TORONTO (miningweekly.com) – Toronto-based Harry Winston, which owns 40% of the Diavik diamond mine, in Canada's Northwest Territories, may seek to increase its stake in the operation if partner Rio Tinto, which holds the balance and operates the mine, puts its share up for sale.

Rio Tinto announced far-reaching plans on Wednesday to sell assets, retrench workers and slash capital expenditure, as it repositions itself to survive low commodity prices and turbulent financial conditions.

Rio has not indicated which additional assets it may put up for sale, but there has been speculation that its interest in Diavik may be one of them.

If Rio does plan to sell all or part of its controlling stake in the mine, “we would seek, actually, to increase our interest,” chairperson and CEO Robert Gannicott said on a conference call on Thursday.

However, he said he was not aware of any plans by Rio Tinto to sell its interest in the mine.

Harry Winston has a right of first refusal on Rio Tinto's 60% if the larger group decides to sell the stake, and vice versa.

Sales from Harry Winston's share of production from Diavik slid to $90,7-million in the third quarter, compared with $122,7-million a year earlier.

Diamond prices are experiencing volatility because of slowing economic activity and uncertainty, and production at the mine has also been affected by lower grade areas being mined, Gannicott said.

The Diavik mine is being expanded, and was expected to have begun underground mining early next year. However, this has been deferred to the third quarter of 2009, as the owners seek to curtail costs at the mine.

The mine, which has an annual output of about 10-million carats, could produce around 8-million carats in 2009, Gannicott said.

Harry Winston, formerly known as Aber Diamonds, bought high-end jewellery retailer Harry Winston in 2006.

The firm posted a third-quarter profit of $71,9-million, compared with a $7,4-million loss a year earlier, after foreign-exchange movements worked in the company's favour.

Harry Winston shares declined 0,84% on Thursday, to C$5,93 a share by 16:15 in Toronto. The stock rose as high as C$7,00 a share earlier in the day.

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