Rapaport Magazine


April 2008

By Rapaport
RAPAPORT... ALROSA to Develop Strategy for Southeast Asia
Russian diamond mining company ALROSA will develop an active strategy for the markets of East and Southeast Asia, ALROSA vice-president Sergey Oulin told Itar-Tass prior to the opening of the Hong Kong International Jewellery Show. At the show, ALROSA auctioned polished and rough diamonds and participated in a “parade of cut-diamonds” arranged by the Hong Kong Trade Development Council and the Diamond Federation of Hong Kong. With a view toward boosting the sale of Russian diamonds in Asia, ALROSA has launched a subsidiary, Arcos Hong Kong Ltd., Itar-Tass reported.

South Africa Increases Mining Power Supply
The Chamber of Mines of South Africa worked on behalf of the mining industry with power supplier Eskom and the nation’s government to normalize the sector’s power consumption levels. The Department of Public Enterprises announced a marginal increase of 260 megawatts, which amounts to about 5 percent of the mining industry’s total electricity consumption. The Chamber noted that the increase would be introduced in phases. Mining is responsible for about 50 percent of South Africa’s foreign exchange earnings from merchandise exports. Before Eskom’s power cuts, the nation’s mining sector implemented energy-saving initiatives resulting in a consumption reduction of more than 4 percent. The mines are now committed to becoming even more efficient, the Chamber reported.

BRC DiamondCore Tender Nets $1 Million
Exploration company BRC DiamondCore Ltd. reported that it sold $1.7 million worth of diamonds mined from its Paardeberg PK1-East kimberlite and Silverstreams project sites in South Africa. At the most recent tender, a total of 688 carats from the Silverstreams project sold for $995,150, or $1,446 per carat. The tender included a 12.26-carat D stone, which sold for $15,175 per carat; a 13.53-carat for $7,960 per carat; and a 24.67-carat light yellow dodecahedron diamond for $6,405 per carat. The Paardeberg PK1-East kimberlite tender offered 3,362.32 carats for sale, which were valued at $672,824, or about $200.11 per carat. Canada-based BRC DiamondCore Ltd. was formed on February 11 through a merger of BRC Diamond Corporation and Diamond Core Resources Limited. The new company plans to focus its exploration activities on South Africa and the Democratic Republic of the Congo (DRC).

Vaaldiam Takes Over Great Western
Great Western Diamonds Corp. shares ceased trading on the Toronto Venture Exchange on March 11, once Vaaldiam completed its takeover of the company. Vaaldiam, based in Toronto, unveiled plans to purchase Great Western and Elkedra Diamonds in July 2007 to create “new Vaaldiam,” which will conduct diamond exploration in South America.

Paramount Finds First Diamond at Wood River Project
Paramount Mining Corporation recovered the first diamond from its Wood River project in Western Australia. The clear white diamond is octahedral in shape and measures more than 0.019 of an inch in diameter, the Perth-based company reported. Maureen Muggeridge, Paramount’s chief executive officer (CEO), stressed that the find proved the firm was on the right track. She added that a cluster of pandanus palms and relatively large trees in the area reveal the presence of water, which may indicate that the rock beneath the soil could be different from the sandstone dominating the region. Previous explorers reportedly recovered two diamonds greater than 0.019 of an inch in diameter in the same creek, about 2.5 miles downstream.

Dianor Recovers Rare Purple Diamonds
Dianor Resources Inc. discovered rare purple diamonds at its Ekomiak V property in the James Bay region of Quebec. Dianor, with partners Metalex Ventures Limited and Wemindji Exploration Inc., reported that a total of 856 diamonds were found, including 16 purple diamonds, from 26 surface rock samples of conglomerates aged between 2.72 and 2.73 billion years. Dianor focuses on diamond exploration in Quebec and Ontario and its flagship, the Leadbetter Diamond project in northeast Ontario, is in the advanced stages of exploration. In February, the company announced a plan to raise $10 million in a private placement to cover expenses at the Leadbetter site. 

South Africa’s Diamond Production Down
South Africa’s diamond industry was partly to blame for the country’s poor mining production performance in the three months ended January 31, 2008, according to Statistics South Africa (Stats SA). Per this report, diamond production fell 12.8 percent, or 1.4 percentage points, based on Stats SA’s index tracking of total mining production in the country. Diamonds carry a weight of 8.3 percent in the index. Gold production fell 9.2 percent, or 1.3 percentage points, in the three months and platinum group metals were down 3.3 percent, or 1.2 percentage points.

South Africa’s total mining production fell 3.9 percent, with the major contributors to the decrease being diamonds, gold and the platinum group of metals. Total mining production for January decreased 10.6 percent with gold leading the way, falling 16.5 percent. Actual production figures were not provided in the report.

Sales figures for the year were not as bleak. Stats SA reported that South Africa’s total mineral sales increased 16.6 percent to $28 billion (ZAR 225.64 billion) in 2007. Gold sales rose 7.1 percent to $4.9 billion (ZAR 39 billion) and platinum sales climbed 22.1 percent to $9.9 billion (ZAR 79.89 billion). Diamond sales figures were not published. South Africa’s electricity crisis shut down the mining sector for five days in January, as power supplier Eskom struggled to supply the country’s mines. The mines subsequently agreed to use 90 percent of electricity capacity in their operations.

DiamondCorp Net Loss Widens
DiamondCorp, a junior diamond mining company, posted its first revenues in 2007, but more than doubled its annual net loss. DiamondCorp sold 8,574 carats of gem-quality diamonds at tender for $548,291 during the year and 5,170 carats of industrial-grade diamonds, mined at its 74-percent-owned mine’s recovery plant, for $21,633. The majority of these sales, however, were set against capital costs accrued in commissioning the Lace Mine. Only about $149,040 (GBP 74,795) of the 4,454 carats sold at tender after the mine’s processing plant was commissioned in October 2007 were recognized as revenues for the year.

Total diamond recoveries were 25,266 carats in 2007, of which 15,976 carats were mined in the wake of the plant commissioning. DiamondCorp said it would move to bring phase-two underground mining into production during the second half of 2008. The company extended its net loss to $4.18 million (GBP 2.1 million) in 2007, from $1.59 million (GBP 799,046) the previous year, due mainly to power shortages in South Africa and higher administrative costs. DiamondCorp chairman Euan Worthington told Rapaport News that he expects the company to break even in 2008, as it generates a steadier revenue cash flow.

Congo Grants Diamond Concessions to Mexivada
Diamond and precious metals explorer Mexivada Mining Corporation of Canada was granted concessions in the Democratic Republic of the Congo (DRC) for the Malambani diamond, Malambani gold and Bitsandou diamond areas. This was the first formal ratification of “Permis de Recherches” for mineral exploration in the Congo since 2004, Mexivada stated. The firm submitted additional applications in January for diamond and gold concessions at Vouka, located south of the Malambani concession.

Australian Diamond Production Up
Australia’s diamond production rose 23 percent to 6.1 million carats in the fourth quarter of 2007, the Australian Bureau of Agricultural & Resource Economics (ABARE) reported. ABARE stated that the increase reflected higher output from Rio Tinto’s Argyle mine in western Australia during the quarter. Diamond exports remained flat at about $171.6 million (AUD 183 million), while prices sank 19 percent.

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