The European Islamic Investment Bank (EIIB) has boosted its stake in South African diamond-miner DiamondCorp from 9,37% to 26,7%.
The EIIB has become DiamondCorp’s largest shareholder, with the acquisition of 6,72-million shares from a number of institutions and shareholders, the JSE- and Aim-listed company said on Wednesday.
DiamondCorp CEO Paul Loudon said EIIB’s investment demonstrated the bank’s confidence in the underlying fundamentals of the diamond market, including the long-term supply shortage, which should lead to a strengthening in diamond prices.
Diamond prices have come under pressure as the credit crisis is taking its toll on the demand for stones. On Wednesday, fellow South African diamond-miner Trans Hex warned that diamond sales were likely to face a difficult period until confidence returned.
DiamondCorp is developing the Lace mine near Kroonstad, in South Africa’s Free State province. The project contains an estimated 14-million carats of diamonds in tailings and kimberlite.
“DiamondCorp’s plan to grow as a midtier diamond producer in the years ahead has the potential to benefit from EIIB’s access to capital and backing by very large Middle Eastern investors,” Loudon added.
Robin Henshall, the head of private equity and corporate advisory division at EIIB, commented that the bank had confidence in the continuing development of the Lace project, which was more than a year ahead of schedule.
Underground mining would begin by year-end.
