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Angola is working to make its diamond sector more appealing to Australian miners.

While there is a large number of Australian miners active on the broader African continent, there are just three that have projects in Angola, and only one of those companies – Lucapa (ASX:LOM) – is in diamonds.

>> Scroll down for a list of ASX stocks with diamond exposure, courtesy of leading ASX data provider MakCorp

Up until now Angola has had in place restrictive legislation over diamond operations including not allowing foreign investors to hold a majority stake and a requirement that all diamonds must be sold through a central state-owned government agency.

On top of that, the process for repatriating revenues earned in Angola back to Australia has been somewhat long and arduous.

However, following the election of a new government in August last year, the country is now seeking more foreign investment in its natural resources, including diamonds.

“The fact of the matter is that any diamond that is not sold in international commercial tender in Antwerp you’re not achieving the best price,” Lucapa’s head of investor relations Mark Drummond told Stockhead.

“We’re actually achieving the best prices in the world for an alluvial diamond mine, so it’s not a bad start, but could you get more for your diamonds at international tender – the answer would be yes.”

Angola is now considering allowing companies to sell their diamonds outside of the country as well as potentially revising the restriction on foreign ownership of projects and streamlining the repatriation process.

Earlier this month Lucapa banked $4 million from the sale of a package of alluvial diamonds from its Lulo mine in Angola.

However, the pricey package did not include the recently discovered 46-carat pink diamond or other large “special” diamonds recovered from the new Mining Block 4.

Diamonds aren’t forever in Oz

There are just 13 diamond companies listed on the ASX and the majority of them have projects in Australia, which has a rapidly depleting supply of diamonds.

The federal government predicted earlier this year that Aussie diamonds would be exhausted within eight years at current production rates.

This may prompt our miners to look at potential investment overseas, particularly as the outlook is more bullish for diamond prices over the next few years.

Analyst Paul Zimnisky sees diamond prices climbing around 10 per cent between now and 2021 due to declining production and a looming supply shortfall.

Here’s a list of ASX stocks with exposure to diamonds courtesy of leading ASX data provider MakCorp. (Scroll or swipe for full table)

ASX CodeCompanyOne-year price changePrice May 22 (intraday)Market CapFocus
POZPOZ MINERALS20.0915.58MAustralia (WA)
ARVARTEMIS RESOURCES1.50.185120.33MWA, Australia (Pilbara, WA)
MEIMETEORIC RESOURCES1.266666666670.03419.53MAustralia (WA)
AROASTRO RESOURCESS0.50.0032.66MWA, Australia (East Kimberley, WA)
RIORIO TINTO0.29800613496984.63137.95BAustralia (East Kimberley, WA)
PNNPEPINNINI LITHIUM0.08695652173910.02513.86MAustralia (West Amadeus Basin, WA)
LOMLUCAPA DIAMOND-0.03333333333330.29132.63MAustralia (WA), Lesotho, Botswana, Angola
JRLJINDALEE RESOURCES-0.1363636363640.196.63MAustralia (WA)
FDXFRONTIER DIAMOND (listed Jan 2018)-0.350.1326.95MSouth Africa
NWFNEWFIELD RESOURCES-0.4213649851630.195104.63MSierra Leone, Africa
MEDMERLIN DIAMONDS-0.4545454545450.00621.77MAustralia (NT, WA)
MUSMUSTANG RESOURCES-0.523809523810.0218.15MMozambique
MOXMONAX MINING-0.5555555555560.0042.66MAustralia (SA)

Of the companies listed, the biggest gain (150 per cent in the past year) has been made by Artemis Resources (ASX:ARV), but that has not been because of its diamond project.

Artemis is better known to investors as a Pilbara conglomerate gold player and more recently a nickel explorer.

Meteoric Resources (ASX:MEI) has jumped nearly 127 per cent in the past year – but again not because of diamonds.

Meteoric has joint ventured its Webb diamond project out to private company GeoCrystal – which was looking to list on the ASX but has dropped its second attempt to become a publicly listed explorer.

The reason Meteoric’s share price has gone through the roof in the last 12 months is because of its rapidly growing cobalt portfolio.

By comparison, those that are purely in diamonds have seen their share prices tumble over the same period.

Merlin Diamonds (ASX:MED) has fallen 45.5 per cent, while Lucapa has slipped over 3 per cent.

 

Stockhead is proud to use MakCorp as a provider of great value, accurate and reliable data on ASX-listed mining stocks. For more information head to MakCorp’s website.