Burgundy Diamond Mines (ASX:BDM) has been battered heading into the Week 29 weekend after suspending its Point Lake diamond operation in Canada and sacking several hundred employees and contractors.
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The Oz miner made the snap call mid-Week 29 as once-strong diamond prices continued to sag towards new lows. Its other site, Misery Camp, is unaffected.
“Burgundy made the decision to temporarily suspend open pit mining at Point Lake, which constitutes a shift from surface mining operations in the short term,” company communication chief Ariella Calin said today.
Point Lake recently recorded a 67.7K carat yield through processed bulk samples, but subsequent pricing analysis revealed it would be “sub-economic” to continue.
Shareholders weren’t particularly happy with this week’s news, if price action is anything to go on, and by lunchtime today, Burgundy had lost as much as -20%. There was some slight recovery; BGN is at 3.3cps at time of writing.
Friday’s bomb leaves Burgundy at -61.8% YTD. It’s lost -80% in the last 12 months.
The mine suspension was the main reason for the layoffs, with many employees and contractors now redundant. A skeleton crew has been kept on to ensure “operations can be restarted when market conditions improve.”
Today, one-carat diamond prices are at around $3,987, per Diamond Prices.
Operation or no, Burgundy is due to share a quarterly update in late July.
Before that ships to shareholders, the beleaguered diamond miner is expected to run a “reset” on its operational model; HotCopper understands it plans to run with an adjusted plan that doesn’t rely on near-term surface operations.
Mining at Misery continues too: Production rates there have improved in recent months thanks to improved mining techniques and equipment utilisation.
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