Stellar Diamonds (LON:STEL) has increased diamond production at the Mandala mine by 31% in the third quarter from the second quarter.
In the three months ended 30 September, 18,291 carats were produced at the Mandala mine in south east Guinea. The company sold 18,549 carats in the period, at an average price of US$33 per carat to generate US$609,000 in revenue.
The company highlighted that production was significantly higher because of the new earth moving machinery which came into operation in late July.
Investors welcomed the news as shares advanced around 6% in early trading on London’s AIM market.
"Production at Mandala during the third quarter saw an increase of 31% on the second quarter figures even though heavy seasonal rains caused mining operations to focus on lower grade areas,” chief executive Karl Smithson said.
"Passing the 100,000 carat mark at Mandala is an important milestone for Stellar and demonstrates our capability to deliver mining projects in West Africa."
“With improving weather conditions I am confident that production and revenues, as well as margins, can be further enhanced.”
Mandala is one of Stellar’s two producing diamond mines in Guinea, the other being the Bomboko mine to the North West. Bomboko has produced 4,000 carats as at 30 June 2010.
The medium term strategy is to use the producing assets to fund the development of its high-grade kimberlite projects and key growth projects at Kono and Tongo in Sierra Leone and the Bouro and Droujba projects in Guinea.
Astaire Securities analyst Andrew McGeary said the statement was a positive update.
The analyst highlighted that by targeting higher grades and volumes as the rainy season subsides, Stellar can further boost its performance further in the coming months.
Today’s quarterly production report represents a notable milestone, as it takes Mandala’s total diamond production to 100,002 carats.
Mandala began production in April 2009.
In 2010 Stellar have sold 51,471 carats to generate $1.7 million in revenue. So far average diamond prices have increased by 20%, to $33.86 per carat compared with $28.16 per carat last year.
Stellar said this reflects the general improvement in global diamond prices.