DIAMOND NEWS ROUNDUP — De Beers and Russians negotiating to

Retail sales of diamond jewelry continued to improve in 1994. But despite this upward trend, De Beers Consolidated Mines reported earnings of US$555 million for the year, representing a 7% decrease from the US$595 million earned in 1993.

Retail sales, however, rose by 4% last year, based on an encouraging increase in the U.S., further growth in the Far East, and

better-than-expected sales in Europe and Japan.

Nevertheless, sales of rough diamonds by the Central Selling Organization (CSO) were 3% lower than in 1993. The prime reason, says De Beers, was “the continued, and indeed increased, sales by the Russians, outside of the quota arrangement.”

Gary Ralfe, CSO’s manager, recently told a group of analysts that many hundreds of millions of dollars are bypassing the organization: “I do not plan to give you a figure of our analysis of what those sales are, other than to say that what one has seen in the press — a figure of US$700-800 million of rough sales from Russia reaching the market in Antwerp and Tel Aviv — is not a number that we would take issue with. Nor would we take issue with Mr. Bychkov, who is head of Komdragmet, being quoted in the press as giving a figure of US$1.05 billion as representing the totality of the polished, part-processed and rough sales from Russia to the markets outside the sales to the CSO.”

Ralfe noted that CSO purchases exceeded $1 billion, “and so these two are very much in the same ball park.” He added that if you combine all the figures, total sales from Russia exceed $2 billion. “We would like to contrast cents this estimate] with a production figure, again given by the Russian side to the press, of $1.2 billion last year. So whatever the original size and make-up the stockpile of Komdragmet was, it is a finite stockpile and it was being depleted last year at a very substantial rate,” he said. The Russians and De Beers have undertaken not to speak about the details of their negotiations for a renewed marketing agreement. However, it is apparent that neither party is satisfied with the present arrangement. The Russians want to see a larger quota for Russia with CSO, and are believed to be unhappy about certain aspects of CSO’s pricing policy. The Russians are also on record as wanting to increase production of polished diamonds in their country, and they want to have as much beneficiation of diamonds take place in Russia as possible.

As for De Beers, Ralfe says CSO is not happy with a situation “that makes a mockery of the quota arrangement.” Nor is it satisfied with the position “whereby we run the risk of becoming the residual buyer of Russian diamonds after other buyers have been able to pick what they want out of the production or out of the stockpile.”

Meanwhile, De Beers continues to monitor developments in Canada’s North. As of yet, however, no serious discussions have taken place with BHP Minerals, the operator of the most advanced project in the region, a joint venture with Dia Met Minerals (TSE).

“We do believe that Canada will have at least one diamond mine in the near future, and one or two more to follow,” said De Beers spokesman Roger van Eeghen. “But it is still early days.”

Van Eeghen said De Beers dropped the Yamba Lake option in the Northwest Territories because results did not merit further work. But he added that the company’s exploration subsidiary, Monopros, is continuing to prospect its own targets in Canada and that it is involved in a joint venture with the Slave Syndicate covering a large land package in the Territories.

De Beers also has prospecting programs in several African countries, as well as in Brazil, Australia, Finland and India.

Northwest Territories

* Additional kimberlite intersections at the AK property sparked buying interest in joint-venture partners Mountain Province Mining (VSE), Glenmore Highlands (ASE) and Camphor Ventures (VSE).

Earlier this year, the companies, which hold 50%, 40% and 10% interests in the property, respectively, reported the intersection of kimberlite on the 5034 target. A stepout hole in the western portion of the discovery area was stopped in kimberlite at a depth of 154 metres while a second stepout hole, now in progress, also intersected kimberlite.

Microprobe analysis of G10 garnets found in the discovery hole indicates the pyropes are from within the diamond stability field, but investors will have to wait until core is processed before finding out if it actually contains any diamonds.

Meanwhile, joint-venture partners ITL Capital (VSE) and Riley Resources (VSE) expect soon to begin drilling on their Lac de Charloit property, which is in the vicinity of the AK ground.

Saskatchewan

* Drilling on claim block

S-103400, in the Tobin Lake area, will get under way shortly. The program will test a target up-ice from a previous drill hole (85A), which intersected a breccia. The rock is believed to be a reworked epiclastic component of a crater facies kimberlite pipe complex.

The property is owned 50-50 by Consolidated Pine Channel Gold (VSE) and Golden Peaks Resources (VSE). A group of three companies — First Choice Industries (VSE), Coronation Mines (VSE) and Miranda Industries (VSE) — is earning a 33.3% interest.

* Elsewhere in the province, Kensington Resources (VSE) has agreed to acquire a 25% participating interest in the Fort a la Corne joint venture; the other partners include Uranerz Exploration & Mining, Cameco (TSE) and Monopros. To acquire the interest, Kensington will pay $3.4 million on exploration, including large-diameter drilling on previously unexplored kimberlites, as well as on those that have returned encouraging macrodiamond counts. Overseas

* In Russia, Archangel Diamond (VSE) reports that drill hole 21 on its half-owned Windy Ridge property returned diamond counts over a 17.1-metre intersection. A total of 506 microdiamonds were recovered from the first 8.1 metres (7 kg), followed by 723 microdiamonds over the remaining 9 metres (11 kg).

The diamonds are hosted in a clean, fine-to-medium-grained sand resting on 0.2-metre-thick, pebbly sand.

A 1,200-metre drilling program is attempting to locate the source of the diamonds.