It is no secret that Diamcor Mining $DMIFF $DMI.V is my largest position. I bought my first shares in December of 2020 after watching them at LD Micro and have gone really heavy after a lengthy chat with CEO Dean Taylor in May of this year. I have been covering the stock on the Breakout Investor Platform and anybody following me had the opportunity for handsome profits. My 10 Minutes with Scott gives you a quick intro and I will especially remind you about the model I shared here. Below I’d like to offer a slightly updated model with mainly improved price assumptions as has recently been demonstrated.
Short term scenario modelling for DMIFFLonger term scenario modelling for DMIFF with wider uncertainties.
We recently caught up with CEO Dean Taylor for an update on the company’s progress and questions from the community. Dean likes to talk about his business and in a way where he is not evasive or “talking around it”. No, he is just passionate and takes time to illuminate shareholders on his thinking behind the decisions he makes. I am also happy to share the updated slide deck with my readers. A few points:
Warrant amendment: They were extended and the strike lowered. Why? Exercise provides much needed, quick and frictionless funding. The holders have been very long term shareholders and it is good to be in good standing with them. They would step in any time again.
Current debt: It looks ugly in the financials but is no threat whatsoever. The Tiffany loan will probably be paid off when they find a large stone, that Tiffany no doubt will want. While that debt is current, Tiffany is VERY friendly with them as a lender and there are just no issues there. The Caterpillar loans are from the machinery and being paid off already. The convertibles… well, will convert. No selling pressure to be expected as these guys are the same old long term shareholders. The Black Empowerment component is a liability but not cash relevant. My models adjust for that.
Cash in general is tight by design. They run a tight ship. No need to raise money.
Pricing: Before I was worried that the bulk of production might turn out lower quality with prices below $200/ct. That is not the case. If anything $250/ct might be too conservative. This deposit is just amazing and I updated my models accordingly. You can see why I think the stock is headed for between 50 ct and $1.
Unrest in South Africa: No problem for Diamcor. They are not only in a remote region but also behind a secure fence and even if someone would get through, they would have the pleasure to deal with a range of rather hostile animals. Dean extensively described all the safety measures. Transport is secured. Nothing to see here.
Covid: They are getting the workforce vaccinated and that is the only hurdle to increase production markedly by going to 24 hour shifts. So far no issues with Covid, they are just careful. Again Dean went into detail on all their measures.
Workforce: Diamcor treats them well. Very well.
Equipment: The new machinery (X-ray, etc) is active and everything is on track to double production. If anything they are ahead of schedule.
Dean is very confident in them being able to pull it off. It is just execution at this point. He wants to see them slowly and methodically increase production over time. He explained in detail how the production process works and why it is so much more efficient and cheaper than other diamond mines.
He reiterated again that this could be a $400-500M company. He says that casually. Not to impress or pump. It is just what he thinks is realistic. They obviously need to explore some more around the current resource to get there but that is the plan.
Speaking of exploration, Dean has shown a map and illustrated that there are several fertile areas that have not been explored at all and could VERY meaningfully expand their resources. All that would be gravy.
They are going to engage more now in spreading the message (of course we were Ahead of the Curve!). Conferences etc. They have a shiny new homepage and an IR firm.
Watch the video. The details Dean provides are worth it. Myself I could listen to Dean all day long and I am happy to be a shareholder. I have got diamond hands here as has the majority of the shareholder base including the convertible debt and warrant holders. No investment advice, but I think you should too.
