Diamond prices drop 50%

Johannesburg - Diamond mining junior DiamondCorp on Tuesday reported that diamond prices have suffered a significant drop in the second half of 2008, with prices received falling 50% in the last quarter of the year.

Issuing a market update, DiamondCorp said as a result of the lower prices, tailings retreatment operations are no longer economic and have ceased.

DiamondCorp's principal asset is its 74%-owned Lace diamond mine in the Free State, where the company has been accelerating development of the underground mine.

"The worldwide economic downturn has impacted significantly on the diamond market, with prices received for Lace diamonds falling 50% during the fourth quarter of 2008," DiamondCorp CEO Paul Loudon confirmed.

But despite the decision to cease re-treatment operations, Loudon believes the accelerated Phase Two development programme targeting kimberlite has the potential to produce profit even at these lower prices.

"The decision last year to accelerate development of the Lace underground mine has proven to be timely, with mining of higher value kimberlite now under way and able to take over from tailings re-treatment activities, which have become uneconomic as a result of a fall in diamond prices," Loudon said.

- I-Net Bridge