CULLINAN (miningweekly.com) - Mid-tier diamond miner Petra Diamonds was not planning any cuts in the production of diamonds at its flagship Cullinan diamond mine, and was also contemplating a move to the main board of the London Stock Exchange (LSE) from the Alternative Investment Market (Aim), Petra CEO Johan Dippenaar said on Thursday.

Petra was also bucking diamond’s downward trend, with its Cullinan mine heading for a production of 950 000 carats this financial year to June 30, 2009, which would be considerably greater than the 750 000 carats-to-850 000 carats that had been promised to the market.

Dippenaar told a media visit to Cullinan mine that Petra would persist with its ongoing process of reviewing efficiencies and costs and that these reviews were likely, however, to affect employment numbers at the Star and Helam operations, the Petra group’s two smallest mines.

He said the company was reluctant to put mines on care-and-maintenance and had instead opted for maintaining a state of readiness throughout the group, which would enable the company to react "very quickly", should any major issues arise.

Dippenaar reiterated Petra’s intention of producing a million carats of diamonds in the financial year to June.

He said that any cutback by Petra would not make any meaningful difference in the diamond market of 160-million carats a year.

“We are in the fortunate position of participating in a market that has traditionally been dominated by De Beers, Alrosa, Rio Tinto and BHP Billiton, which have all announced major cuts in production, which could underpin prices in the months ahead.

“But should we find that for a certain production profile it does not make sense to take the diamonds out of the ground for now, then certainly we will act very quickly to stop that production,” he said.

Petra was readying itself, he said, for extremely tough market conditions that could endure to the end of 2010.

Petra obtained $99/ct for its Cullinan diamonds in the six months since it bought the mine from De Beers for R1-billion.

“But there is now a virtual halving of diamond prices in the market,” Dippenaar said.

Special stones, however, lifted averages substantially and Cullinan discovered three specials in the first six months of its financial year, a 39 carat blue alone fetching $8,8-million.

On possible graduation to the main board of the LSE, Dippenaar said that the company had outgrown its position on the Aim and, although no formal approach had yet been made, a move to the LSE's main board was being seriously contemplated.

The company had cut costs and increased efficiencies to such an extent that
Cullinan would continue to be profitable even if it obtained dramatically less than the $91 per carat it obtained in the six months from June to December last year.

Petra was not incumbered by any significant debt and was achieving significant improvement at Koffiefontein and the Kimberley Underground, also acquired from De Beers.

The area where mining was currently taking place at Cullinan was a traditional producer of blue diamonds and large flawless diamonds. Cullinan, the company said, was an historical producer of spectaculr diamonds, including "the Cullinan", the world's largest gem diamond at 3 106 carats. It was also the source of the llargest plished diamonds in the world, including "The Great Star of Africa", at 530 carats.

Although much media attention had been given to Cullinan’s 133-million-carat C-Cut deepening project, technical director Jim Davidson reported that there was still 60-million carats worth of diamonds in the B-Cut resource, where mining was currently taking place, to 763 m.

Should the so-called BA West area be developed, in would provide another 20 years life of mine.

Davidson said that Cullinan was achieving its target production of 8 500 t a day and plant modifications had allowed throughput to be taken up to 11 500 t a day.

Cullinan, he said, had a complex plant layout, involving continual add-ons over the years. The company was rearranging the layout.

Cullinan, GM Teon Swanepoel reported, was the world's second-largest indicated diamond resource by in-situ value, containing 208-million carats, including tailings, and being worth $17,9-billion. Cullinan has produced 300 stones weighing more than 100 ct.

Petra had made four major acquisitions in two years, buying Cullinan, Koffiefontein, Kimberley Underground and Williamson between 2006 and 2008, all from De Beers, and was currently operating five diamond mines in South Africa.

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