Diamond & Specialty Minerals Summary for Jan. 17, 2022
2022-01-17 19:48 ET - Market Summary
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by Will Purcell
The diamond and specialty minerals stocks box score on Monday was a positive 100-74-126 as the TSX Venture Exchange added six points to 909 while polished diamond prices lost 0.1 per cent. Ewan Mason and Ken MacNeill's Star Diamond Corp. (DIAM), stalled near 20 cents for most of the past decade but a high flyer of late, dipped two cents to 39 cents on 866,000 shares.
Newfound enthusiasm for Star arose in mid-December after it settled a dispute with its co-venturer, Rio Tinto Exploration Canada Inc. (RTEC). The settlement saw RTEC confirmed with a 75-per-cent interest in the FalCon diamond project in exchange for delaying Star's payment of its share of exploration expenses until a mine is in production. Once RTEC gives construction the go-ahead, however, Star will have just six months to start kicking in several hundred million dollars for its 25-per-cent share of those costs, so it will need to get busy arranging the financing.
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Good note on DIAM Will,
but I wonder if STAR is really going to have that many problems raising cash if RTEC decides to move forward with a mine? I believe past companies in similar situations have arranged Bank Lines that secure against future production. DIAM may not even need to raise dilutive equity other than a small working capital portion to see them through the process. As a DIAM shareholder the thought of a buyout under tough terms and a legal battle is more of a concern. DIAM cannot afford to go toe to toe with RTEC in a legal battle.
"I believe past companies in similar situations have arranged Bank Lines that secure against future production. "
Yes. Orion (now Osisko Gold Royalties) had an arrangement with Stornoway at Renard. That hasn't worked out so well. Still, royalty and streaming deals remain all the rage with golds...
The bottom line, as I suggest, there will be many ways to raise cash, and most of them may figure into the equation. Still, I expect the bankers, investors and streamers will be eyeing up the feasibility study with a jaundiced eye, given the flops elsewhere.
Good luck with your investment. SDC looks to be the main story for some time to come. That's not a bad thing for either of us, I guess.
Cheers,
Will
Posted by Will Purcell at 2022-01-20 11:45
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