Gem Diamonds Guides For Lower Output Despite Solid Annual Outturn

LONDON (Alliance News) - Gem Diamonds Ltd registered solid growth in both diamonds found and sold ...

Alliance News 7 February, 2019 | 9:10AM
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LONDON (Alliance News) - Gem Diamonds Ltd registered solid growth in both diamonds found and sold during 2018, the miner said on Thursday.

However, Gem does expect both production and sales to fall slightly in 2019.

Gem, which owns Lesotho's Letseng mine and the Ghaghoo mine in Botswana, recovered 126,875 carats of diamonds in 2018, up 13% year-on-year. Fourth quarter recoveries fell 17% on the prior quarter, however, to 29,523 carats.

Carats sold rose 9% to 33,140 in the fourth quarter. For 2018, carats sold increased 17% to 125,111 carats with a total value of USD266.6 million from USD206.8 million a year before

The average price for 2018 was USD2,131 per carat, 10% higher year-on-year.

During the fourth quarter, nine diamonds were sold for more than USD1 million each. Overall in 2018, 44 rocks were sold for at least USD1 million.

Looking to 2019, Gem is guiding for carat recoveries of between 114,000 carats and 118,000 carats. It hopes to sell between 115,000 carats and 119,000 carats of diamonds.

On the development front, manufacturing of a pilot plant has begun at Letseng, and should be commissioned by the end of the second quarter of 2019. Gem hopes the plant will help find diamonds within kimberlite ore.

Gem is on track to achieve its target of USD100 million of incremental revenue, as well as productivity and cost improvements, in the four years to 2021.

At the end of 2018, Gem had USD50.8 million in cash, and net cash of USD17.5 million.

Chief Executive Clifford Elphick commented: "The large diamond recoveries continued during the period with three diamonds greater than 100 carats being recovered, resulting in the highest number of these recoveries in a single calendar year.

"Production in 2018 also included a record number of diamonds greater than 20 carats being recovered in a single year," he added.

"The revised mine plan results in a significant reduction in Letseng's overall stripping ratio due to steeper slope angles, which is expected to result in a significantly improved net present value of the mine."

Gem's new plan has already commenced, it said, and it will release more details of the plan alongside 2018 results on March 13.

Shares were 3.5% lower Thursday at 104.71 pence each.

By George Collard; georgecollard@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Gem Diamonds Ltd 24.50 GBX -2.00 -

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