Rapaport Magazine

Rio Tinto Production Down

Mining News

By Rapaport
Rio Tinto Production Down

Rio Tinto’s diamond production fell 29 percent to 4.6 million carats in the second quarter of 2008. The biggest drop came at Rio Tinto’s flagship Argyle mine in Western Australia, which saw a 32 percent decline in production to 3 million carats during the period. Company spokespersons explained that access to the high-grade areas of the pit, which had been restricted due to geotechnical issues and wet weather, was re-established midway through the quarter. Production at the Diavik mine, in which Rio Tinto owns a 60 percent stake, fell 23 percent to 1.5 million carats due to lower recovery grades. The first recovery of small diamonds at Diavik is expected to take place toward the end of 2009. Production rose 116 percent to 67,000 carats at the Murowa mine in Zimbabwe, in which Rio Tinto holds a 78 percent stake. For the half-year ended June 30, 2008, Rio Tinto’s total diamond production fell 30 percent to 9.6 million carats.

DiamondCorp Nets $1 Million

DiamondCorp sold 19,214 carats of diamonds for $1.16 million, or $61 per carat, on tender from its Lace tailings retreatment plant in South Africa during the first six months of 2008. The junior miner reported that it recovered 27,103 carats from the plant during the same period, with approximately 70 percent of that total being gem quality. Paul Loudon, DiamondCorp’s chief executive officer (CEO), reported that recoveries were back in line with original estimates now that power supply issues and the recrush circuit have been addressed. DiamondCorp owns 74 percent of the Lace project.

Tahera Ordered to Set Aside $2 Million

The Ontario Superior Court ordered Tahera Diamond Corporation to set aside $1.9 million (CAD 2 million) in a trust account to pay for goods and services it received prior to January 16, 2008, when the company secured bankruptcy protection. The court order was based on the Miners Lien Act, which gives contractors and suppliers the right to lien mine assets when they have not been compensated for their services. Tahera filed for court protection from its creditors after failing to pay off debt and finance operations at its Jericho mine in Nunavut.

Gem Diamonds Earns $11 Million

Gem Diamonds sold ten diamonds from its Letseng mine in Lesotho for a total of nearly $11 million at its most recent tender in Antwerp. The diamonds, recovered in early June, weighed a total of 261.4 carats and sold for an average of $42,000 per carat. The white diamonds ranged in size from 11.8 to 70.7 carats and from D through F in color. Gem Diamonds owns 70 percent of Letseng, with the Lesotho government holding the remainder.
Gem Diamonds held its first polished tender of diamonds recovered from its Ellendale mine in Australia, selling 15.7 carats worth for $453,102, or $28,860 per carat. Among the collection was a 7.1-carat cushion cut vivid yellow diamond, which sold for $52,000 per carat, and a 2.3-carat cushion cut vivid yellow diamond, which sold for $19,000 per carat.

Stornoway Arranges Private Placement

Stornoway Diamond Corporation arranged for a $22 million private placement of more than 24 million shares at 90 cents each to Agnico Eagle Mines and Lorito Holdings. Agnico and Lorito presently hold equal convertible debentures in the aggregate principal amount of $20 million. The two firms agreed to permit Stornoway to redeem these debentures prior to the March 2009 maturity date for an additional $2 million. The placement is subject to the completion of subscription agreements and stock exchange and regulatory acceptances and approvals, but upon completion of this financing, Stornoway will be debt-free. Agnico Eagle reports holding 13.6 percent of Stornoway’s issued and outstanding common shares, with its holdings increasing to approximately 17.6 percent as a result of the private placement.

Trans Hex Nets Nearly $17 Million

Trans Hex reported selling 11,823 carats for $16.9 million at its July rough diamond tender, with an average sales price of $1,426 per carat. The South Africa-based miner sold 45 stones weighing over 10 carats at the tender. Six sold for more than $20,000 per carat, among them a 27-carat stone valued at $50,000 per carat. Trans Hex also reported that it decided not to pursue a previously announced potential joint venture with Kimberley Consolidated Mines.

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

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