COVID-19 disruptions brought broad declines across the diamond-mining sector in 2020, but some companies are still making headway. Learn about six of them here.
ASX-listed diamond stocks have faced headwinds recently. In 2020, COVID-19 disruptions brought broad declines across the sector as many buyers chose not to make luxury purchases.
Although assets like gold, uranium and bitcoin rebounded fairly quickly, the diamond industry wasn’t able to pick back up until well into the second quarter of 2020.
Then, when coronavirus-related trends began to improve later in the year, Australia’s diamond industry was impacted by the closure of the renowned Argyle mine in Kimberley.
The world-class asset was responsible for approximately 90 percent of the world’s fancy pink diamonds. Argyle also contributed 12 million carats of white stones to the global market annually.
“In 2020, pandemic-related production suspensions and curtailments across the industry accelerated this decreasing supply trend,” said diamond analyst Paul Zimnisky.
“More specifically, in 2020 I estimate that global diamond production volume decreased by over 20 percent, to about 113 million carats. This is the lowest output since the 1990s.”
With the Argyle mine out of commission, the Australian diamond sector is in transition, awaiting a restart at the Merlin mine and continued exploration in the Kimberley region. Of the three diamond mines in the country, Ellendale is the only one currently operating.
Despite the slowdown in the industry, upside remains, and ASX-listed diamond stocks continue to move forward at their assets, both in Australia and around the world.
With that landscape in mind, the Investing News Network has used TradingView’s stock screener to put together a list of ASX-listed diamond stocks with projects in Australia, Canada and parts of Africa. Companies are listed in order of market cap size, and all had market caps above AU$10 million as of March 24, 2021. Read on to learn more about them.
1. Rio Tinto (ASX:RIO)
Market cap: AU$40.72 billion; current share price: AU$109.70
Diversified major Rio Tinto is the owner of the famed Argyle mine, which permanently closed in November 2020. The company also has a controlling 60 percent stake in the Diavik diamond mine, located in Canada’s Northwest Territories.
2020 saw output decrease on both continents, as noted in Rio Tinto’s latest annual report.
“Diamond production was 14 percent lower than 2019, attributable to lower carats recovered at Diavik, where a 10 percent reduction in grade was partially offset by an increase in tonnes processed, and the closure of Argyle, as planned, on 3 November,” it reads.
Values were also lower — according to Rio Tinto, its realised diamond price last year was down 21 percent on a weighted average basis.
2. Burgundy Diamond Mines (ASX:BDM)
Market cap: AU$93.46 million; current share price: AU$0.36
Multinational diamond explorer Burgundy Diamond Mines is currently advancing its portfolio of projects in Botswana. The company also has an option agreement for the Naujaat project in Canada, which is operated by North Arrow Minerals (TSXV:NAR).
In addition to gem exploration, Burgundy also holds a stake in a Peruvian gold and silver project.
Shares of the firm are up by triple digits since January, with most of its gains occurring since late February. Most recently, Burgundy’s share price spiked 24 percent over a five day period following the release of the company’s half-year financial report.
3. Jindalee Resources (ASX:JRL)
Market cap: AU$84.65 million; current share price: AU$1.65
Diversified explorer Jindalee Resources has a variety of exploration projects. Most notable is the Aries project, located in the Central Kimberley region roughly three hours east of Derby.
Aside from Aries, Jindalee is advancing several Australian iron ore, gold, nickel and lithium deposits.
Since January, shares of the explorer have steadily trended higher, peaking at AU$2.09 on February 4. Jindalee subsequently fell back to the AU$1.50 range. In mid-March, news that the company had raised AU$9 million to advance its McDermitt lithium project pushed its share value to the current level.
4. Lucapa Diamond (ASX:LOM)
Market cap: AU$53.32 million; current share price: AU$0.06
Africa-focused Lucapa Diamond has had a stellar start to the year, recovering three 100+ carat diamonds since January. It also found a massive 215 carat stone in February.
The first quarter of 2021 has also seen Lucapa sell AU$7.7 million worth of gems recovered from its Mothae mine in Lesotho.
“As with the first sale of Mothae diamonds in 2021, prices achieved by SML at this sale continued to reflect the positive industry mood, and with sales from both operations in 2021 already totalling AU$15 million, it has been a solid start to the year,” said Managing Director Stephan Wetherall. Shares of Lucapa rallied 32 percent a few days later, but have since retreated.
Along with its successes, there have been some challenges for the firm. In January, the Mothae mine was temporarily shuttered as part of a nationwide COVID-19 lockdown.
5. Gibb River Diamonds (ASX:GIB)
Market cap: AU$17.98 million; current share price: AU$0.09
Gibb River Diamonds owns the Ellendale mine, one of Australia’s three diamond mines.
Located in Kimberley, Ellendale is a past producer and is known for its rare yellow stones. Roughly 1.3 million carats have been produced from Ellendale, and it is estimated that 50 percent of the world’s annual yellow diamond supply was once derived from the asset.
Gibb River acquired the project, as well as the mining and exploration leases for the area, in 2019. The company is in the process of raising capital to commence operations at Ellendale. In the meantime, Gibb River is advancing its Edjudina gold project in Western Australia.
The company’s current share value marks a year-to-date high.
6. Astro Resources (ASX:ARO)
Market cap: AU$13.98 million; current share price: AU$0.004
Astro Resources is an exploration company with projects in Australia and the US. The company’s Lower Smoke Creek diamond project is less than an hour away from Rio Tinto’s Argyle mine.
In a financial report, Astro states that it is actively exploring the Lower Smoke asset.
“The company is currently conducting exploration upon tenements considered prospective for diamonds,” the document reads. “No income has been derived from the recovery of diamonds in the period ending 31 December 2020.”
Astro also has a heavy metals project also in Australia and a gold project in Nevada.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.