Rio Tinto Q1: Diavik Growing while Argyle Shrinking

Miner Rio Tinto says today first quarter production was “adversely affected by poor weather conditions” harming bottom line results. The company’s diamond operations in Argyle, Australia were affected by unusually wet weather and “tight mining conditions”.

However, the company did note that its production benefited from the increased output at Diavik as well as at several other, none diamond, operations as iron ore, coking coal and copper.

A close look at the numbers reveals that mining at Argyle has been declining over the past year. Argyle produced 3,612,000 carats during the first quarter of 2004, down dramatically 57 percent since the first quarter of last year.

Tight mining conditions at Argyle as a result of the deep open pit are presently limiting mine production. Run of mine material is therefore being supplemented with lower grade stockpiled ore giving rise to lower production throughout 2004. In the first quarter the effects of wet weather compounded this.

On the other hand, Rio Tinto’s production at Diavik leaped to 922,000 carats (representing only 60 percent of total production – the rest goes to Aber) an increase of 274 percent over the comparable quarter of 2003.

Mining at Diavik is yet to reach full production, analysts predict that to happen by July of this year.

Rio Tinto reports that the process plant operated comfortably ahead of design capacity rates of 1.5 million tons per year. Grades continue to reflect the processing of mud rich material that surrounds the kimberlite proper. This is expected to continue for the remainder of the year.

Other diamond interest includes a small-scale diamond mine and plant at Murowa at a cost of $11 million where construction started. First production is expected during the second half of 2004.

Diamonds exploration continued in Andhra Pradesh, Karnataka and Madhya Pradesh in India and mobilisation of field crews and equipment commenced at several diamond projects in Nunavut and the Northwest Territories in Canada.

A 26 ton sample was collected by drilling a kimberlite pipe in Mauritania.