Tahera Diamond considers consolidating shares when revenue starts in 2006
Maria Babbage
Canadian Press
Tuesday, June 07, 2005
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TORONTO (CP) - Tahera Diamond Corp. is looking at consolidating its shares "before too long" as the mining firm tries to find a place among the gem giants in Canada's emerging diamond industry.
Consolidating the stock could help distinguish Tahera from other exploration companies and open the door to bigger institutional investors. But Tahera said Tuesday it will wait until it can piggyback a reverse stock split on a "momentous" announcement.
That would likely come once it begins to generate revenue from its Jericho diamond project in Nunavut, which Tahera expects will start commercial production in the first quarter of 2006.
"I think once a company gets to a production level, where it's generating earnings, to calculate earnings per share that delivers a number that you can actually see is a positive thing," CEO Peter Gillin told Tahera's annual meeting.
"When you've got 780 million shares outstanding, that's a lot of shares to divide earnings into."
The move would help Tahera set itself apart from other penny-stock exploration companies and attract bigger investors, said analyst David Davidson of Paradigm Capital Inc.
"If you're a producing diamond company with earnings and cash flow and growth opportunities, you want to put yourself in some sort of visible league that is separate from the explorers," he said.
With a relatively small mine, the other challenge Tahera will face is to keep production going.
"Jericho is a fairly small, discrete pipe, and it has a finite production profile," Davidson said.
"So what is going to be really imperative, I guess in the next few years, is for them to find other things that they can provide."
In addition to the Jericho project, about 400 kilometres northeast of Yellowknife, Tahera has other holdings in Nunavut and the Northwest Territories where diamond-bearing kimberlite has been found.
Tahera said Tuesday it is advancing other projects, including its Anuri site northwest of Jericho. It is also developing the Polar project with De Beers, also northwest of Jericho.
Tahera has an agreement with jeweller Tiffany & Co., which will buy and market diamonds produced at Jericho and is providing a $35-million loan to help in construction.
"There have not been many small diamond mines developed in the world," Davidson said.
"It's going to be interesting to see how a small diamond mine can actually deliver profitability."
De Beers' $490-million Snap Lake project is also set to open in 2006.
Canada now has two operating diamond mines, Diavik and Ekati, both in the Northwest Territories.
Steady demand for gems amid flat or declining supply is creating "the perfect storm" for companies like Tahera, CEO Gillin said.
Tahera stock (TSX:TAH) traded down 0.5 cent to 39.5 cents Tuesday, with a 52-week range between 61 cents and 30.5 cents on the Toronto Stock Exchange.
© The Canadian Press 2005
