Our Strategy
The Namakwa Group is consolidating its position in the diamond industry, through its policy of vertical integration along the diamond value chain which drives margin and return-enhancing growth, supplemented by selective expansion through acquisitions and the consolidation of assets.
The consolidated Namakwa Group value chain
A core objective of Namakwa's strategy is to increase the volume and consistency of supply of diamonds to complement its longstanding diamond trading and beneficiation operations and to generate value through the selective acquisition of new operations. The Company is achieving this in three ways:
- by continuing to increase captive production from its own mines with its diverse portfolio of projects and has already made considerable investments in its development projects. Subject to satisfactory results, the Directors aim to continue to develop these assets and ultimately build full scale mining operations;
- by selectively acquiring mining operations which present profitable opportunities for the Company. Management are particularly focused on acquiring mining rights in proximity to the Company's existing properties;
- by supplementing the Company's captive production with tactical open market purchases of third party diamond production, informed by pricing intelligence yielded from the rough and polished sales and trading activities of the beneficiation management team. The Directors foresee that open market purchases of rough diamonds will seek to exploit pricing arbitrage opportunities for particular value categories of diamonds as well as to optimise realised pricing for Namakwa's own production. Critically, third party purchases are specifically designed to supplement the particular production profile of Namakwa's own run of mine production. This allows Namakwa to aggregate larger parcels of similar quality diamonds to provide for greater pricing efficiency, by enabling better matching parcels to be developed to satisfy particular customer requirements and preferences.
This strategy benefits the Company by:
(a) increasing the consistency of supply of rough diamonds, as Namakwa can deliver a consistent quantity of rough and polished diamonds of a consistent size and quality to its customers, capturing a premium from customers, relative to mining operations which sell their run of mine production "at the gate of the mine";
(b) leveraging beneficiation skills, as by combining the production from its own mines with diamonds sourced from third party producers through its trading operation, Namakwa is able to procure larger parcels of similar diamonds, and therefore Namakwa has been able to sell such parcels at a premium, creating significant margin enhancement for the business; and
(c) capturing a larger share of the value chain, as the integration of its mining, trading and beneficiation operations allows Namakwa to capture a significant share of the value chain and to maximise the realised value of its diamonds. Namakwa is one of the few industry players that has the skills and experience to mine its own diamonds, as well as the beneficiation of such diamond production. Namakwa has a reputation in the industry for specialising in the procurement and supply of high quality, large diamonds. This reputation, together with the skills and experience of the management team mean that Namakwa is well placed to determine, for each rough diamond produced or purchased, how to realise maximum value.
