Issue link: http://resourceworld.uberflip.com/i/229125
All in all, we like the prospects of copper and would once again get our initial exposure by writing puts on companies like BHP Billiton or Freeport McMoRan Copper & Gold [FCX-NYSE]. ONE SECTOR SPARKLES - DIAMONDS One of the bright lights in the last 12 months has been select companies in the Canadian diamond sector. We put together a portfolio of diamond companies for certain investors. The main criterion for selection was that the company had found a commercial or potentially commercial diamond deposit. In other words, they have found a significant number of large diamonds. Our analysis points to an impending shortage of diamond production over the next decade in the face of an average annual 3% increase in demand. This diamond-related portfolio was hit hard, like all resource stocks, after the spring of 2011. However, many of the individual catalysts we have been expecting have come to pass and this group of diamond-focused companies has significantly outperformed the Venture Exchange over the last 12 months. The 12 month returns, as of November 8, 2013, of a couple of diamond companies we have invested in include: Mountain Province Diamonds +49% and Lucara Diamonds +126%. The diamond industry is in the midst of profound changes. Many of the traditional big players have exited stage left. The Oppenheimers, who controlled De Beers for most of the last century, sold their stake to Anglo American (a company founded by Sir Ernest Oppenheimer). BHP Billiton quit the diamond sector selling their stakes in development play Peregrine Diamonds and their share of Canada's original diamond discovery at the Ekati Mine in the NWT. Rio Tinto played with the idea of divesting their diamond holdings but so far they have stayed in the game. In the meantime, Canada's Harry Winston (formerly Aber Diamonds) sold their stake in their eponymous jeweller Harry Winston to Swatch. This necessitated a change of name to Dominion Diamond (DDC-TSX, NYSE] which then bought BHP's 80% stake in Ekati to go along with their 40% share of the nearby Diavik Mine. DDC is DECEMBER/JANUARY 2014 RW December 2013.indd 17 www.resourceworld.com 17 12/11/2013 6:11 PM