Jul 31, 2015

Gem Diamonds Reports 18% Sales Decline in H1 2015

Gem Diamonds Limited has issued a Trading Update for the six month period ended June 30, 2015, reporting an 18% decline in value and a 15% fall in volume in sales as compared to the preceding six months period (H2 2014). The miner noted that despite difficult market conditions, there was only a small 3% fall in the average price per carat.

Sales of rough fetched US$ 106.3 mn as against US$ 129 mn in H2 2014, while the carats sold were 46,961 as aginst the 55,164 carats sold in H2 2014. The average price per carat was US$ 2,264 as against the US$ 2,338 realised in the earlier period.

The Letseng mine continued to produce high value diamonds whose prices remained firm despite difficult market conditions. There were 13 rough diamonds that achieved a value of greater than US$ 1.0 mn each. Further, a 314 carat Type IIa white diamond and another outstanding quality 357 carat Type IIa white diamond was recovered which are expected to be sold in Q3 2015.

Further, four diamonds of over 100 carats each were sold in the Period, including a top quality 108 carat Type IIa rough diamond which sold for US$ 65,226 per carat

At Letseng, the Plant 2 Phase 1 upgrade and the Coarse Recovery Plant construction were successfully completed on time and within budget. On the first day of its operation, the new XRT unit recovered a high quality 52 carat Type IIa diamond.

The company reported that at Ghagoo, the recovered grade in latter part of H1 2015 was above reserve grade, with recovery of larger diamonds beginning to fill gaps in size frequency distribution model. Small size blue and pink coloured diamonds were also recovered, confirming presence of these valuable diamonds in the ore body.

A 48 carat diamond was recovered in July 2015 with an increasing number of diamonds in the 10 to 30 carat size range being recovered, albeit still below modelled frequencies

A second parcel of 29,891 carats of commissioning phase production sold for US$ 4.9 million in July 2015 (US$ 165 per carat) in a difficult market.

Gem Diamonds’ CEO, Clifford Elphick commented, “The recovery of large high quality diamonds continues to define the Letšeng mine and it is pleasing to see that prices for these goods have remained firm despite the current difficult diamond market conditions.

The development of the Ghaghoo mine is progressing slower than planned due to difficult ground conditions which have hampered slot development in the first five production tunnels and constrained production ramp-up.”