Canada-based diamond exploration company Shear Diamonds Ltd said it delivered in May its first parcel of diamonds to Taché Company NV, Shear's diamond marketing partner, for sale into end markets. This first parcel amounted to 11,317.98 carats.
Pending ultimate determination of the prices to be paid by Taché for the parcel, Taché has made an initial payment of $500,000 to Shear. Taché will reconcile a final payment to Shear once prices per carat can be ascertained based on the formula provided in the marketing agreement, Shear said.
While it is anticipated that the ultimate amount to be paid by Taché will exceed the initial payment made to Shear by Taché, recent significant reductions in world rough diamond market prices have resulted in an expected ultimate price for the parcel being significantly lower than world market prices existing until very recently.
Although Shear has had considerable success in starting up and steadily improving processing, it had to temporarily suspend processing for two full days and reduce processing for an additional two days to address clean-up requirements for wind dispersed fine processed kimberlite which came to light as a result of spring thawing. Processing has now fully resumed, the miner said.
On the recommendation of operations personnel, the processing rate has been slowed to more fully maximise the processing yield.
Shear's processing activities to date are meeting two of Shear’s three stated goals, in that Shear has demonstrated that a significant number of diamonds went unrecovered by Jericho's prior operators and can be recovered, and Shear has acquired – and continues to acquire – key processing knowledge which can be applied to future production at Jericho. However, the recent drop in world diamond market prices, which are significantly lower than those used for Shear's operating plans and budgets, will not generate sufficient cash flow to support operations, the company said.
Efforts continue to achieve around-the-clock processing to generate significantly greater carat recovery, and it is anticipated that 24-hour processing will commence shortly. Lower current diamond prices need to be offset with greater production. Shear must obtain financing in the very near term to fund continuing operations and to increase production by going to around-the-clock processing, the miner said.