Small Talk: Dwyka and De Beers link up to find diamonds in the dust

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The Independent Online

A little bird tells Small Talk that Dwyka Diamonds will this week announce the start of production at its joint venture with De Beers.

The two companies have built a plant to reprocess tailings from De Beers' Kimberly site. The diamond industry giant stopped normal production at Kimberly last year but is now working with Dwyka to extract diamonds from the area which has a hundred years worth of tailings.

Thanks to modern technology and engineering, tailings, which 10 years ago were seen as waste and not worth recovering, now have a very real value.

The Dwyka/De Beers plant is highly successful at separating a range of diamond sizes from what to the untrained eye looks like mere dust.

The joint venture is Dwyka's fifth revenue producing asset.

US firms flock to AIM

There is little doubt that AIM has become the number one place for small US companies in search of a stock market listing.

There are now 29 US companies quoted on London's junior market.

Of those, 19 were admitted in 2005, raising well over £1bn of new money.

In the meantime, there has been a marked decline in the number of small companies listing on American exchanges.

Two key factors seem to be driving these trends. First, the Sarbanes-Oxley reforms rushed through Congress in 2002 after the Enron and WorldCom accounting scandals have simply made the process of getting and holding on to a New York quote excessively fraught with regulation and cost. The New York Stock Exchange said as much just last week.

Second, the Nasdaq Stock Market has imposed minimum market capitalisation and share prices on companies. This has left US firms valued at under £200m with nowhere to go.

On Thursday, two US lawmakers said they were drafting legislation to roll back portions of the Sarbanes-Oxley reforms.

If they are successful that might stem the tide of small American small companies abandoning Wall Street.

Meanwhile, AIM looks set to continue to cash in on its newfound popularity.

SLDC sparkles

There are bullish signals coming from the Sierra Leone Diamond Company (SLDC).

At the end of last week its founder, the Romanian businessman Frank Timis, and a number of fellow directors raised their shareholdings in the explorer by exercising warrants and by acquiring new shares as part of a fund raising.

The net effect of the deal saw SLDC get an extra $5m (£2.75m) to fund its development programme.

The company aims to soon be in a position where it is extracting $15m-worth of diamonds from the West African country every month.

If it did hit this target it would make SLDC a seriously profitable company.

Mr Timis has been involved in his fair share of controversy in recent years but is no fool. Investors would do well to keep an eye on SLDC - which closed at an all-time high of 104.5p on Friday - in the coming months.

Eleksen in touch with the market

Dealings in Eleksen Group shares are due to start tomorrow on the Alternative Investment Market. The company makes ElekTex, a smart fabric touchpad that can be used to control electronic devices such as iPods and MP3 players.

Eleksen will join the market via the reverse takeover of Bora Communications, a deal that will be approved by shareholders of the AIM cash shell today. Shares in the combined group are expected to start trading at around 50p. This will value it at £20m.

For now Eleksen plans to focus on selling its touchpads into the consumer electronics market. Longer term, it hopes to move into other industries including health care, automotive and military.

Last month's annual results from Bora revealed it had just under £600,000 of cash on its balance sheet.