A diamond in the rough

DIAMOND Rose NL has issued a $5 million prospectus for one of its subsidiary companies, Kimberley Rose NL, which company chairwoman Pnina Feldman hopes will help propel the business from explorer to miner status.

Mrs Feldman has put together three exploration projects and two exploration licence applications. The subsidiary company has entered into a joint venture with AGD, which holds an additional 17 exploration licence applications, two of which have been joint ventured with De Beers Australia Exploration Limited.

The projects cover the Barnett Range and Woods River tenements, which lie in the Central Kimberley region.

The approximately 1,600 shareholders in Diamond Rose, of which Mrs Feldman owns about 50 per cent, have first cut at the new float. Under the priority offer, Diamond Rose shareholders holding at least $500 in shares will be guaranteed an allocation of 10,000 Kimberley Rose shares at the subscription price of 20 cents per share.

They also will be issued with one free attaching option for every two shares held.

Mrs Feldman will be joined by her son Shalom Feldman, who has taken on the position of managing director of Kimberley Rose. He has been general manager of diamond and gemstone explorer Diamond Rose since 1999.

John Ceplecha will take on the role of the director of exploration.

The newly listed company hopes to invest $3.12 million in exploration work over the next three years, with just $550,000 spent in the first year, growing to a $1.32 million investment in the third year.

Based on the valuation of equivalent projects, Kimberley Rose has put the total value of its interests at between $6.1 million and $15.54 million. Its parent company and majority shareholder, Diamond Rose, last quarter completed a $4 million capital raising that was underwritten by PrimeGlobal LLC.

And in early January, after a two week trading halt, the company announced it had agreed to acquire the Guanaco gold mine in Chile through its subsidiary Golden Rose International Limited.

The purchase agreement with Kinross Gold Corporation is subject to shareholder approval at the extraordinary meeting scheduled for March 14. The purchase includes the gold mine, associated plant and equipment and infrastructure.

The current gold resource at the mine is in excess of 1.5 million ounces.

Diamond Rose shares are currently trading at around six cents, but Mrs Feldman believes that, based on the reserves, the price should be 10 times that as the company begins moving into production to maintain cash flows.

Production is initially planned to be between 50,000 and 100,000 ounces for the first year at an average cost of below $US200 an ounce.

Diamond Rose was called up by the Australian Securities and Investment Commission late last year because of concerns about its ongoing financial viability.

Metals Quest falters

KIMBERLEY Rose would do well to learn from another IPO hopeful, Perth-based company Metals Quest Australia. While seeking to raise $3.5 million through the sale of 17.5 million 20-cent shares, Metals Quest Australia had its three key tenements snapped from under it after they were forfeited last week.

Kalgoorlie real estate agent Peter Gianni reportedly secured the tenements within hours of them being made available. The Australian Securities and Investment Commission responded by placing an interim stop order on the prospectus, “due to concerns that potential investors may not be fully informed about circumstances that may be materially adverse to the company”.

It has been a bad run for the Metals Quest Australia, which issued the prospectus in May last year. Three of the five tenements at the Silver Swan Ultramafics Project near the Black Swan and Silver Swan nickel mines are now no longer in the control of the company.

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