Sunday, February 27, 2011
Expansion plans cause Tanzania diamond revenue drop
Diamonds mining expansion has forced the Shinyanga-based Williamson Diamonds Mine, controlled by Petra Diamonds of South Africa, to post a revenue drop in the in second half of last year, ending December 2010.
The revenue dropped to USD2.0 million in June-December 2010 half year period compared to $7.5 million of January-June the same year.
The company attributed the revenue declined to its expansion plan that aims at increasing output to 10 metric tones per year of diamonds ore.
The company has reported the quantity of the diamonds sold also went down to 7,722 carats down from 43,018 carats in the same period under review, although the average price of the precious gemstones increases to $ 264 from $174 per carats. The Chief Executive Officer, Johan Dippenaar, says in a financial statement released last week that the expansion plan to establish a 10MTPA operation at the Williamson diamonds mine has commenced.
"…Production from the main pit has stopped whilst the re-shaping operations are underway," the CEO says in his report.
Due to expansion activities, sales and production during the period were therefore limited to contract alluvial mining, producing 10,847 diamonds carats for the period.
Mr Dippenaar says "there is currently no ore processing facility at Williamson diamonds mine whilst the refurbishment work on the old main plant is undertaken."
Capex-capital expenditure-at Williamson mine during the period was primarily focused on the 10MTPA project with the main activities undertaken during the period being engineering design, site preparation and earth works, and pit shaping.
Capex estimates the remainder of the expansion programme is worth $50 million, much of which will be covered under the $40 million IFC debt financing, with the balance being sourced from Petra's own treasury.
Petra Diamonds gross revenue of $90million was recorded in the second half, an increase of 44% on the $62.4 million recorded for first half of last year.
Mr Dippenaar, mainly attributable Petra's gross revenue to the healthy diamonds price environment, combined with increased sales volumes from its South African mines.
Petra's strategy is to deliver on its capital rollout, with a core objective to increase annual production to around 4.0 million carats by 2014 and further increase output to over 5 million carats by 2019.
"We believe this exceptional growth profile will place the Group in a unique position to capitalise on what we anticipate to be an exciting future for our market," Mr Dippenaar.