Abstract
Financing diamond projects
Highlights
=@6;A; Investment in diamond exploration has been declining over the past decade, in spite of positive long-term industry fundamentals and a growing interest in diamonds as an investment category
The lack of major diamond discoveries in recent years has done little to strengthen the case for investing in diamond projects, yet no new discoveries can be made without investment in exploration
Junior explorers usually rely on equity financing to fund their early stage exploration and resource development until such time as an Indicated Resource is declared, along with completion of a bankable Feasibility Study (BFS) and debt funding becomes potentially accessible
Summary
In an effort to address such key challenges, rough diamond producers are investing significantly to promote diamond sales; an estimated $150 million was invested in generic and branded marketing in 2017, representing an increase of about 50% from recent years. This was in addition to retailers’ own marketing spend (Bain & Company, 2017). The primary risk of exploration lies with the mineralization in the ground; this is inherent in any form of mineral exploration, but diamond mineralization has a higher degree of complexity than other types Such primary risk is partly mitigated by increasingly refining the understanding of the mineralization through a process of systematic mineral resource development which leverages new and past geological data.
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