RAPAPORT...
Mining Giants Abandon India Exploration
A survey conducted by the Indian Bureau of Mines (IBM) found that the government granted 292 reconnaissance permits (RPs) to various companies for regional exploration between 2000 and 2008. Of these, 183 have been relinquished, as mining was not considered commercially viable. About 70 of the 183 permits were surrendered by major global miners like Rio Tinto, Anglo American, De Beers and BHP Billiton.
Firestone Doubles Revenues
U.K.-based junior diamond miner Firestone Diamonds reported that its revenues for the fiscal year ended June 30, 2008 doubled to $4.9 million (GBP 3.3 million). The company’s annual net loss narrowed to $350,783 (GBP 237,112) from $803,176 (GBP 542,907) during fiscal 2007. The improvement came as the company ramped up to full production at its Bonte Koe toll treatment project, a joint venture with De Beers, increasing revenues by over 100 percent.
African Diamonds Buys Out De Beers Botswana ExplorationAfrican Diamonds has acquired full ownership of its exploration activities in Botswana, buying out its partner De Beers portion of the projects. In its annual report for the year ended June 30, 2008, the junior diamond miner reported that it is taking over the Atlas joint venture — which has licenses to drill at four sites in Botswana — as well as the AK08 and AK09 kimberlite discoveries, where De Beers completed an analysis of bulk sampling data.
African Diamonds spokespersons added that the company’s Bugeco subsidiary will continue to work on seven newly discovered kimberlite pipes in the Democratic Republic of the Congo (DRC) without De Beers.
Tahera Closes Jericho OperationsTahera Diamond Corporation was granted court approval to end operations at its Jericho Mine. At that time, pursuant to the Nunavut Waters and Nunavut Surface Rights Tribunal Act, Indian and Northern Affairs Canada (INAC) retained former Tahera employees to conduct ongoing care and maintenance activities at the mine site. Tahera Diamonds then terminated all remaining staff and closed its Toronto office.
The court also granted Tahera an extension of its creditors arrangement until January 23, 2009. During the extension period, Tahera will continue to pursue the sale of its remaining assets in consultation with Caz Petroleum Inc., its leading secured creditor.
Thomas Steps Down as Stornoway CEOEira Thomas stepped down as chief executive officer (CEO) of Stornoway Diamond Corporation, assuming the role of company chairperson, according to a corporate update from Stornoway. The diamond exploration company also reshuffled its executive structure: company president Matt Manson will take on the expanded role of president and CEO and Catherine McLeod-Seltzer, the current board chairperson, will become lead director.
In addition, the company promoted David Skeleton, senior project manager, to its executive team as vice president in charge of project development. The company is currently developing the Renard Diamond Project, Quebec’s first diamond mine.
Rio Tinto Commits to Debt Reduction
Rio Tinto plans to reduce its net debt by $10 billion by the end of 2009 in response to the current economic climate. In a statement, the company announced that it will reduce its contractor and payroll headcount by 14,000 for an estimated annual savings of $1.2 billion. Rio Tinto’s net debt was $38.9 billion as of October 31, which is $3.2 billion less than its net debt as of June 2008. Rio Tinto expects to reduce its total capital expenditure for 2009 from more than $9 billion to $4 billion. One bright spot for the firm has been the steady decline in oil prices since August. Each $1-per-barrel drop in the price of oil improves Rio Tinto’s annualized underlying earnings by $11 million, according to company estimates.
Harry Winston’s Rough Sales FallRough diamond sales for Harry Winston Diamond Corporation fell 26 percent to $90.7 million in the company’s third fiscal quarter. Rough diamond production decreased 26 percent during the quarter, as well.
Gross margin as a percentage of sales was 55.2 percent in the company’s mining segment, down from 62.5 percent. This reduction was due to a combination of lower sales and the fact that a smaller proportion of costs could be attributed to development activity than in the previous year. Rough diamond prices, which peaked in August 2008, have declined to the levels exhibited during the first quarter of 2007, the miner reported.
Australia’s Diamond Exports Drop in ValueAustralia’s rough diamond exports fell 40 percent in value to $110 million in the first fiscal quarter ended September 30, 2008, the Australian Bureau of Agricultural and Resource Economics (ABARE) stated in its quarterly minerals statistics report. Production during the period declined 3 percent to 4.839 million carats, all of which were exported. ABARE noted that the decline in diamond prices was the main reason for the sharp fall in export value.
Mexivada to Mine Diamonds in Sierra LeoneMexivada was given clearance to mine diamonds in Koidu, Sierra Leone. The Vancouver-based junior miner reported that it received a signed memorandum of understanding (MOU) from the Gbense Chiefdom of the Kono diamond-mining district to allow Mexivada’s local subsidiary, Mexivada Gold and Diamond Mining Company, to conduct artisanal alluvial mining in Koidu.
Mexivada expects the initial mining venture to cost $25,000 before any diamonds can be sold, according to a company statement. Under the MOU, Mexivada will manage the project and receive a 70 percent share of the profits, with the Gbense Chiefdom taking the remaining 30 percent.
Mexivada works in the region with its local partner, Pink Diamond Exploration Company, which is entitled to 40 percent of Mexivada’s share in the project. The company’s statement did not mention what levels of production Mexivada expects from the project, noting only that the area has yielded large gem-quality diamonds in the past, most notably the 968-carat “Star of Sierra Leone.”
De Beers Delays Moving Aggregation to BotswanaDe Beers representatives said that the company is unlikely to transfer its aggregation activities to Botswana in 2009, as previously planned, because current conditions are not suitable to make the move. Lynette Gould, a De Beers Group spokesperson, stated that the firm completed a feasibility study which identified a small number of key issues that need to be resolved to ensure a successful transition. Gould did not specify what issues needed ironing out, but said that the company was working with the government to “ensure conditions in Botswana are right for success.”
De Beers plans to move its aggregation center from London to Botswana as part of its support for beneficiation in the southern African country. In the past year and a half, the company has set up its main sorting facility in Gaborone and started supplying goods to local clients for cutting and polishing there.
Article from the Rapaport Magazine - January 2009. To subscribe click here.