May 21, 2009 / 6:24 AM / 10 years ago

UPDATE 1-Petra Diamonds says to suspend Kono project

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LONDON, May 21 (Reuters) - African diamond producer Petra Diamonds Ltd (PDL.L) has suspended development of its Kono project in Sierra Leone due to weak gem prices, the London-listed company said on Thursday.

The project, a joint venture with Stellar Diamonds Ltd, is at an advanced stage of exploration and underground trial mining has already been undertaken.

“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,” Petra said in a statement.

“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.”

Under care and maintenance, essential upkeep is undertaken to keep a mine from deteriorating to allow reopening later.

“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,” chief executive Johan Dippenaar said.

Kono has so far produced over 4,400 carats from trial mining. (Reporting by Eric Onstad; Editing by Dan Lalor)

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