Namakwa Diamonds eyes maiden profit

Namakwa Diamonds sees its maiden profit this year on a production boost from its closely watched mine in the Democratic Republic of Congo (DRC), its chief executive said.

The diamond producer also expects its Lesotho mine to drive production further in the next fiscal year, contributing at least 300,000-350,000 carats after it comes on stream in September, CEO Nico Kruger told Reuters.

“We are moving our DRC production, we are stepping on the gas there, specifically bringing more of these river-based operations into production, which will create an opportunity for another 200,000 odd carats per year of production,” Kruger said.

Kruger said the company was comfortable with Thomson Reuters I/B/E/S estimates of a pretax profit of $0.13 million for the current financial year.

About 65-70 percent of Namakwa's total output comes from the traditionally stronger second half as rains dominate the preceding half.

“I think we're in for a bumper second half in the DRC,” said Kruger, whose father Tom Kruger founded the company in 1979.

Kruger also expects rough diamond prices to remain high in the near term as demand continues to rise in Asia, mainly from China and India.

De Beers, which controls around 40 percent of the rough or unpolished diamond market, had said earlier this week that rough diamond prices were likely to rise in 2011 on increased demand from the United States, the biggest buyer, and others like India and China.

Namakwa was not affected by the recent disaster in Japan, which accounts for 11 percent of global demand for rough diamonds, CEO Kruger said.

Earlier on Thursday, Namakwa posted an unchanged first-half pretax loss at about $12 million, but remained upbeat on its prospects for the rest of the year.

Revenue for the six months ended Feb. 28 rose 34 percent to $45.5 million.

Johannesburg-based Namakwa's shares, which have gained 63 percent in value over the past year, were trading down 2.3 percent at 53.25 pence at 16:15 SA time on the London Stock Exchange. - Reuters