African Diamonds - The Stock of 2004

African sparkle

Watch out for corporate activity at African Diamonds, the Dublin-based explorer that has accumulated potentially lucrative diamond mine licences in Botswana.

The company’s potential has attracted covetous glances from Firestone Diamonds, a UK-quoted mining company headed by the Irishman Philip Kenny. Firestone has three diamond mining licences in a neighbouring area of Botswana and, like African Diamonds, is involved in a joint venture deal with De Beers to bring the mines to production.

Firestone recently acquired 7.3% of African Diamonds and is believed to have requested a seat on the board chaired by John Teeling. African Diamonds has requested further information before responding, but it’s a sure fire bet that the request will be politely declined.

De Beers, which has a small stake in African Diamonds, will be keeping an eye on the outcome. It is preparing to spend $25m (€21m) drilling AK6, a potentially world-class diamond mine. It also has pre-emption rights on the stock held by directors.

Firestone is unlikely to go away and a hostile move on African Diamonds cannot be ruled out. Kenny might find an ally in Mark Scowcroft, a former African Diamonds director, who owns 7.8% of the company. Scowcroft and Leon Daniels originally brought the project to Teeling but have since fallen out with him. Teeling is battle hardened following years of corporate scraps. Expect him to fight tooth and nail to retain control of a business that might finally see him hit the exploration jackpot.