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 Code Company One-year price change Price May 22 (intraday) Market Cap Focus
POZ POZ MINERALS 2 0.09 15.58M Australia (WA)
ARV ARTEMIS RESOURCES 1.5 0.185 120.33M WA, Australia (Pilbara, WA)
MEI METEORIC RESOURCES 1.26666666667 0.034 19.53M Australia (WA)
ARO ASTRO RESOURCESS 0.5 0.003 2.66M WA, Australia (East Kimberley, WA)
RIO RIO TINTO 0.298006134969 84.63 137.95B Australia (East Kimberley, WA)
PNN PEPINNINI LITHIUM 0.0869565217391 0.025 13.86M Australia (West Amadeus Basin, WA)
LOM LUCAPA DIAMOND -0.0333333333333 0.29 132.63M Australia (WA), Lesotho, Botswana, Angola
JRL JINDALEE RESOURCES -0.136363636364 0.19 6.63M Australia (WA)
FDX FRONTIER DIAMOND (listed Jan 2018) -0.35 0.13 26.95M South Africa
NWF NEWFIELD RESOURCES -0.421364985163 0.195 104.63M Sierra Leone, Africa
MED MERLIN DIAMONDS -0.454545454545 0.006 21.77M Australia (NT, WA)
MUS MUSTANG RESOURCES -0.52380952381 0.02 18.15M Mozambique
MOX MONAX MINING -0.555555555556 0.004 2.66M Australia (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.