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UPDATE 2-Vaaldiam mulls options on diamond mine; shares drop
April 21, 2010 / 2:42 PM / 7 years ago

UPDATE 2-Vaaldiam mulls options on diamond mine; shares drop

* Says will either restart or sell Chapada diamond mine

* Sees diamond production by Q3 at Duas Barras mine

* Says mine to generate immediate cash flow

* Shares down 8 pct (Adds details, share movement)

April 21 (Reuters) - Canada’s Vaaldiam Mining Inc VAA.TO said it will restart one of its two Brazilian diamond mines and was mulling restarting or selling the other mine despite a recovery in rough diamond prices.

Rough diamonds are not traded on futures exchanges, but prices probably tumbled about 60 percent during the downturn and have already recovered close to the previous peaks hit in early 2008 and diamond producers are set for a boost from a recovery in gem prices. [ID:nLDE60P0UM]

Shares of Vaaldiam were down about 8 percent at 29.5 Canadian cents Wednesday afternoon on the Toronto Stock Exchange.

The diamond miner and explorer said it would either restart or sell its Chapada diamond mine, which produced over 33,000 carats from 2006 to 2008, while it was going to restart its Duas Barras mine, which is expected to produce 20,000 carats in 2010.

The company, which was recently merged with Tiomin Resources Inc, had shut the Chapada mine in July 2008 and the Duas Barras mine in November the same year due to a weak diamond market and high operating expenses.

“The mine (Duas Barras) is expected to generate immediate and self-sustaining cash flow for Vaaldiam from the sale of diamonds and gold,” Chief Executive Robert Jackson said in a statement.

Vaaldiam expects operating costs to average $85 per carat at the Duas Barras mine when production starts by the third quarter.

Before the financial crisis, the mine achieved average rough diamond sales value of $165 per carat, the company said. (Reporting by Arnika Thakur in Bangalore; Editing by Gopakumar Warrier, Maju Samuel)

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