IN the hit-and-often-miss world of diamond exploration and development, a new kimberlite mine is a rare beast. In South Africa’s diminishing diamond sector, it is remarkably rare. Nonetheless, DiamondCorp’s Loudon is steering a difficult project at the firm’s Lace mine near Kroonstad in the Free State province to completion. This is despite a costly four-month delay caused by difficult ground conditions that surprised management. Lace is a block-cave mine built on a kimberlite deposit that De Beers first staked out in the Sixties, but which it never exploited. Loudon forecasts positive cash flows from July and has committed the company to an aggressive dividend policy, as well as special dividends, if windfalls from pink and purple diamond sales materialise. DiamondCorp will be a single-asset company focused on churning out cash over its 25-year life, but there’s a view it could be a takeover target especially as its shares have fallen hard. It has forecast annual production of 540,000 carats a year, making it a tasty (and cheap) asset. In the meantime, Loudon’s job is to deliver on production and cash return promises. An agreement to roll up R258m worth of interest and loan repayments with the Industrial Development Corporation has bought Loudon some breathing space.
LIFE OF PAUL
Loudon is an associate of the Securities Institute and a member of the Southern African Institute of Mines and Metallurgy. He was the head of equity sales at Loeb Aron & Company, a specialist mining corporate finance establishment. He was its president between 1996 and 2003.
- Web Address: www.diamondcorp.plc.uk