diamond - bright future

7/30/2019 Diamond - Bright Future

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For the past 6,000 years diamonds have been

highly prized for their sparkle and strength.

They are formed in the Earths mantle, which

lies 110 miles below the surface, by intense pressureand temperatures in excess of 2,400C. Diamonds

are brought to the surface by volcanic eruptions

which send large pieces of mantle rock, called

xenoliths, upwards. The presence of nitrogen and

sulphur create the highly prized yellow, pink

and blue diamonds.

The key uses are either as gem

diamonds or industrial diamonds.

They sparkle because of their

optical quality which is due

to the manner in which lightpasses through these stones.

By quantity, 30% of diamonds

mined annually are cut, polished

and turned into jewellery. The

value of the stones is based on

four Cs: carat, cut, colour and clarity,

with the highest prices received for the

pretty coloured stones. Industrial diamonds

account for the remaining 70% of world diamonds by

quantity. As the hardest naturally occurring material

on the planet, diamonds are used for cutting,grindin g, drill ing and polishing ; either as tiny stones

or crushed to create abrasive powders.

Historically, Africa has been the major source of

diamonds since the 1870s, but the last fty years

or so have seen the emergence of diamond mining

in Russia and Canada. The estimated global rough

diamond production in 2010 was 133 million carats

worth $12 billion. Of thi s total, Russia produces 34.85

million carats (26%) followed by Botswana (16%),

Democratic Republic of Congo (15%), South Africa

(10%) and Canada (9%). The better quality stonesare found in Botswana which, based on value, came

out on top with $2.59bn compared with Russia at

$2.38bn and Canada at $2.3bn. Between them the

top ve producing countries account for more than

three quarters of world diamond production. The

remainder comes from Angola, Zimbabwe,Australia, Namibia, Gui nea, Brazil and

Ghana.

Diamonds are produced by mining

either hard rock that contains

xenoliths or alluvial sediments that

have resulted from the weathering

of diamond bearing rocks. Today

most diamonds are mined from

kimberlite, a rare type of volcanic

rock, which occurs as pipes, dykes

and blows. Kimberlite pipes are vertical

carrot-shaped structures and a rule ofthumb used in the industry is that just one in

1,000 kimberlites actually contain diamonds. There

is even less chance of nding an economic deposit.

However, in some countries, such as Botswana,

diamondiferous kimberlites are a lot more prevalent

than that ratio would suggest.

Alluvial dia mond mining involves the processing

of river and beach gravels to extract diamonds.

Although thi s mining method accounts for just

10% of world diamond production, it does produce

some very high quality diamonds. Exploration work

involves geologists sampling stream sediments to

nd diamonds or diamond indicator minerals which

may be traced back to the weathered remains of a

kimberlite pipe that can have a surface expression inthe order of many hectares.

Industry giant De Beers estimate global jewellerydemand rose by 8% in 2010. The US, the largest single

market with 38% of global demand, saw a 7% increase

in demand. However, the real excitement surrounds

the far-higher growth rates witnessed in emerging

markets with countries like China and India seeing

growth rates in local cur rency terms of more than

25% and 31% respectively. De Beers is predicting the

Far East (China, Hong Kong, Taiwan, India and the

Gulf region) will account for 40% of global demand in

2015. This is a story of the urbanisation in China and

India and the burgeoning middle classes along with

escalating wealth in the Middle East, which are seenas powerful business drivers.

There is a scarcity of new diamond projects

coming on stream due to the oversupply of

diamonds in the 1990s, which discouraged

exploration eort. Matters have not been helped

by the worldwide nancial crisis which h as slashed

exploration budgets. In the rst half of 2011, rough

diamond prices climbed by 40% on the back of

demand from China and India. Uncertainty in

nancial markets may have trimmed these gains for

smaller stones, but demand has remained rm for

better-quality diamonds. Over the last seven yearsthe price of rough diamonds has basically doubled

and growth in the market is expected to resume in

2012, driven by the clear shortage of supply.

FEATURE SPONSOR

Sparkling future

OORTUNITIES IN AFRICAN DIAMOND MINING

Dr Michael Green exaMines the funDaMentals of the DiaMonD Market

...

Dr. MichaelGreen is an

independent

mining

analyst

specialising

in small cap

stocks and

has acted as

a consultant

to a number of stockbrokers.

He has been active in the

smaller company sector since

1990.

Dr Michael Green

Thebetter quality

stones are foundin Botswana which,

based on value,came out top

with $2.59bn

Mining Mvn @thminingmvn www.miningmvn.com

Botswanas Orapa region

rench

excavationat BK5

February 2012

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John TeelingExecutive ChairmanJohn Teeling is executive chairman

of Botswana Diamonds and has 40

years resources experience. Teeling is

also involved in a number of other AIM

exploration companies and has been a serial

entrepreneur in the resource sector having founded African

Diamonds and created Pan Andean Resources, Minco, African

Gold, Persian Gold and West African Diamonds, all listedon AIM. The deal which saw Lucara (part of Lundin Group)

takeover African Diamonds in 2010 was worth in the region

of $90 million. He is also the founder and a former director

of Kenmare Resources, former director of Arcon and holds

interests in a number of industrial ventures. As chairman of

Cooley Distillery he recently oversaw its sale to J im Beam for

$95 million. Teeling holds degrees in Economics and Business

from University College Dublin, an MBA from Wharton and a

DBA in Business Administration from Harvard. He lec tured for

20 years in business and nance at University College Dublin.

Andre FourieTechnical Director

Andre Fourie, technical director at

Botswana Diamonds, has 21 years of

diamond and gold experience, 19 of which

was with Anglo American and De Beers. Hehas done exploration and mining geology

on WITS paleoplacer gold deposits including surface and

underground drilling as well as 3D seismic surveys. Fourie

also has experience in marine, alluvial and kimberlite

diamond exploration and mining across Southern Africa. He

is responsible for strategy formulation and implementation

on a company as well as business unit level and for managing

a department of multifunctional specialists and professional

engineers/earth scientists. Andre has a degree in Geology

and postgraduate qualications in Mining Engineering from

University of Stellenbosch and WITS University.

James FinnFinance Director

James Finn is nance director of Botswana

Diamonds and has over 20 years

experience in working with explorationcompanies. Finn has extensive experience

in the administration of oil and gas and

minerals companies. He has been responsible for listing

several resource sector companies on AIM in London,

including two of the rst companies ever listed on AIM, Pan

Andean Resources and African Gold. Finn was previously

nance director of African Diamonds and West African

Diamonds. He holds a degree in Management and the

Association of Chartered Certied Accountants (ACCA)

qualication.

David HorganDirector

David Horgan is a director at Botswana

Diamonds and has extensive African

experience. Horgan has over 20 years

experience in oil and gas and resources

projects in Latin America, Africa and the

Middle East through a number of AIM listed companies

including Clontarf Energy, Petrel Resources and Pan Andean

Resources. He previously worked at Kenmare where he

raised nance, captured the premium graphite worldwide

market and evaluated investment opportunities. Prior to

that he worked with Boston Consulting Group internationally

for seven years. He holds a rst class law degree from

Cambridge and an MBA with distinction from the Harvard

Business School. Horgan speaks several languages including

Portuguese, Spanish and German.

Robert BouquetDirector

Robert Bouquet is director at Botswana

Diamonds and has 17 years experience in

the diamond industry, 14 of which he spent

with De Beers and Rio Tinto Diamonds in a

variety of strategic and commercial roles. On

the commercial side Bouquet has worked in strategic roles as

well as a sales manager for Rio Tinto and as a rough diamond

buyer for De Beers in the Democratic Republic of Congo

and Guinea. He has wide experience in diamond producing

countries, particularly in Africa, as well as in all diamond

cutting centers. He has a degree in Management and French

from the University of Leeds.

Meet the team

In this interview, MiningMaven puts investor-focussed

questions to John Teeling, executive chairman of

Botswana Diamonds, an exploration company focussing

on the best addresses in the diamond world.

MM: What are the companys key strategic objectives?

Teeling:To multiply the capital value o Botswana Diamonds by

fnding new diamond mines. We are looking to recreate the recent

success o Botswana Diamonds predecessor, Arican Diamonds,

which discovered and successully sold a multi-million carat a year

mine in Botswana. Botswana Diamonds is managed by many othe team responsible or that discovery. Our goal is to secure high-

potential ground and projects, and become a hard rock diamond

producer.

MM: Why is the diamond sector a good place to invest today?

Teeling:The undamentals o the diamond business are the besto any mineral: demand is strong, supply is tight, new discoveries

are rare and diamonds are a store o value. The supply gap will

increase signifcantly rom 2015, which strongly supports uture

diamond prices and businesses that beneft accordingly.

MM: Why is Botswana considered the best address in

diamonds?

Teeling: Botswana is the Switzerland o Arica: prosperous, law-

abiding and sae. It is the largest supplier o diamonds globally by

carats and value, has the highest percentage o diamond-bearing

kimberlite pipes and the lowest operating costs worldwide.

MM: What news fow can investors expect rom the company

in the coming year and what does this mean or value

generation?

Teeling:We are very excited about 2012. We are confdent there

are more mines to be ound in Botswana where we will apply newtechnoloy to prospective ground and hope to repeat our earlier

success. We are also at the oreront o the emerging palaeoplacer

diamond sector, which holds considerable potential where we

have prospective ground in Cameroon, and an active programme

in Zimbabwe. This year will see activity in all three countries. The

board is confdent o a bright uture or Botswana Diamonds with

lots o news on all ronts. Investors should also fnd comort in the

act our costs are low, cash is reinvested in the ground and the

whole team benefts rom discoveries, which closely aligns the

interests o all our stakeholders.

To read the full Q&A, please

visit the Mini ngMaven.com

website, click on this link or

type it into your browser:

http://bit.ly/AdzR3b,

or scan this QR code with your

smart phone:

Ve fr he p:

Botswana Diamonds

Excavatedtrench at AK8

IanTomlinson


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Clly d cDigging Deeper into Botswana DiamonDsBy Emma Cusworth

BotswanaDiamonds at

a glance:

Strong African focus

Experienced team with proven

track record of delivery

Good ground position

New approach in Botswana

Established presence in two of

the newest diamond provinces

Cameroon and Zimbabwe

Ticker: BOD

Shares issued: 100.53 million

Listed: AIM, 1 Feb 2011

Year end: 31 December

[email protected]

Tel: +353 1 833 2833Fax: +353 1 833 3505. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MiningMaven

MiningMaven is the go to

resource for the private

investor with a keen eye on the

mining exploration and natural

resources Sector. As well as

writing about the sector and

specic companies, MiningMaven

conduct regular interviews with

management, allowing investors

to stay abreast of companies

progress. MiningMaven also host

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oering investors the opportunity

to meet the companies, learn

more about the sector and hear

from industry experts. For more

information please visit us at

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Newsletter.

@theminingmaven

Mining Maven. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EmmaCusworthFreelancefnancialJournalist

Emma Cusworth

is a freelance

nancial journalist and has been

following investment markets

and issues for over a decade. She

regularly contributes features and

comment to leading investment

trade publications including

Financial News, Investment

& Pensions Europe, Portfolio

Institutional and Hedge Funds

Review. She was also responsible

for editing this special feature.

Attractive Price Fundamentals

20

15

10

5

US$Billions

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018I I I I I I I I I I I

SUPPLY

(IN 2008 PRICES)

DEMAND

Source: Alrosa, RBC Capital Markets

Ingeological

terms, BotswanaDiamonds is

operating in thebest address in

the worldFOURIE

Treatmentplant usedby BotswanaDiamonds

I

anTomlinson


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The Company eatured here has sponsored the cost o producing this MiningMaven Special Feature. All fgures quoted have been obtained rom the Companys websites and/or publically available sources. Errors &

omissions excepted. All written content represents the views and opinions o MiningMaven, has been prepared or inormation and educational purposes only and should not be considered as investment advice or

a recommendation to buy shares in the company eatured. All opinions expressed are those o the author/s and unless otherwise stated should not be construed as being made on behal o the eatured company. From

time to time MiningMaven principals may take equity positions in a eatured company. Readers are advised to do their own extensive research beore buying shares which, as with all small cap exploration stocks, should be

viewed as high risk. Investors should also seek the advice o their investment adviser or stockbroker, as they deem appropriate. MiningMaven is a division o Catalyst Inormation Services Ltd registered in England: 06537074.

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