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

Sparkling diamonds soaring in popularity.

The Sunday Times - 22 May 2005

http://www.timesonline.co.uk/article/0,,2095-1622100,00.html


A HUGE increase in global demand for diamonds will force prices up by a third in the next few years, it is predicted. Either that or the market will face a $3 billion (1.6 billion) supply shortage by 2012, writes Dan Box.

James Picton, an analyst at WH Ireland, will warn an international diamond conference tomorrow at the London stockbroker Hargrave Hale that demand will rise by at least 50% by 2012, to $14 billion (7.7 billion).

This is equal to the combined annual production of Russia and Botswana, the worlds biggest diamond producers. Meanwhile, reserves in Australia and Canada are declining.

As a result, prices for rough diamonds, from which gems are cut, will go up by at least 30%. Although much of this will be absorbed by companies that act as middlemen in the diamond trade, the price of gemstones will inevitably rise.

You have supply going up by 1% a year on average, and demand going up by at least 5% a year, he said. But that was a conservative estimate and the real increase in demand could be much higher.

There are going to be other mines coming on stream, but nothing like another $3 billion worth. Thats almost another De Beers. Its just not going to happen, he said.

Demand was being driven by both the industrial and commercial markets, while there had been a massive new increase in demand for gemstones in China and India, Picton said.

Looks like you talked it up 50p Andy!! That's progress!

phil,

50p?

What share are you talking about?

Whoops! Must be wishful thinking. 0.50p I mean of course!

:-)

Anyway, keep writing nice things and we may reach 40p in time for Xmas

What date is the EGM?

Any views on Sunrise Diamonds spun off from Tertiary minerals and soon to apply for an AIM listing?

EGM is 11.30am today

Philfolio,
Cheers
Ald.

EPD is ticking slowly back up towards 40p, and still the official minestart RNS is awaited.

I feel we will have it later this month, but with This weak market it may well be absorbed.

What a shame a good opportunity was lost, ahd they announced two months ago I genuinely think we would have had up to a 50% increase, and now, probably no more than 10% IMO.

Who rattled their cage today, I wonder. Anyone got any news - no RNS, but an interesting rise of 2p which was sustained through closing, in spite of a couple of sells of 50,000 shares each at about 15.30.

Has someone put a spade through a kimberlite pipe, or something? Any views, Andy?

sd

stockdog,

Well we are due a minestart RNS IMO, and there has been a board meeting in the Uk this week, so maybe people are anticipating some positive news in the near future?

EPD was selected as an undervalued stock by a new mining report according to posters on ADVFN, so that would have helped too I would have thought.

Approaching the 50DMA, which I would like to see us break.

EPD has been recommended by James Picton in his latest report. Not only that but there are hints that the recent board meeting decided something which will improve the share price dramatically. There have been rumours about what this information might be. That a well known major has been making approaches to EPD with a view to either buying the company outright, or at least buying a stake in the company. We have to consider that if there is an veracity in these rumours, then EPD holders are going to benefit.

Guesswork

Baughfell - 25 Jun'05 - 13:24 - 96 of 96
Guesswork

Jealousy!

I'd be surprised if we were a takeover target for a major unless they know
more about Finland than we do.
Lesotho is a great start for EPD but its small fry for a major imo...

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.