Target Resources expects ‘positive cash flow in two to three months’ from Sierra Leone and plans further prospecting.

Managing director Nissim Levy says the AIM-quoted company, which raised £5.6 million last October at 21p to develop a 4,200-acre alluvial diamond prospect in the West African country’s gem-rich Kono region, hopes to start producing next month and reach full output in October. After initial delays, Target will have a new big dredger onsite in June or July, which can process larger amounts of material and keep working during the rainy season.

Levy suggests this will generate revenues by the end of this year at the rate of £3 million to £3.5 million. He predicts a high average selling price of $500 (£250) a carat for the stones, which he argues should average 0.8 to 0.9 carats each – though he adds that Target will deliver a diamond package containing 16 and 17 carat stones to Antwerp on Monday.

London-based Target has a ten-year exclusive marketing deal with New York jeweller Tiffany, which extended a £2.45 million five-year unsecured loan to the company at the same time as the autumn’s equity raising. Levy says the largest stone the company has sold to Tiffany was a 19.5-carat diamond worth $185,000.

Target has an option on another nearby area, with prized coloured diamonds, in Sierra Leone, which Levy expects to exercise next year. He hints at another, much bigger licence coming the company’s way by April.

These apparently glittering prospects have not stopped Target’s shares falling from their 2006 float price of 50p to 18.5p today. Sentiment might change if cash flow meets Levy’s timetable.

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Target Resources	AIM	£3.09m	2.50p	0.00p
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