JOHANNESBURG (miningweekly.com) – London-listed diamond-miner Namakwa Diamonds has increased its net loss to $76,7-million in the six months ended February 28, 2009, in a period during which it encountered the “most difficult trading environment” in its 30-year history.

The company’s net loss had increased by 300% compared with the net loss of $19,4-million recorded for the first six months of the 2008 financial year.

The diamond-miner on Wednesday reported a $0,61 loss a share, compared with a loss a share of $0,23 the year before.

“The impact of the global economic crisis on the diamond industry in the first half of this financial year has been substantial and has been the dominant factor over this period. There has been a considerable drop in both rough and polished prices,” CEO Nico Kruger noted in a statement to shareholders.

Rough diamond prices had declined by between 40% and 70% during the six months, reported the diamond-miner.

Namakwa stated that one could not compare current financial results with that of previous periods, given the aftereffects of the global economic crisis.

Lower diamond prices had forced the company to follow a cash-preservation approach compared with the significant expansion projects it had undertaken the year before, it noted.

During the period under review, Namakwa had placed four of its mines on care-and-maintenance and implemented a number of cost-cutting measures.

The “abnormal” low diamond prices had also lead to impairments of $32,1-million, as a result of the company reassessing its inventory.

Adding to the loss, was $25,2-million in goodwill impairments and impairments on its diamond-mining and exploration properties, while the cost of retrenching 562 employees had amounted to $410 000.

The company noted that the lower supply of rough diamonds, which was estimated to have declined by between 40% and 50% year-on-year, would stabilise in the long term and positively affect prices.

Meanwhile, Namakwa assured shareholders that the alluvial nature of its mining activities would allow it to quickly restart operations without significant additional capital requirements, once markets improved.

It also expected to be able to reappoint some of its retrenched employees once markets had recovered and operations were in the process of being restarted.

The company would also benefit from its improved distribution network, it highlighted.

Namakwa had opened a trading office in Tel Aviv to ensure access to new customers, suppliers and beneficiation plants in the region. A joint-venture partnership with Swiss Gold to improve distribution to Dubai, Jordan and other parts of the Middle East had also been established.

Further, Namakwa stated that it was ready to capitalise on acquisition and expansion opportunities created as a result of the weak market.

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