Related Articles
Top Stories
May 24 2012 17:31
The Reserve Bank will maintain current interest rates, and a considerable reduction in the local petrol price is anticipated, says governor Gill Marcus.
May 24 2012 15:29
The Reserve Bank will maintain current interest rates, says governor Gill Marcus.
May 24 2012 12:00
Britain fell deeper into recession than initially thought in the first quarter of 2012, upping chances that the central bank could inject more stimulus into the economy.
Johannesburg - The Botswana government has had to provide financial support for the country's newest diamond producer, Diamonex, because of the poor prices received for its diamond output.
Diamonex started production from the Lerala kimberlite mine in August and made its first sale of 10 612 carats of diamonds on October 30 for an average price of just US$20 per carat.
The weighted average value of the diamonds in the Lerala pipe, situated close to the SA border post at Martins Drift, was estimated in the feasibility study for the mine at $53 to $59 per carat.
Diamonds mined from kimberlite pipes are typically of much lower value than the gem diamonds recovered from alluvial deposits, which frequently sell at prices greater than $1 000 per carat.
According to Diamonex's board of directors, the $20 per carat price was "an aberration reflecting an abnormally depressed market".
Steps taken to improve future prices include direct sales to a number of Indian buyers before Christmas, and discussions with those buyers over possible forward off-take commitments in the short to medium term.
Diamonex has now secured a 10 million pula (about R12.5m) facility from Stanbic Bank, Botswana on which repayment is guaranteed by the Botswana government.
The directors say the loan will enable Diamonex to fund its operating costs against its diamond inventory until a sale "at what it believes to be a fair price" can be achieved.
The financing facility "can be increased and extended with the consent of the government of Botswana, depending on how discussions and negotiations proceed with Indian or other buyers".
Diamonex MD Dan O'Neill said: "The arrangements which have been negotiated with our bank and the government of Botswana gives us the financial stability we need to weather the immediate market uncertainty, and provides time to further mitigate these risks to secure the future of the business.
"Fortunately, we are producing and recovering well, our grade is where we believed it to be and we have a very low cost base."
- Miningmx.com
For more mining sector coverage, visit miningmx.com.
href=http://www.miningmx.com>miningmx.com.