BRC suspends cash-generating diamond projectsAllan

BRC DIAMONDCORE is the latest company to suspend work because of low prices...

BRC DIAMONDCORE is the latest company to suspend work because of low prices for the precious stones, which are resulting inlarge cutbacks in production of rough stones from producers like De Beers. BRC has stopped bulk sampling work at its most advanced project, the Silverstreams alluvial deposit in South Africa, as well as other deposits in the country, citing the depressed market conditions for diamonds. “All plant and equipment will be maintained and receive appropriate refurbishment in anticipation of a resumption of bulk sampling operations at the Company’s Silverstreams alluvial project in early January 2009, with its Paardeberg East kimberlite and De Kalk alluvial projects expected to resume operations as diamond prices recover,” BRC said in a statement.During the September quarter of 2008, tenders held for Silverstreams diamonds generated $2m. Tenders for diamonds from De Kalk and Paardeberg East bought total sales in the three months to $2.8m.There was no word on its exploration work in the Democratic Republic of Congo. A statement to the market on 18 November indicated work was progressing on most of its tenements there.BRC’s JSE-traded shares are at 302 cents, just above their year-low of 210 cents and well off the high of 3,600 cents. In Toronto, the share is at C$0.23, off its C$7 high.Reuters has reported Freddy Hanard, CEO of Antwerp World Diamond Centre, as saying a slowing of loans extended by banks and weakening diamond demand would see De Beers and Russia’s Alrosa, the two leading producers, cut their production by 40%. De Beers has already trimmed output from its two new Canadian mines.Petra Diamonds, which has said it intends producing a million or more carats of rough diamonds in 2009, is in talks with unions about potential job cuts at its South Africa fissure mines -- Helam and Star -- which it could temporarily close.Gem Diamonds, which has the Letseng mine in Lesotho that fetches the highest average price per carat of any producer by far, has sharply curtailed exploration work and it has put its Cempaka mine in Indonesia into care-and-maintenance.BRC sounded an upbeat note about the diamond market in 2009."While there is a clear short-term need to conserve cash in light of current market conditions, we anticipate a recovery in rough diamond prices in 2009,” said BRC president Mike de Wit.Test work at Silverstreams had not progressed as smoothly as BRC would have liked because of power sourced from generator sets, which is far more expensive than Eskom-derived power. This meant the recovery plant could not operate at full capacity.