Lesotho Diamond Corporation, backed by Aussie ex-tycoon Alan Bond, hopes to raise up to �52.5 million with Middle East support.

Ealing-born Bond, a once-imprisoned fallen star of the 1980s Australian mining and stock market boom, holds 38 per cent of Lesotho Diamonds Corp (LDC), which says it is ‘well on track’ to begin gem production from its 93 per cent-owned Kao mine in Lesotho, which is estimated to hold 10.2 million carats. Bond is also understood to be lining up a big oil project in Madagascar to woo the punters, but for the moment sparklers are to the fore.

LDC’s chairman Morven Hay, a former luminary of Arab Banking corporation and banker to Bond in his heyday, says a ‘strategic investor from the Middle East is showing willingness to commit to purchasing �25 million to �41 million worth of the company’. AIM-quoted River Diamonds, with interests in Brazil and Sierra Leone, has already agreed to pay �4 million for a stake in LDC with warrants to buy more at 35p.

LDC says River has negotiated for an option to buy another chunk of warrants at 35p to 40p, which would raise another �11.3 million. There has been unconfirmed speculation that River, headed by Colin Orr-Ewing, could play a part in a reverse bid as a route for Lesotho to float on AIM.

Both River Diamonds and the unnamed ‘strategic’ Middle Easterner like the look of the Kao diamond pipe, where LDC says it is already starting to prepare for a second phase of production. According to River, it could eventually cost �100 million to bring Kao into full production.

At present, the mine claims a net value of no more than �129 million. But Hay argues it could ‘soon prove to be one of the world’s largest diamond mines’. Sceptics might regard the whole LDC/River saga as a ‘mature market’ phenomenon, but, at a lowly 1.38p, River Diamonds, for long a disappointment, could conceivably perk up as a punt on these developments, before LDC comes forward itself.