European Diamonds Plc (EPD: AIM) is a diamond exploration and development company with advanced projects in Finland and Lesotho.

In Finland, the company has explored a large part of the prospective Karelian Craton and identifed a number of kimberlite indicator trains. Kimberlites have been discovered in one of these areas and exploration continues in the others. Evaluation work on the promising Lahtojoki Pipe has begun with a 5,000 tonne bulk sample due to be collected before Easter 2005.

In Lesotho, European Diamonds holds a 25 year mining license to develop the Liqhobong diamondiferous kimberlites. The Liqhobong Project provides for the commencement of mining at 290,000 carats per annum from the end of 2004 from the Satellite Pipe and the evaluation of the adjacent large Main Pipe and start of a Feasibility Study in 2005.

European Diamonds will become a mid-tier diamond producer in 2005 and intends to grow through acquisition and in-house exploration. The experienced management and technical team of European Diamonds have a strong track record of discovery and a history of wealth creation for shareholders.



The Kingdom of Lesotho gained its independence from the UK in 1966 and is the only constitutional monarchy on the African continent. The country is a small, densely populated mountainous country situated in the east of the Republic of South Africa, which entirely encircles the country.

Diamonds in Lesotho
The country has long been known as a source of large, high quality diamonds, mostly from alluvial deposits. To date most of the country's diamond production has been derived from the Letseng-la-Terai deposit which was mined by De Beers between 1977-1981. Letseng has recently returned into production and is again producing high quality gems albeit on a modest scale. Apart from Letseng, the only other known significantly mineralised kimberlites in the country are the Liqhobong suite and the nearby lower grade Kao pipe all located about 40 kilometres west of Letseng also high in the Maluti mountains.





Finland project.

Project Highlights
Work undertaken by European Diamonds and the Geological Survey of Finland has proven that the Achaean-aged Karelian Craton is highly prospective for hard-rock diamond deposits.
European Diamonds currently have seven regional exploration projects in eastern and central Finland in addition to the Lathojoki project currently under evaluation.
The Company has recovered high quality kimberlite indicator minerals from all of the exploration projects and will continue with the field exploration of these areas in 2005.
Work on the Lentiira Project in central eastern Finland has identified a large kimberlite complex covering an area of some 160 square kilometres. Although the Company has recovered high quality indicator minerals and diamonds from the project area, to date only linear kimberlite dykes have been discovered.
None of the sampled dykes has proved to be the source of the highest quality indicators emanating from the highly prospective 'Railway' indicator train. Further assessment of this project will continue throughout 2005.





Corporate website : http://www.europeandiamondsplc.com/s/Home.asp

Shareholder info : http://www.europeandiamondsplc.com/s/InformationRequest.asp

stockdog,

I'll be watching the price and volume closely here in the morning, hoping to see both increase, and break the 50DMA.

Higher volume may indicate some news is in the offing.

Andy

Seen the RNS today - they started mining. It's been so long I can't remember who we were betting on to start first, NML or EPD. The report sounds like they may be quite organised, promising 420,000 tonnes per annum at a grade of 0.69 carats per tonne priced at $42 per carat plus 30% price increase = $15,823,080 per annum revenues - about 18.5p per share. What's it cost to get them out of the ground and amortise the 8m capital cost?

Anyway SP is up 3p over last couple of days in response, so maybe there's life in the old fella yet. Wait till we hit the main pipe!

stockdog -

My calculations show net post-everything earnings from Satellite of approx 2.5 million p.a. attributable to EPD.

That's based on the figures given by the company, adjusted for an additional 30% on carat value, and slightly increased costs. The original cost figures (payable in Rand) were calculated with a Rand/$ rate of 9 - these days it's more like 7.

Hard to take Satellite in isolation though, as its life is so short. I have done a 13 year NPV for the Lesotho projects combined - 5 years of Satellite overlapping with 10 years of Main. At 8% (as per this morning's Numis note), assuming that Main is 16.2 cpht, carat value is +30%, and costs and capex are adjusted for a Rand/$ rate of 7, the NPV is approx 25 million after allowing for a 9 year repayment of $80 million (43 million - 8 years x 5 mill + 1 year x 3 mill)) Main capex.

If Main turns out to be higher grade, as is currently thought, then the figures are very much better. With all the same factors as above, plus Main=25 cpht, the NPV is 70 million.

If Main capex is paid back faster, then both NPVs will reduce, as the earnings in the early years, which carry the least discount, will also reduce.

I believe that these figures are slightly higher than those produced by Anomalous - that may be because I have treated Lesotho as a "whole" project rather than trying to add together two separate NPVs.

Wendy - thanks for this, very interesting. I agree the Lesotho project should be treated as a whole because management and much infrastructure, processing and tailings are common capex etc.

At todays market cap of 19.41 million, your 2.5m pa earnings gives a PE of 7.8 - pretty humble IMHO. At a PE of nearer 18 for a company with the Main Pipe still in prospect, the SP might be about double today's price. News of first diamonds and first sales will be big positives to look forward to.

sd

Wendy,

Thanks for updating your figures, today's news, after FDI yesterday, may stir the junior diamond sector a bit from it's recent slumber.



Stockdog,

Yes I remember those days!

Good news indeed, and (hopefully) a discovery or two in Finland to ice the cake.

The general consensus puts a value on EPD around 60p, some say more, but 60p for now is the most we can expect IMO.

Lets all stick to this thread, it will make things less confusing.

aldwickk,

yes I agree, multiple threads can cause some posts to be missed.

Quiet day again so far, only 11,000 shares traded.

Roll on September!

Nice write up on www.minesite.com.


Minews Story
Date: July 14, 2005

European Diamonds Has Started Production At Satellite Pipe Mine In Lesotho

The market can act in a very perverse way on many occasions. The week before last European Diamonds announced that commissioning of the diamond recovery plant at the company's Liqhobong property in Lesotho was complete and initial production of diamonds had commenced. The shares dropped 10 per cent to 42p on the week. Last week Last week our London Correspondent reported in That Was The Week That Was that the shares had fallen back by 14 per cent to 37.5p. Agreed the start of diamond production came as no surprise, but it is worth remembering that European Diamonds is only capitalised at 42 million. Kimberlite diamond production tends to merit a high rating.

As John Meyer, analyst at Numis Securities points out, the implied valuation for the Diavik diamond mine in Canada is simple to deduce from the $1.7billion market capitalisation of Aber Resources which holds 40 per cent of the deposit. This implies a $4.25billion valuation for the Diavik diamond mine. Compare it with the Ekati diamond mine which lies relatively near-by in Canada. BHP Billiton went on to acquire 29 per cent of the Ekati diamond pipe for $446million effectively valuing the project at $1.54billion at that time. OK, production at these two mines is a whole lot higher than at Liqhobong, but the question that the market should be pondering is whether the differential between $4.25 billion and 42 million is sensible.

The first materials being processed are tailings from previous bulk sampling and surface mining activities. Production will gradually increase over the next four months to around 35,000 tonnes of ore per month, and by the end of the third month the first batch of primary kimberlite will enter the processing stream. This primary material is expected to contain significantly higher diamond grades and values than the surface material and tails. As Roy Spencer, the chief executive, points out European Diamonds is targeting a production rate of 24,000 carats per month by the end of this year. This makes for a total annual production of just under 300,000 carats compared with the 6 to 7 million carats produced at Diavik, which helps put things in perspective. European Diamonds has yet to sell any diamonds from run-of-mine production, but the presence of fancy yellow stones could have an impact on value.

The other plus for investors interested in the Liqhobong property is that the 1.6 hectare diamondiferous Satellite pipe was brought into production 20 per cent below the original US$10 million budget and in only just over 9 months. And this was achieved despite paying for increased engineering capacity at the crushing section of the processing plant and for a larger tailings dam for waste disposal. It is an open pit operation which will be mined at a rate of 420,000 tonnes/year so has an initial life of 5 years. This life may well be extended, but well before that time production will also have started from the Main pipe which is considerably larger. It is 9.5 hectares in area and Roy Spencer thinks the economics are very promising. He expects to use existing infrastructure to accelerate production from it once economic evaluation is complete.

In recognition of this achievement the Welsh Wizard is stepping down as chairman to bog standard director and in his place comes Buddy Doyle, former head of diamond exploration for Rio Tinto in Canada. Buddy led the team which was helping Eira Thomas when she discovered the A-154 pipe which became the Diavik mine. The fact that he is taking over at the junior says something for what Tony Williams has achieved over the past 4.5 years and it should not be forgotten that European Diamonds has also had success with its exploration on the prospective Karelian Craton in Finland. Kimberlites have been discovered and evaluation work on the promising Lahtojoki pipe has begun with a 5,000 tonne bulk sample now underway.

European Diamonds PLC
14 July 2005


New Kimberlite Discovery in Finland
Bulk Sampling Update - Lahtojoki, Finland


New Kimberlite Discovery in Finland

The management of European Diamonds plc is pleased to announce the
discovery of a new kimberlite body in its Area 3 exploration zone in central
Finland. The discovery comes as a result of the drilling of a geophysical
anomaly located at the head of a 30 kilometre long glacial train of indicator
minerals which has been traced by the company's field team over the last 18
months.

Roy Spencer, the company's CEO, has noted that 'this new kimberlite
appears to be a pipe but we cannot yet say how big it is. The chemistry of the
minerals we have been following is excellent but at this stage we cannot
speculate on whether the kimberlite will be diamondiferous or not. Once the
current drilling is completed, we will send material to laboratories in both
Canada and Australia for micro-diamond analysis and chemical work. We expect
these results to be available by the end of August.

The discovery is confirmation of the prospectivity of the Finnish
part of the Karelian craton and the widespread occurrence of kimberlites across
the region.'
Bulk Sampling Update - Lahtojoki, Finland

The management of EPD is pleased to issue the following update on
the company's bulk sampling activities at the Lahtojoki site in Finland.

Roy Spencer, the Company's CEO, reports 'the first part of the
5,000 tonne bulk sample planned for the pipe has been completed. Approximately
2,500 tonnes from the central and western parts of the plus 2ha the pipe have
been recovered and are now under cover awaiting the final decision as to the
most appropriate method of processing. The company is presently negotiating a
processing agreement with the Geological Survey of Finland who will produce a 20
tonne concentrate for shipment to Canada for final analysis and diamond
recovery.

Results of the first 2,500 tonne Lahtojoki analysis are expected
early in 2006 and the remainder of the 5,000 tonne sample will be collected
during late winter if results from the earlier analysis justifies doing so.

For further information contact:

James Cable, Finance Director, European Diamonds plc: +44 20 7529 7500
John Harrison, Numis Securities Ltd: +44 20 7776 1500
Allan Piper, First City Financial Public Relations: +44 20 7436 7486
+44 7736 064 982






This information is provided by RNS
The company news service from the London Stock Exchange

Not much of amove up given the two recent positive RNS's, not to mention minsite's write up. Lot of sellers getting out at 40/41p - need them to clear before SP moves higher.

sd

not that these things are the be-all and end-all but nice to see:

Numis says sell Acambis (178p price target) and has upgraded Admiral to add from hold (raising the target price to 440p from 390p). The broker says buy Alizyme (140p price target) and hold Amlin (180p price target). Numis says buy Biofuels (180p price target) and says reduce Bovis Homes (620p price target). The broker says add Chaucer Holdings (LSE: CHU.L - news) and buy European Diamonds (LSE: EPD.L - news) (77p price target) Numis says add Oilexco (165p price target) and add Wilmington (190p price target). The broker has upgraded Neteller (LSE: NLR.L - news) to buy from hold (raising the target price to 1000p from 700p).

Thanks, ched

I see BFC ignored this note and fell back today. Happy to have sold Bovis last week for a modest profit. Roll on EPD.

European Diamonds PLC
19 July 2005


EUROPEAN DIAMONDS PLC

ANNOUNCEMENT

19 July 2005

Disclosure of share interest

Date of notification: 18 July 2005

Shareholder: investment funds under the management of DKR Saturn Management L.P.

Transaction: acquisition (by way of allotment) of 2,222,222 ordinary 5p shares

Resulting share interest: aggregate holding 6,191,722 ordinary 5p shares
representing approximately 12.6% of the issued share capital.

For further information please contact:

Graham A Potts - Company Secretary
European Diamonds PLC
22 Grosvenor Square
London, W1K 6LF
Tel: +44 (0) 20 7529 7502
Fax: +44 (0) 20 7491 2244
e-mail:
enquiries@europeandiamondsplc.com
website:
www.europeandiamondsplc.com

Slightly unsettling RNS - 2.1m out of 5m fund-raising not to be completed and delay in first diamond sales from September to November 2005.

SP reacting accordingly.

sd

Andy,
Whats your view on this, has share price fall been over done?

aldwick,

This was one VERY disappointing announcement, IMHO, and It's hard to find any positives.

They have lost the further funds due for the placing, postponed Finland, experienced difficulties in constructing the taillings wall, and as a result will not sell any diamonds until November, if all goes well!

I think that's enough shocks for one RNS!

The ONLY positive is the fatc that they seem to be finding some decent stones amongst the tialings, which may lead to higher revenue than expected once they commence sales, but they will probably have to raise finance to arrive in November, so the Sp may have a further knock yet.

To be honest, I think the Sp is about righ given the current situation, and may well indeed fall further before bottoming, it's hard to predict.

I hope any holders here have not lost significant sums, and l hope that EPD report better news later this year.

Between EPD and NML, I can only ponder on the words of the old song that Diamonds Are A Girl's Best Friend and remember that I am NOT a girl! Marilyn certainly did OK with her couple of rocks (bigger than the average find)!

sd

I agree that the timing of the RNS could have been better, it would have given me a chance to sell if it had come out early morning.
The weeks worst performer was European Diamonds, which picked Friday lunch time to announce that it has serious cashflow problems as a result of a slow production build-up at its Liqhobong diamond mine in Lesotho, combined with the partial failure of a private placement of stock announced back in April. In spite of the timing of the announcement, the stock was immediately marked down and by the end of the afternoon was down by 33 per cent at 23p The release did point out that the placement had been done directly so broker and NOMAD Numis is not directly at fault, and the fact that the most recent company releases no longer list a Numis contact may be a pointer to the current state of the relationship. The bottom line is that European Diamonds is in discussions with its advisers concerning alternative potential sources of finance to meet the company's short-term working capital requirements. So, reading between the lines, shareholders either cough up or write it off.

A high volume of trades today, both buys and sells......