Gannicott told analysts that some underground mine development at Diavik is being differed with the timeline on the US$875 million expansion pushed back until 2012.

In a statement, Burt said, "We are acting on a rare opportunity to acquire a stake in one of the world's great diamond mines, operating in northern Canada, with a long mine life and a record of strong cash flows. For Kinross, this represents a strategic investment that is accretive and has the potential to create excellent long-term value for our investors."

"We view diamond mining as complementary to our core business of gold mining, which remains our primary focus," he said. "We believe that, as with gold, the long-term supply and diamond fundamentals for high-quality diamonds are strong. Harry Winston occupies a unique and respected place in the global diamond business and we look forward to working with them in the future."

Burt told analysts, "We think there is significant potential for Harry Winston stock to recover especially in contemplation of future diamond shortages and potential economic recovery." He also mentioned that the deal is tax effective for Kinross.

Meanwhile, Gannicott told analysts that he sees a "little light in the diamond pipeline" despite the global economic crisis. Although the polished diamond market is down 20% from its peak, the rough diamond price dropped 40%, and diamond offtake is "down highly due to destocking," Gannicott said quality engagement stones "are picking up."

Therefore, he suggested, rough diamond prices will see some recovery in the near term. However, Gannicott cautioned, beyond that diamond companies will have to wait for the world to economically recover.

Harry Winston said the new relationship with Kinross will enable the diamond company "to access Kinross' mining expertise in a broad variety of geographic environments, as well as their financial strength, to complement the acknowledged diamond expertise of Harry Winston."

Full article at mineweb.net