Industry News
Namakwa Diamond Production Up 114%
07/07/2009
Namakwa Diamonds Limited’s diamond production reached 4,200 carats in the quarter beginning 1 March 2009 representing a quarter-on-quarter increase of 114%.
Namakwa’s mining activities in the North West region continue at the Northern Node on a cash positive basis, while all other sites in the region remain on care and maintenance.
Two DMS plants commissioned in May 2009 and full scale trial mining commenced in the DRC. Namakwa is currently the only large scale diamond mining company still active in the DRC;
The company’s beneficiation segment sold 44,643 carats of rough diamonds and 487 carats of polished diamonds at a gross margin of 9% and 18% respectively realising a gross profit of US$ 1.3 million;
The global economic weakness continues to impact the entire diamond value chain from rough producers through to the retail buyers. The period under review saw an increase in rough prices and to a lesser extent polished prices, as well as an increase in liquidity and volumes, but the sustainability of these trends remains unclear. Global diamond production for the first half of 2009 is estimated to be approximately 90% below the corresponding period of 2008 which should assist with the recovery of rough and polished diamond prices.
Although prices for certain categories of rough diamonds recovered to levels close to those achieved prior to the collapse, Namakwa believes both rough and polished prices will remain volatile until fundamental retail demand strengthens. Rough volumes are expected to come onto the market from Russia and other African producers, which could put renewed pressure on prices. The potential recovery in production from the larger diamond mines that curtailed production in Q4 08 remains uncertain.
Polished diamond prices have seen an improvement since February 2009, but remarkably less than has been the case for rough diamonds. The continued weakness in the US retail market makes it very difficult for the wholesale polish trade to raise prices in line with the bullish pattern seen in rough diamonds. Overall, the time frame for recovery in polished prices remain uncertain with current buying and selling mainly taking place in the dealer market with limited activity in the retail segment.
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