Stockchase Opinions

Robert McWhirter Star Diamond Corporation DIAM-T DON'T BUY Apr 29, 2009

Currently losing money and in development stage for mine. A year from now you will be closer to finding out if you can bring the mine into production.
$0.440

Stock price when the opinion was issued

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COMMENT
Moving averages are at $.70 and stock is at $1.50, well ahead of the momentum. Probably has higher potential. If you own, just in case of a pullback, consider taking profits on half the position and buying it back on a pullback. Relative Strength Index suggests it is well into overbought territory and that herd mentality is starting to turn. Pull back could be at around $1.10.
BUY
Diamonds. This is a good entry point. Have 2 projects, the Orion and Star project in Saskatchewan. Still developing the mine, which will take billions of dollars so there, is financing risks.
SELL
(Market Call Minute.) Diamonds in Saskatchewan. Not a big fan of diamonds.
COMMENT
Doesn't know this company well but the management seems to know how to make the stock move. Tremendous play in Northern Ontario.
DON'T BUY
Diamond project that will need hundreds of millions of dollars of CapX to bring it to bear. Doesn't see banks really ready to land on these types of projects any time soon. Good project.
DON'T BUY
He never buys into IPOs. Only has one miner in his portfolio.
COMMENT

Spent a lot of money on the Fort a la Corne star kimberlites, a very low grade system in Saskatchewan. Their base case is up at the higher end. Even though it is a low grade system, it appears to have potential for larger, high quality diamonds. Although it will require a lot of CapX to develop, one of the new trends in the diamond junior sector is to revisit the kimberlites that are not off scale, and see if they have Type 2A diamonds. When somebody serious start to look at a lower grade system and revisiting it, it is time to pay attention.

COMMENT

This has a diamond project in Saskatchewan and have been working on it for more than a decade. It was a pretty decent company and had good potential for future development, but the diamond industry is extremely difficult. Cash needs to be raised and you have to perform up to expectations. A pretty high-risk play.

BUY

He bought this in December and it's been on a tear, because Rio Tinto exercised three options on their property (https://thestarphoenix.com/business/mining/star-diamond-corp-to-start-trenching-operations-at-fort-a-la-corne-sites). DIAM has been grinding through this project for 20 years; it's low-grade, but a very large diamond deposit. There's been a dispute with Rio Tinto (https://thestarphoenix.com/news/local-news/star-diamond-says-rio-tinto-hasnt-complied-with-agreement-on-project-near-prince-albert). The details aren't public, but it's probably over spending commitments. Rio exercised that option at least a year ahead of expectations. He believes Fort a la Corne will be a real project and the Star Diamond project makes sense.

DON'T BUY

They have option agreements with major partner Rio Tinto, but these have been under dispute for the past year. It's worth tens of millions of dollars. The stock has fallen because of this battle; investors have lost patience. He owned this before the legal battle and didn't want to wait for it to be sorted out.