TORONTO (CP) -- Tahera Diamond Corp. [TSX:TAH] shares were down more than 22% Friday afternoon after the miner reported cash-flow problems and said its third-quarter loss widened to C$10.8 million.
The company said the start of commercial production at its Jericho diamond mine in Nunavut on July 1 ''had a significant impact'' on its financial results. It now expects to produce fewer diamonds than originally planned, due to lower-grade kimberlite rock and slow processing rates.
On the Toronto stock market, Tahera's stock was down 29 cents at C$1.02, with 7.6 million shares traded by early afternoon. The shares had lost as much as 32% of their value, to 89 cents each, earlier in the session.
Chairman and CEO Peter Gillin told investors Tahera has begun discussions on financing to determine how it might fund its resupply requirements in the first quarter of 2007.
''As a results of the lower-grade realizations and the lower throughput we had experienced in the quarter, our cash flow from operations was less than we had anticipated,'' Gillin said in a conference call.
As part of these discussions, the company has approached Tiffany & Co. with respect to deferring scheduled repayments on its C$35-million loan until the second half of 2007.
Tahera has a marketing and financing agreement with the New-York-based jewelry giant. Under the deal, Tiffany is to buy or market all of the diamond production.
''A decision with respect to all of these financing arrangements we expect to make quite shortly,'' Gillin said, adding a full range of options is being considered.
But even with its pressing need for cash, the company gave assurances it is not considering a stock consolidation - a reduction in the number of its shares to boost their value - at this time.
For the quarter ended Sept. 30, Tahera said late Thursday its loss amounted to seven cents a share, versus a year-earlier loss of C$658,000 or zero cents a share.
The Jericho diamond mine is Canada's third diamond mine and the first in Nunavut. Ore throughput for the period ended Sept. 30 improved modestly to 157,000 tonnes from about 145,000 tonnes in the previous period.
The grade per tonne of kimberlite ore processed was 0.62 carats per tonne for the quarter and 0.61 carats per tonne year-to-date, lower than original expectations.
Meanwhile, cash operating costs per tonne of ore processed totalled C$85, ''well above'' what was envisaged in the feasibility study, observed Brian Christie of National Bank Financial.
''Clearly, we're focused on reducing costs,'' Gillin added. ''The estimates for next year, the C$80 to C$90 range, is a double-mining shift scenario which does increase the costs.''
The nine-month loss was C$8.2 million or five cents a share, compared with C$1.4 million or one cent per share a year ago. Revenues totalled C$1.3 million, versus nil last year.
(c) The Canadian Press 2006
