Gem Diamonds Profit And Revenue Slide On Lower Prices And Production

(Alliance News) - Gem Diamonds Ltd on Thursday reported a decline in interim profit and revenue ...

Alliance News 5 September, 2019 | 11:05AM
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(Alliance News) - Gem Diamonds Ltd on Thursday reported a decline in interim profit and revenue following a decline in both production and prices.

Gem, which owns 70% of Lesotho's Letseng mine, recovered 56,668 carats in the six months to June, 8.0% lower than the year before. The average price tumbled 38% year-on-year to USD1,697 per carat, but prices were 10% higher than the second half of 2018.

Gem's revenue fell 45% to USD91.3 million, with pretax profit slumping 72% to USD18.7 million.

Gem also owns the Ghaghoo mine in Botswana, but this has been put on care & maintenance and is currently undergoing a sale process. This was counted as a discontinued operation in the results.

"The first half of 2019 started exceptionally well, with the recovery of a 13.32 carat pink diamond which sold for a Letseng record of USD656,934 per carat, reaffirming the unique quality of the mine's diamond production," said Gem.

"A further four diamonds greater than 100 carats were also sold and Letseng achieved an average price of USD1,697 per carat from the sale of 55,714 carats. The prices achieved for the period, 10% up from the prices achieved in second half 2018, are notwithstanding the planned limited contribution from the Satellite pipe material and current diamond market conditions."

Gem also had its first worker fatality during the period for six years, after a sub-contractor vehicle was involved in an accident at Letseng.

Looking ahead, Gem said: "In the medium to long term, rough diamond prices are expected to be supported by the favourable demand/supply fundamentals, which are underpinned by a continued growth in demand from emerging markets coupled with a limited growth in supply. In the short term, supply is expected to decrease with the depletion of existing mines."

Shares were 1.2% higher on Thursday morning in London at 72.87 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 32.70 GBX 2.19 -

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