Connor Davidson
Deep Value, contrarian, long-term horizon, long/short equity

Gem Diamonds: The Cheapest Way To Play Diamond Mining

Introduction

Let's be honest; mining is a pretty terrible business most of the time: it's massively capital intensive, often comes with hideous political risks from unstable governments, producers are highly leveraged and its profitability is determined by highly volatile commodity prices. In general, mining shares are best avoided, or at least approached with extreme caution backed up by extensive due diligence.

Despite this, I believe that diamond mining is actually attractive and the current depressed valuations across the mining sector, coupled with short-term diamond industry specific issues make now an attractive entry point into the sector.

In my opinion, Gem Diamonds (OTC:GMDMF) stands out as a high-quality company whose potential is misunderstood or, at least under-appreciated, by the...

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