Dean Taylor: "We Expect a Recovery in Diamond Prices in 2017"

Gem Investing

Taylor, who is CEO of Diamcor, discusses the factors that will influence diamond supply and demand this year.

At this year’s Vancouver Resource Investment Conference (VRIC), the Investing News Network (INN) caught up with Dean Taylor, CEO of Diamcor (TSX:DMI).
In the interview above, he gives his perspective on the diamond market, nothing that after last year’s struggle he expects diamond prices to strengthen in the long term. “We are confident that natural diamonds from non-conflict sources will appreciate in value,” he says.
He also explains Diamcor’s strategic alliance with Tiffany & Co. (NYSE:TIF) and speaks about the factors that will influence supply and demand in the diamond market.
Watch the video above for the full interview or read the transcript below and don’t forget to click here to check out INN’s other VRIC videos.

INN: Can you tell us a bit more about your strategic alliance with Tiffany & Co., and what advantage that gives you as a company?
DT: Sure. We did a strategic alliance a number of years back with Tiffany & Co., as people know. Our company acquired non-core assets from majors, and … the strategic alliance really is about us getting those projects and advancing them as quickly as possible into a production scenario. [The goal is] to then secure high-quality diamonds from the production runs to supply diamonds to Tiffany & Co. for their stores throughout the world. So it’s really largely based on a supply/demand thing, and the money they provide to us we do in a combination of debt and convertible debentures usually. It’s really focused on trying to take good-quality assets and advance them quickly towards getting those diamonds out of the ground to support their needs going forward.
INN: What is your forecast for the diamond market in 2017?
DN: Last year was a tough year, prices were down overall for us as a producer. We saw a lot of different things in the middle part of the supply chain … [it was] a little bit of an issue at the end of the year. We saw some issues with the Indian currency, which affects the bottom end of the diamond pricing for us as a producer. I think on a go-forward basis for this year we’re likely to see a little bit more of the same to start the year. We hope that the bottom-end goods with the Indian currency issues will straighten out, and over the longer term we think prices will tend to strengthen up.
Certainly things like synthetics will come in and be marketed as alternatives. But ultimately we’re pretty confident that real natural diamonds from non-conflict sources will appreciate in value, and as we go forward a number of years certainly the supply/demand scenario remains the same, where we believe that there will be shortages. This year we [are looking] for a little bit of recovery. In the mid term, we look for prices strengthening year-over-year, and in the longer term it looks very positive. I think last year was a bit of a glitch and hopefully this year we’re going to see a trend back up and be better.

INN: What catalysts could affect the diamond price this year?
DT: Well I think again in the short term the Indian market … certainly we see that as an area that will tend to come back. And I think again the price weakness that we saw last year was largely due to some issues with funding in the middle of the supply chain, and I think that ultimately we’ll see some appreciation in the price this year just in general. Certainly bigger players like De Beers, Alrosa (MCX:ALRS), some things will depend on how many diamonds they feed into the market and things like that. But I think in general everybody’s pretty cautious with what they’re putting into the market. Everybody wants a strong, profitable business for everybody involved, not just us as producers but for the supply chain and the retailers.
INN: Finally, what other company milestones should investors be watching for in 2017?
DT: Our company is really unique in the sense that our project is right next to De Beers’ flagship, Venetia. It is the displacement of material off of the top of Venetia directly adjacent to it. We’ve spent a lot of time over the last five years advancing it through to the near-term production scenario that it’s in. We have completed everything in terms of the infrastructure and the build out of the facilities.
As of the first of the year we’ve entered into really what amounts to large-scale trial mining, operating at very, very high volumes. And the idea is to take that information and use it to ultimately aid us in arriving at an actual production decision in the short term. For us we had certain quarters last year where even in testing we were a little bit profitable. So as we bring these volumes up and go into this stage we’re pretty excited about 2017 and going forward. We feel like it’s going to be a great year for our company.
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
The Conversation (0)