Companies: KDD   

After raising £6 million at 10p, Lesotho-focused Kopane Diamond Developments has spurned a 17p approach from an unnamed company and argues that a definitive feasibility study of its key Liqhobong project will justify a significantly higher stock market rating. Executive chairman Tim Read says drilling is already showing significantly better quality, grades and recoverability from 75 per cent-owned Liqhobong than shown by the earlier pre-feasibility study.

Kopane, which floated on AIM at a much higher 75p in 2000 as Scandinavian gem play European Diamonds, hopes to finish the definitive feasibility study of Liqhobong’s main pipe by the end of the year and has already claimed the project has the potential to increase production from 160,000 to one million carats a year. Read says the project’s K5 ‘facies’ is showing 51 carats per 100 tonnes of rock, against 30 carats in the pre-feasibility study.

The pre-feasibility study valued the Liqhobong stones from K5 at $70 a carat, and Read suggests the current definitive study is likely to show an improvement on that. He argues that the overall project could show a tonnage up from 48 million to 60 million tonnes, with an average grade of 40 to 45 carats per hundred tonnes, which he maintains would represent ‘a huge increase’.

Read, who is strengthening Kopane’s board, also expresses high hopes for the imminent sale in Antwerp of large exotic stones from the K6 facies, in particular three ‘vivid yellows’ of 13 carats. If his hopes are justified, that could usefully increase Liqhobong’s average prospective value.

Kopane still suffers from disappointment about European Diamonds’ original projects.

By last March, the shares were down to a mere 9.13p and they are still only 11.5p.

The company has several institutional holders, who speak Read’s language. If the feasibility study lives up to the board’s expectations, the price should have scope for a stronger rally.

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