Namakwa reopens North West mines

Brendan Ryan | Thu, 29 Oct 2009 16:45

[miningmx.com] -- LONDON-listed Namakwa Diamonds has reopened four alluvial diamond mines in North West Province in response to improving conditions in the rough diamond market.

Namakwa made an overall loss of $87.2m for the year to end-August (previous comparable year $39m loss).

The major item in the total loss was a $32.1m write-down in the value of Namakwa’s diamond inventory held by its beneficiation division. It was caused by the market collapse in rough diamond prices.

The company also took a $27.7m impairment charge against property, plant, equipment and goodwill.

Namakwa’s total cash and cash equivalents dropped to $13.9m at August 31 from $52m a year previously.

Despite this, CEO Nico Kruger said Namakwa remained in an “enviable” position. This was because of its remaining cash reserves and net working capital of $44.8m, as well as the improving financial performance over the second six months of the financial year.

He said: “We are well positioned to sustain our improved operational and financial performance for continued growth in 2010.

“The outlook for the coming year remains positive. Production levels are increasing and the group’s beneficiation experience presents buying opportunities as the sale of goods acquired under current conditions is seen to deliver high returns.

“The current disjoint in rough and polished prices has presented opportunities which the group will continue to capitalise on in both rough and polished stones. Furthermore, opportunities for the acquisition of distressed assets are expected to continue to arise.

“As a result the group’s financial year 2010 production targets are to recover 50,000 carats in the North West and 90,000 carats in the Democratic Republic of Congo. “

Asked to elaborate on potential acquisitions, Kruger told Miningmx: “We have not been sitting on our hands and have already looked at a number of opportunities.

“We are interested in projects that are already close to production and we are not into longer-term exploration assets.”