Five Star’s low production costs and impressive results are a recipe for success
Five Star Diamonds (TSX-V: STAR) is a Canadian-based mining company that operates in Brazil. The company’s strategy is to establish itself as the primary producer of gem quality Brazilian diamonds, with a focus on acquiring and developing advanced stage diamond projects in Brazil with a pathway to early production. They own 23 projects across 49 licenses and applications covering an area of 130,237 hectares.
Natasha Frakes: Hi. I’m Natasha Frakes, and you’re watching Market One Minute. Joining us is Jeremy South from Five Star Diamonds. Jeremy, thank you so much for being here.
Jeremy South: Thanks for having me.
Natasha Frakes: Tell us about the company.
Jeremy South: Five Star Diamonds is an interesting diamond explorer based in Brazil. We have acquired a number of projects, 23 projects over 49 licenses in Brazil. We aim to be the number one producer of gem quality diamonds in Brazil, and we aim to be the dominant producer of diamonds in Brazil.
Natasha Frakes: What are some of the successes you’ve had so far with your management team?
Jeremy South: The management team has had a great success story in Brazil. Recently, Avanco, a large Brazilian copper company was acquired by OZ Minerals. The founders of our company, Matt Wood and Luis Azevedo, were both the founders of Avanco. It was acquired for about $440 million at 120% premium to the market price and a great success for shareholders.
Natasha Frakes: Can you tell us about the Catalão project?
Jeremy South: Catalão is an interesting project. Catalão is actually a city in Brazil. It’s about 500 kilometers from Rio de Janeiro. Our mine is about 10 miles out of the city of Catalão, about 100,000 people. Catalão is a near-term production project, we look to be in production about this time next year. We’re spending now some dollars to get Catalão into production. We have the plant assembled, and it’s a very low-cost, low-CAPEX, low-OPEX project, we’re very excited to move forward with that. That’s our focus right now and very excited about it.
Natasha Frakes: What kind of quality of diamonds are coming out of Catalão and out of Brazil?
Jeremy South: Well, Brazilian diamonds, Brazil’s an interesting country. Brazil has been the largest diamond country in the world for many years. In fact, until South Africa came along with its kimberlite discovery, it was the largest producer. Diamonds in Brazil are of a much higher quality than most other places around the world. So not only are they low cost, but they’re also high quality. In 2016, diamonds from Brazil were selling for more than two times the similar product in Canada.
Natasha Frakes: Can you tell us about the new Maravilha discovery?
Jeremy South: So Maravilha is another interesting project for us. Maravilha is a project about an hour from the city of Belo Horizonte, a major mining city in Brazil of about five million people. Again, very accessible, low-cost project. We’re drilling there right now, looking to prove out a resource in the next six to 12 months, and in fact, what we’ve done is we’ve agreed with one of the top drilling companies in South America to provide us with their drilling services in exchange for stocks or a strong validation of our company. Maravilha, I was actually there very recently. Very exciting project. It sits on a piece of farmland just outside the town of Pequi. We’ve got very good early samples from Maravilha, and we’re very excited to be drilling there shortly.
Natasha Frakes: Are there any other projects in the Five Star portfolio?
Jeremy South: Yeah, we have 23 projects across 49 licenses. So it’s a big land package, but it’s important for us to be focused. We’re looking at Catalão and Maravilha right now. We do have about five other projects that are looking very prospective. We have a number of projects that we know have diamond kimberlite, so kimberlite’s that are diamondiferous, and that is very exciting.
Natasha Frakes: Can you tell us about the drilling programs that are set to begin?
Jeremy South: Yeah, so the drilling programs, we announced recently that one of the South American’s leading drilling companies has agreed to drill in exchange for shares, a great validation of our projects, at both Catalão and Maravilha. At Catalão, we’re looking to extend some drilling on the project there to better define how we’ll mine and the same for Maravilha, where most of the drilling will occur. We’re looking to really define the resource in a more definitive fashion and that’s happening in May.
Natasha Frakes: A lot to look forward to. Thank you so much for being here.
Jeremy South: Thank you for having me.