BRC scales back to preserve cash

Sustained lower prices for diamonds and the deepening economic downturn have led BRC DiamondCore (BCD-T, BCD-J) to move towards putting two of its South African operations on the bricks.

BRC announced in December that its bulks sampling operations at its Silverstreams project would resume in early January, but now says that won’t happen.

The company still plans to shut down its Paardeberg East operation soon and says it will have to down-size its Silverstreams project to one shift from a three shifts.

“By maintaining one shift at Silverstreams we retain flexibility and can rapidly resume an increased level of production if justified by market conditions, while maintaining the benefits of a downsized operation,” Mike De Wit, BRC’s president said in a statement.

Silverstreams is BRC’s most advanced alluvial diamond project.

Trial mining of alluvial diamonds has been on going while it explores for kimberlite potential.

Silverstreams covers 35.89 sq. km along the bank of the Orange River roughly 14 km from the town of Prieska.

As for Paardeberg East, the project is considered to be BRC’s most advanced kimberlite exploration project.

It is made up of licences that cover different portions of the farm Paardeberg East which sits roughly 35 km west of Kimberley in the Northern Cape Province of South Africa.

Following through on the scale backs at the two projects, however, will require talks with workers at the mines and their unions in accordance with the South African labour act.

A third project, De Kalk, was the subject of a bulk sampling operation as well. BRC announced, however, that the out-sourced contract for the sampling expired at the end of December and wasn’t renewed.

De Kalk is an alluvial diamond project and sits on the southern bank of the Orange River, in the Hopetown district of the Northern Cape Province. Historical production from the area is estimated at 644 carats.

BRC began bulk sampling at the De Kalk project at the beginning of August last year.

The move to scale-back operations, BRC says, is “essential” given the need to conserve cash given the poor global economic situation.

The company says is counting on better rough diamond prices, a stronger US dollar exchange rate against the South African rand and lower energy costs, to bring back the projects in 2009.

BRC has operations in South Africa and the Democratic Republic of the Congo DRC.