TORONTO (miningweekly.com) – Rough diamond prices have improved by at least 61% from the lows experienced at the weakest point of the market, in the first quarter of the year, Harry Winston Diamonds CEO Robert Gannicott said on Wednesday.
The company has seen a sustained improvement in rough diamond prices over the year, as firming demand for polished diamonds from the Far East and India, coupled with stirrings of interest in the US, helped empty out inventories held by manufacturers, he said.
With the traditional holiday diamond buying season in the US now under way, Gannicott said the company is “cautiously optimistic” on US holiday sales.
Harry Winston owns part of the Diavik diamond mine, in Canada's Northwest Territories, and also sells high-value jewellery and watches through a separate retail business.
In the quarter ended October 31, Harry Winston realised rough diamond prices that were about 9% lower than in the same period last year, while prices remain about 13% below the highs achieved during 2008 before the decline.
Going forward, mine supply for rough diamonds will remain constrained, implying continued price rises in the near term, increasing in velocity as the US economic recovers, Gannicott predicted.
DIAVIK
Harry Winston and Kinross Gold own 40% of the Diavik mine and diversified miner Rio Tinto holds the balance and is the operator.
The mine is expected to produce 5,5-million carats this year. Operations were halted for six weeks during the summer but the partners opted to cancel a second shutdown that had been planned for the winter.
Output in 2010 is forecast at 7,8-million carats, but operating costs will be high, as production from underground mining is scheduled to begin in the first quarter, Gannicott cautioned.
About 2,1-million tons of ore is expected to be processed in 2010, comprising 700 000 t from underground and 1,4-million tons of openpit ore.
Beyond 2010, openpit production will decline as more ore is mined from underground.
ICE ROAD
Gannicott said that the winter ice road that the three Arctic diamond mines use for supplies has got off to a good start this year.
“There is a good early freeze, which is always a helpful thing.”
The road will have less to handle this year, as production constraints at all three operations mean only about 3 800 loads will need to go up in total.
“So the ice road only needs to operate for really about three weeks to get that done.”
In previous years, the total number of loads has reached as high as 10 000.
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