Kono placed on care and maintenance

I-Net Bridge | Thu, 21 May 2009 10:16
[miningmx.com] -- Petra Diamonds' Kono kimberlite fissure project in Sierra Leone, a joint venture with Stellar Diamonds Limited, has been placed on temporary care and maintenance.

This decision will be reviewed by both parties when the rough diamond market improves sufficiently to achieve a more reasonable sales value for the Kono trial mining production, the group said.

The Kono project is currently sole-funded by Stellar and is at an advanced stage of exploration, with underground trial mining having been undertaken at the Pol-K and Bardu kimberlites.

The project has no carrying value in Petra's balance sheet and therefore there are no impairments to be recognised by Petra with regards to the care and maintenance decision.

Johan Dippenaar, CEO of Petra, commented: "Despite the encouraging diamond grades we continue to encounter at Kono, it is not sustainable to maintain the development and trial mining until we see diamond prices at a more appropriate level. We have therefore decided, along with our partner Stellar Diamonds, to place the project on temporary care and maintenance and it will be relatively quick and easy to resume trial mining at a later date."

The group said that the total number of diamonds produced to date from the trial mining is over 4,400 carats. The in-situ grade of the Pol-K kimberlite consistently averages 65 carats per hundred tonnes ("cpht"). At Bardu, a new kimberlite intrusion has recently been intersected and sampled and has returned an average grade of 140 cpht, with a high frequency of +1 carat stones.

A parcel of 2,697 carats of diamonds was recently exported to Antwerp for sale. The parcel comprised mainly Pol-K goods (80%), along with Bardu goods (20%). The sale realised US$125,000 at an average value of US$46.34 per carat. By means of comparison, in September 2008 a sale of 811 carats from Pol-K and 252 carats from Bardu realised average prices of US$152 and US$52 per carat respectively (US$128 per carat average).

"The difference between the two sales values demonstrates the present adverse conditions in the diamond market. On this basis Petra and Stellar have agreed that the Kono project be placed on temporary care and maintenance until the rough diamond market improves sufficiently to achieve more reasonable sales values for what the partners consider to be good quality run of mine diamond product," Petra Diamonds said.

Petra's interest in the Kono project is 51%, with joint venture partner Stellar Diamonds Limited ("Stellar"), a 59.6% owned subsidiary of Mano River Resources Inc, holding the remaining 49%. Stellar is currently sole-funding the project and Petra has until 31 December 2009 to elect to refund Stellar for the 51% of the exploration incurred since 1 January 2009, or alternatively to dilute its interest in Kono.