Paul Zimnisky: Holiday Demand to Impact Diamond Prices

Paul Zimnisky Diamond Analytics released a report that looks at the state of the diamond industry heading into the end of 2015. In the short term, diamond prices are expected to be influenced by “the actual resulting demand of the global holiday season.” If buying is strong during the period, lighter-than-usual inventories could be cleared out, paving the way for more buying next year.
In addition, the report summarizes how major diamond miners have performed this year, though it also touches on the performance of companies exploring for the gems.
As quoted in the report:

With rough diamond prices down over 12% YTD, according to the Zimnisky Global Rough Diamond Price Index, share prices of diamond miners have been punished by investors. Year to date, ALROSA is down 18%, Dominion is down 34%, Petra is down 58%, Lucara is down 24%, and Gem Diamonds (LSE: GEMD) is down 44%.
Emerging producer Mountain Province Diamonds (TSX: MPV) is down 23% YTD, and is currently trading at a 3-year low, even though the company has since fully financed it’s portion (partnered with De Beers) of the Gahcho Kué diamond project in the Northwest Territories Canada. The project’s construction is over 75% complete (shown below), with initial production estimated to commence around this time next year. Gahcho Kué is the largest new diamond project in the global pipeline and will rank a top-10 project by volume and value once fully ramped up.
Also worthy of note, Mountain Province’s exploration spinoff, Kennady Diamonds (TSX-V: KDI), successfully closed a C$48M financing in October, which will cover the company’s activities through 2017. The raise, impressive on a relative basis, was equivalent to 35% of the company’s C$140M market cap. The stock is down 35% YTD.
Stornoway Diamonds (TSX: SWY), which is building Quebec’s first diamond mine, is the standout in the diamond mining space so far this year with the stock up 26% YTD (although the stock did close at multiyear lows at the end of last year). The company is fully financed through construction of its Renard mine, which is scheduled to begin commercial production in the first half of 2017.

Click here to read the full report from Paul Zimnisky Diamond Analytics.