The desire to own diamonds has been around for centuries. The diamond was a symbol of ultimate wealth and prosperity as early as the 17th century. By weight, they are one of the most valuable items as you can hold several million dollars in the palm of your hand. As which currency to hold gets cloudier, maybe an investment in diamonds is the answer.
In the movie Havana, Robert Redford plays a professional gambler who goes to Havana, Cuba. In a scene from the movie, he explains to Lena Olin that a lump on his arm contains a diamond which was sewn into his arm as a teenager, for insurance that no matter what happens in life, one always has a diamond.
Many of the investment Gurus followed on this website own more diversified large cap miners with small diamond exposure, such as John Keeley who recently added to his holding of Harry Winston Diamonds (HWD). David Dreman and Joel Greenblatt recently purchased Vale SA (NYSE:VALE) shares. Ken Fisher recently reduced his holding in Anglo American (AAUKY).
Below is a price chart of diamond prices:
A good source of diamonds industry news, information and prices is Rapport’s:http://www.diamonds.net/
Are there any pure diamond miners listed on the stock exchanges?
The other day Bob Pisani of CNBC named a few almost exclusively diamond stocks in his article entitled “Investing in Diamonds: Should They Be Traded Like Gold?” I will expand on Petra Diamonds and Mountain Province Diamonds as well as one not in his article, Stornoway Diamonds. These are highly speculative companies which after your due diligence should only be a fraction of your portfolio.
Petra Diamonds (PDL-GB)(PDMDF) has a market capitalization of approximately $845 million. The company is an independent diamond mining group and a supplier of rough diamonds to the international market. The company has interests in eight producing mines in Africa and an exploration program in Botswana. Petra markets and sells its rough diamond production in Johannesburg (South African goods) and Antwerp (Tanzanian goods).
On Aug. 17, 2012, Petra Diamonds was cut to neutral from buy by Goldman Sachs.
The largest shareholders as of July 2012 were:
|Al Rajhi Holdings W.L.L.||13.3%|
|Saad Investments Company Limited / Awal Bank||12.1%|
|JPMorgan Asset Management Holdings Inc.||7.9%|
|Capital Group International Inc||7.3%|
Mountain Province (NASDAQ:MDM) has a market cap of approximately $356 million. Mountain Province Diamonds is a Canadian diamond exploration and development company headquartered in Toronto, Ontario. In partnership with De Beers, Mountain Province is developing the world's largest and richest new diamond mine-the Kennady Lake diamond project, located in Canada's Northwest Territories. Mountain Province Diamonds Inc. is a Canadian diamond exploration and development company headquartered in Toronto, Ontario. The company's primary asset is its 49% interest in Kennady Lake, one of Canada's largest diamond deposits and the largest diamond mine under development in the world today.
Its largest shareholders was Bottin (International) Investments Ltd. with a 19.84% stake in the company as of May 12, 2012.
On July 16, 2012, Mountain Province Diamonds was upgraded by RBC Capital Markets.
Stornoway Diamond Corp. (SWYDF)(SWY) has an approximately $100 million dollar market capitalization. Stornoway is a Canadian diamond exploration and development company. Its flagship asset is the 100% owned Renard Diamond Project, on track to becoming Quebec’s first diamond mine. Stornoway also maintains an active diamond exploration program with both advanced and grassroots programs in the most prospective regions of Canada. Catherine McLeod-Seltzer, one of Canada’s top mining dealmakers, was a director of Stornoway Diamond Corp. (SWY), a company she co-founded with geologist Eira Thomas, according to a Bloomberg Article
The largest shareholders as of June 1012 were:
Investissement Quebec as of June 20, 2012
25% shareholder of Basic Issued and Outstanding Shares
33.7% of Fully Diluted Issued and Outstanding Shares
Agnico-Eagle Mines Limited
10.6% shareholder of basic issued and outstanding shares (June 20, 2012)
8.9% of fully diluted issued and outstanding shares (assumes conversion of all non-voting convertible shares and all outstanding stock options and warrants as at June 20, 2012).
It you have the desire to have diamonds in your portfolio, take some time and do your due diligence on these three names.
Full Disclosure: I have owned Stornoway Diamonds since June 12, 2012, with an average price of $0.726.
About the author:
• Realized average annualized returns on self managed IRA account of 14% from January 2004 to December 2012 (total return 150+).
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