MINING NEWS

RAPAPORT... Australia’s Diamond Production Down
Australia’s diamond production continued to spiral lower in the first quarter of 2008, according to the Australian Bureau of Agricultural & Resource Economics (ABARE). Diamond production fell 36.4 percent for the three months ended March 31, 2008. Production fell by 62.9 percent compared to the preceding quarter. The decrease was due mainly to declines at Rio Tinto’s Argyle mine, where wet weather and a slip in the main pit’s access ramp restricted access to the high-grade ore zone during the period. Rio Tinto reported that production at Argyle fell 37 percent to 2.2 million carats in the first three months of 2008.

Trans Hex Posts Loss
Trans Hex Group moved into the red in 2008 due to lower diamond production and a 70% net loss from its deepwater operations, which it discontinued in March. The mining firm reported a net loss of $2.4 million (ZAR 18.5 million) for the year ended March 31, 2008, compared with a $5.4 million (ZAR 41.7 million) profit the previous year. Rough diamond sales fell 14 percent to $122.2 million (ZAR 880.9 million). Earnings were also impacted by the temporary closure of the Bloeddrif plant.

South Africa’s Gold Production Tumbles
South Africa’s gold production fell 16.8 percent to 1.7 million ounces in the first quarter of 2008, the country’s Chamber of Mines reported. Production was 15.6 percent lower than the preceding final quarter of 2007. The chamber said the national electricity emergency was the main reason for the large drop, having caused South Africa’s gold mines to close between January 25 and 31. South Africa was the second-largest gold producer in the world in 2007, overtaken by China for the first time. Supply concerns out of South Africa contributed to the surge in gold prices beyond the $1,000 mark.

Diavik Mine Production Drops
Harry Winston reported that rough diamond sales dipped 1.7 percent to $81.4 million during the first quarter as a result of reduced production at its Diavik mine in Canada. The company’s production share dropped 31 percent to 714,000 carats for the three months ended March 31, 2008, the close of Diavik’s reporting period. The production decline was caused by adverse winter weather and lower-grade ore recovery in one pit. Profits from Harry Winston’s mining unit rose 13 percent to $42 million due to higher diamond prices.

Diavik Releases Sustainable Development Report
Diavik Diamond Mines Inc. in Canada released its 2007 Annual Sustainable Development Report, highlighting the mine’s initiatives toward economic prosperity, social well-being and environmental stewardship. The company reported a 4 percent improvement in its all-injury frequency rate and received Canada’s John T. Ryan Regional Safety Award for the third time in five years of operations. Diavik completed its third Aboriginal Leadership Development Program, bringing the total graduates to 26. Mining operations exceeded original employment estimates and the local, northern workforce exceeded 500 workers, of whom approximately half are Aboriginal. Business expenditures exceeded projections, with about $500 million spent locally to maintain operations and invest in new capital construction. Approximately $276 million was spent with northern Aboriginal businesses.

Russia Secures Majority Stake in ALROSA
Russia gained a majority stake in diamond mining company ALROSA through the issue of new shares, local media reported, citing a company statement. Through the share placement, the government raised its stake in ALROSA from 37 percent to 50 percent plus one share. The Republic of Sakha (Yakutia), where ALROSA’s diamonds are mined, retained its 32 percent share and the eight districts in Yakutia kept their 8 percent collective interest, RIA Novosti, the state news agency reported, without saying who owned the remaining 10 percent. In November 2007, company shareholders agreed to raise the government’s stake through the issue of 72,726 shares valued at $570.90 (RUB 13,502) per share. This move by the government has been in the works for over two years.

Article from the Rapaport Magazine - July 2008. To subscribe click here.