I am not intimately familiar with this stock but interested in others thoughts.
Has this sell off been overdone? I do know that the med/long term outlook for diamonds remains very strong according to some knowledgeable players in the industry. The firm has no debt to speak of. The capital requirement to bring one mine at a time into production does not appear to be all that great.
Short term, diamond prices have remained strong through to May. Tiffanys or other suppliers need the supply for the demand expansion they are experiencing in Asia. Sooner or later if the low prices stop supply they will increase the prices.
The announcement almost reads like a bargaining ploy to Tiffanys and perhaps is not as mindful of shareholder questions as it could have been.
The options to bring extra production on line in a continued strong price environment are substantial and do not seem priced in now.
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