Mountain Province Diamonds turned in a very strong production performance at the Gahcho Kué mine in Canada, particularly in the fourth quarter, but a 15% decline in the average price achieved for their rough diamonds over the course of 2019 dragged their proceeds down. A slightly lower recovery grade also curtailed their carat recovery, which ended just below 2018 levels.
Russian diamond miner Alrosa, the largest rough producer in the world, raised its output 5% to 38.5 million carats from 36.7 million carats in 2018 despite lower market demand which pushed their total diamond sales down 12% to 33.4 million carats. The combination of more production and softer sales increased their rough inventories by 5.6 million carats (+33%) to 22.6 million carats. The Russian giant's 2019 rough sales fell 26% to $3.27 billion as the average realised prices for gem-quality rough fell 19% to $133 per carat from $164 per caat last year.
De Beers Group Q4 rough diamond production decreased by 15 percent to 7.8 million carats from 9.1 carats a year earlier, driven by lower production levels in South Africa and Botswana, the company announced this morning.
Angola's industrial diamond miners produced 9.09 million carats in 2019, a decline of 5% on the year. Adding semi-industrial production to industrial output, the total was 9.12 million carats. The figures came courtesy of Ganga Júnior, the president of Angola’s state diamond exploration, mining and licensing company, Endiama. He attributed the declline (4.8% the actual figure cited) to the closure of a diamond mine. He said the semi-industrial diamond sector had accounted for the production of 35,856 carats last year.
Rio Tinto has lowered its 2020 rough diamond production guidance to 12-14 million carats, down from 17 million carats produced in 2019 and 18.4 million carats the year prior.
Lucapa Diamond Company today announced that in 2019 the miner smashed its previous annual high in group production, recovering 49,120 carats compared to 19,196 carats last year.
Mountain Province Diamonds reached the upper level of its output guidance in 2019 and sees opporunity for further growth in 2020. President and CEO Stuart Brown confirmed in a Dec. 19 statement that the miner will achieve the upper end of their production guidance of 6.7 – 6.8 million carats recovered on a 100% basis. Mountain Province Diamonds is a 49% participant with De Beers Group in the Gahcho Kué diamond mine in Canada's Northwest Territories.
Having already revised their 2019 full-year production guidance downwards to ~31 million carats in response to a backlog of polished diamond inventories in the midstream and weaker trading conditions, De Beers' parent company Anglo American yesterday announced it is lowering its diamond production estimate by a million carats in 2020 and 2021. Citing "challenging market conditions," Anglo American notes that De Beers' year-to-date revenues have fallen 26% since 2018, due to lower volumes of sales, a weaker product mix and a softening price index.
The difficulties facing diamond miners delivering products at the lower end of the market hit Mountain Province Diamonds (MPD) particularly hard in Q3 (the three months ending Sept. 30), though the miner has been struggling with low prices for some time now. Q3 revenue from sales declined by 26% as the average price per carat fell by 28%. The company attributes a downturn in carats recovered, as well as the low prices achieved, to mining activity in a lower grade and quality areas that delivered "the expected poorer product mix", as well as "challenging" market conditions.
Lucara Diamond had what could be considered a steady third quarter despite ending in a net loss due primarily to an increase in operating expenses as well as depletion of reserves and amortization, both non-cash expenses. The miner also completed a positive feasibility study for development of an underground mine at Lucara’s Karowe Diamond Mine in Botswana; the underground expansion at Karowe is expected to double the mine life and generate significant revenue and cashflow out to 2040.
Firestone Diamonds last week reported a decline in revenue during for the quarter ended 30 September 2019 (Q1 of their 2020 FY) due mainly to lower sales prices for diamonds from its Liqhobong mine in Lesotho. The miner has had to deal with a power supply cut to the mine since 1 October, which forced Firesetone to temporarily shut down the mine's treatment plant until power is restored.
Stornoway Diamond Corp. is a Canadian diamond exploration and producing company that developed the Renard mine over the course of two decades from a grassroots exploration project to a world-class diamond mine - the first in Québec. The massive project, built for $774 million - under their budget of $811 million - sparked enthusiasm across the diamond industry, which has seen few new mines open in recent years. Stornoway delivered the first ore to the processing plant in July 2016 and achieved full production in the summer of 2017.
Mid-tier diamond miner Petra Diamonds Ltd said its first-quarter revenue sank sharply as sales and prices fell, despite production increasing slightly compared to the same period the prior year. For Q1 FY 2020, covering production and sales from 1 July 2019 to 30 September 2019, diamond production rose 1% to 1.08 million carats from 1.07 million carats a year prior.
Rio Tinto saw its diamond output fall in the third quarter of 2019 (three months ended September 30, 2019), citing lower carat grades from its Argyle mine in Australia and lower ore availability at the Diavik mine in Canada. The multinational mining group reported a 7% decline in diamonds produced during the quarter and a 9% drop over the first nine months of the year.
De Beers' rough diamond production in the third quarter of 2019 declined by 14 percent to 7.4 million carats, with significant reductions in South Africa and Canada which the miner says was planned. "In addition," they note, "we continue to produce to weaker market demand due to macro-economic uncertainty as well as continued midstream weakness." For the year to date, De Beers ouput is lagging 12% behind the first nine months of 2018, falling to 23 million carats from 26 million carats. Q3 output fell 3% from Q2 output.
A 27% decline in the average price per carat led to an equivalent decline in total Q3 proceeds for Canadian miner Mountain Province Diamonds, as the company sold about the same number of carats as in Q3 last year.
Russian diamond mining giant Alrosa increased its Q3 diamond production by 15% year-over-year while the volume and value of carats sold declined, leading to the miner holding 40% more diamonds in stock than at this time last year. However, they write, globally, the second half of Q3 2019 saw an upward trend in rough diamond sales and a turning point in destocking in the midstream, creating a basis for the market recovery in the future.
Lucapa Diamond Co. and its respective partners have reported record production for the September 2019 Quarter (July - Sept.) as its their high-value Lulo alluvial mine in Angola and the Mothae kimberlite mine in Lesotho achieved combined production of 14,610 carats. The company says its results are "in line with Lucapa’s strategy of expanding high-value diamond production to maximise revenue generation."
Firestone Diamonds has announced a production disruption at its 75% owned Liqhobong Mine in Lesotho due to intermittent power supply. The Liqhobong Mine is supplied electricity from the Muela Hydropower Station (MHS) which is owned by the Lesotho Electricity Company (LEC) and which forms part of the Lesotho Highlands Water Project Phase 1 Katse Dam.
Mountain Province Diamonds reported a decline in carats recovered and sales in Q2 2019, but the miner's profit rose 61% to C$10.3 million (US$7.8 million) via foreign exchange gains resulting from the relative strengthening of the Canadian dollar versus US dollar. Mountain Province achieved production targets for the quarter and was ahead of plan at the end of the first half of the year despite a “very difficult rough diamond market”.
Firestone Diamonds achieved solid fourth quarter production to hit the lower end of its FY 2019 guidance, but the miner's year was made 'tough' by a market that eschewed the smaller, lower value goods that make up the bulk of the output at the Liqhobong Diamond Mine in Lesotho. Firestone produced 208,572 carats during Q4 ended 30 June 2019, representing an 34% increase compared to 155,206 carats in the previous quarter.
Petra Diamonds reported full-year revenue below analysts’ estimates on Monday and said it expects next year’s production to be slightly lower, as it struggles with a diamond market hit by weak demand and lack of easy credit. The London-based miner with operations in South Africa and Tanzania said that revenue decreased 6% to US$463.6 million (FY 2018: US$495.3 million) for the year ended 30 June 2019, reflecting a weaker diamond market.
Russian diamond-mining giant Alrosa increased its rough-diamond output in Q2 and H1 2019, but the miner's sales have fallen to a low not seen since Alrosa started publishing monthly results in 2016 as rough and polished diamond market saw weak activity and very poor demand. Alrosa pointed to changing retail practices such as consolidation and increasing online sales as reasons for a reduction in polished diamond stocks across the retail sector. As businesses embrace more efficient stock management practices, cutters and polishers reduce the volumes of their rough diamond purchases.
De Beers decreased its rough diamond production in Q2 by 14% to 7.7 million carats and revised its full-year guidance downwards to ~31 million carats in response to a backlog of polished diamond inventories in the midstream and weaker trading conditions. The overall decline was mainly driven by reductions in Botswana (Debswana) and South Africa (DBCM). The miner's H1 production fell by 11% to 15.5 million carats from 17.5 million carats during the same period a year ago.
Rio Tinto's rough diamond production fell by 10% during the first half of the year despite improved output in the second quarter compared to the first three months of 2019. Production at its Argyle mine in Australia actually increased by 18% compared to Q1, but the nearly 3.3 million carats recovered in Q2 was 5% fewer than during the same period in 2018 due to lower recovered grade, partially offset by stronger mining rates. Output at the Argyle mine reached 6.1 million carats in H1 2019, a 13% decline compared to the same period last year.
Global rough-diamond production fell to 148.2 million carats in 2018, a decline of less than 2% from the 150.9 million carats recovered in 2017; however, a 4% rise in the average price per carat led to a 2.4% increase in the value of the world's rough diamond production, according to Kimberley Process (KP) data. Global diamond production was worth $14.47 billion in 2018 compared to $14.12 billion in 2017, as the average price per carat rose to $97.5 from $93.6.
A mechanical breakdown and the mining of a lower grade area of the Liqhobong Diamond Mine in Lesotho led to a signficant production decline for Firestone Diamonds during the quarter ended 31 March 2019 (Q3 of tFY 2019), but revenue rose on a rebound in the average price per carat and the sale of high value stones.
De Beers Group reported a diamond production decline in the first quarter of 2019 driven by a 65 reduction in South Africa as the Venetia mine as it approaches the transition from open pit to underground mining. Venetia yielded only 0.4 million carats due to lower mined volumes, while the Voorspoed mine was placed onto care and maintenance in Q4 2018 in preparation for closure. De Beers' production guidance for 2019 remains unchanged at 31 - 33 million carats, subject to trading conditions.
Only weeks after recovering a 425-carat diamond, Petra Diamond's famed Cullinan mine has produced another big stone, this time a 209.9 carat D-Colour Type II diamond. The big diamond is the third +100ct Type II D color gem-quality diamond Petra has recovered since March 2019 and the fourth in this financial year. The find will take some of the sting out of the 7% production decline in the third fiscal quarter due to a slowdown at its Finsch mine in South Africa.
Despite a record year for the recovery of 'specials' (diamonds larger than 10.8 carats), including 33 diamonds in excess of 100 carats, Lucara Diamond earned its lowest revenue in six years due to the lowest average price per carat achieved in five years. Judging by their share prices, however, investors hardly seemed too concerned, as Lucara's stock price took an 8% dip following the announcement, only to regain half its loss back the next day.
According to new research published by the Fancy Color Research Foundation (FCRF), one of the most overlooked facts concerning the diamond industry is that the world’s diamond mines are rapidly depleting. Within a quarter of a century, the majority of the 45 most notable diamond mines operating today will cease to exist, and the last diamond will be unearthed in 60 years. According to the FCRF, diamond prices will rise as supply wanes.
"If even a fraction of Chinese production is upgraded to jewelry-quality diamonds, it would have a very significant impact on the global supply which is only in the low-millions-of-carats," independent diamond analyst Paul Zimnisky told Xinhua News journalists Wang Zichen and Shi Linjing.
Gem Diamonds had a banner year in terms of recoveries, sales and average prices acheived for its diamonds unearthed from its Letšeng mine in Lesotho. In addition to setting a company record for recoveries in a single year of diamonds larger than 100 carats (15) and of diamonds larger than 20 carats (257), in 2018 Gem's carats recovered increased by 13% to 126,875 carats (2017: 111 811 carats), sales jumped 29% to $267 million from $207 million, and the average price rose by 10% to $2,131 per carat, up 10% from $1,930 per carat in 2017.
Firestone Diamonds, a diamond producer with operations focused in Lesotho (Liqhobong Diamond Mine), reported "reasonsable" results in the quarter ended 31 December 2018 (Q2), increasing sales despite the "deterioration" in demand and prices for smaller, lower value stones. The miner sold 191,735 carats during the quarter, a slight decline from the 194,206 carats sold last quarter, realising revenue of $13.9 million (Q1: $13.5 million) at an average value of $72 per carat (Q1: $70 per carat).
South Africa-focused miner Petra Diamonds has seen its shares tumble 27% since Monday's announcement of its H1 2019 results, despite an 8% increase in sales and a 10% rise in production. The culprit? Near-historical low prices earned from its rough diamonds from its flagship Cullinan mine. Prices achieved from the miner's Cullinan goods slumped 31% compared to last year, earning just $96 per carat, and compared to a nine-year average of $140 per carat from 2009 to 2018, the miner said.
Multiple forces seem to be conspiring against the diamond industry these days, and if mining stocks are any indication, the wider market takes a pessimistic view of its prospects. But as independent analyst Paul Zimnisky explains in his latest analysis, "Don’t Give Up on the Diamond Industry Just Yet", to take this attitude as a foregone conclusion is to underestimate the resilience of the industry as a whole and overlook not only the enduring intangible value of diamonds, but also the impact of what may well become their much more tangible rarity.
Russian diamond mining giant Alrosa has announced its production results for 2018 and Q4 2018, reporting that annual production declined by 7% to 36.7 million carats, while an 8% decline in carats sold was offset by a higher average price per carat, leading revenues to rise 6% to $4.5 billion. The miner attributed the fall in output to the shutdown of the Mir underground mine and the completion of open-pit mining at the Udachnaya pipe.
The De Beers Group has announced its production results for 2018 and Q4 2018, reporting that annual production increased by nearly 7% to 35.3 million carats, while a 4% decline in carats sold was offset by a higher average price per carat, leading revenues to rise 2% to $5.4 billion. They said the rise is production was due to a planned increase at the Orapa mine, although the group's output was in the lower half of the production guidance range of 35 to 36 million carats.
Rio Tinto's diamond production for the year fell by 15% to 18.4 million carats from 21.6 million carats in 2017, as production at the Argyle mine in 2018 fell by 18% compared to 2017, when production was enhanced by the processing of higher grade alluvial tailings. The fourth quarter in particular put a drag on the annual figures, as the 3.2 million carats unearthed represented a 48% decline from Q4 2017 - albeit against a high base of 7.21 million carats - and a 16% decline from last quarter.
Lucapa Diamond Company has commenced commercial diamond recoveries at its new 1.1Mtpa (million tons per annum) Mothae mine, a "high-quality kimberlite resource" located in Lesotho. Lucapa has been developing a new mine at Mothae throughout 2018 to complement production from the high-value Lulo mine in Angola. During Q4 2018, Lucapa completed construction of Mothae's new treatment plant, which incorporates two XRT diamond recovery circuits, and commenced the commissioning phase.