Yellowknife diamond cutting scam. [CBC.ca] It’s always been a dream of NWT politicians to see a home grown diamond cutting and polishing business set up in Yellowknife. Somebody didn’t do their homework however; just visit Surat in India to see what a swell, high margin industry it really is. No matter – they twisted arms with BHP and Diavik to provide rough and threw some money at the idea, only to watch several operations come and go. Three years ago, the latest arrival showed up – Deepak International run by Deepak Kumar – and GNWT was all over him like butter on bread. Bolstered with government support, Deepak hornswoggled Callidus Capital – a Bay St. financing outfit – into loaning them $15M. Security for the loan? Several mysterious sea cans from Sahajanand Laser Technology Ltd. of Gujarat, India …
Callidus says it provided Kumar with the financing on the understanding that the shipping containers held $18 million in automated diamond cutting and polishing machines that Deepak was going to use to run its operation.
The lender wanted to inspect the machines, but there was a snag. It says Kumar said the shipping containers could not be opened without a representative of Sahajanand Laser Technology present to supervise or the warranty for the equipment would be void. Kumar said an inspection would only be possible after the diamond factories were renovated, which would happen as soon as he got the financing.
Okay – no biggie. Callidus decided to advance Deepak $3M. Deepak failed to renovate the diamond plants or pay municipal taxes and insurance. Callidus hired a security firm to guard the valuable sea cans. Callidus finally got Deepak to get a rep from Sahajanand to fly over and let them see the goods, but again there was a problem:
Kumar told them the Sahajanand Laser Technology representative’s flight was cancelled at the last minute because of riots in India.
Finally, in September, Callidus broke into the containers and discovered
…what Callidus describes as “a miscellaneous assortment of broken or obsolete hardware components and various other equipment in decrepit condition…In other words, the containers were full of junk.”
But in Yellowknife, hope springs eternal:
The territorial government says it’s continuing to work with Deepak International and “remains hopeful that the factories will open soon.”
Strike Diamonds makes the best of it. [Junior Mining Network] After receiving news that their geophysicists could only find a bunch of “rank 3” mag anomalies on their Saskatchewan diamond property, they haven’t given up. They’ve pressed them all, complete with geophysical boiler plate and colour maps. If you’re having trouble sleeping, save this for bed time.
Dominion Diamonds Q3 results are out. [Junior Mining Network] …. and they’re pretty bad. Sales down 35% Y0Y, operating profit down 89% and free cash flow down 82%. They’re still going to issue a dividend which hopefully will prevent a total rout. Must be tense in the boardroom these days.
Millrock closes a $1.3M private placement. [Millrock] They must really be feeling the pain: they face the double whammy of an appreciating US buck combined with the high cost of Alaska exploration. Their projects in Mexico doubtless sound nice this time of year.