17th May 2016 08:54
LONDON (Alliance News) - Gem Diamonds Ltd Tuesday said its flagship mine in Lesotho has seen production fall since the start of the year whilst prices have experienced a slight dip and said it has started to make progress with the downsizing of its other mine in Botswana.
The miner said it achieved an average price of USD1,938 per carat sold from its Letseng mine in Lesotho during the first three months of 2016, which is lower than the prices achieved a year earlier and in the final quarter of 2015.
Prices in early 2015 averaged USD2,157 per carat, 10% higher than the first quarter of 2016, whilst prices in the final three months of last year averaged USD2,117 per carat, 8.4% higher.
Despite the fall in prices, Gem Diamonds Chief Executive Clifford Elphick said the "top quality" diamonds from Letseng achieved a "steady" price.
In addition, production from the Letseng mine has fallen since the start of the year, delivering 28,969 carats in the first quarter of 2016. Although that is 28% higher than a year earlier, it is down 1.3% from the 29,100 carats produced in the final quarter of 2015.
Although grades at Letseng rose quarter-on-quarter to 1.77 carats per hundred tonnes from 1.61 carats, a reduction in the amount of ore treated to 1.6 million tonnes from 1.8 million tonnes caused production to fall overall.
At the Ghaghoo mine in Botswana, the miner is downsizing the operation and focusing on cost reduction. A total of 11,029 carats were produced in the first three months of 2016, less than half the 24,294 carats produced in the final quarter of 2015.
Prices for production from Ghagoo averaged USD160.0 per carat in the first quarter of 2016, up from USD150.0 per carat in the previous quarter but slightly down from the USD162.0 per carat average price achieved over the entire year in 2015.
"A parcel of 14,114 carats of Ghaghoo diamonds was sold during the period for an average of USD160 per carat, which is some 7% above the previous price achieved in December 2015," said Elhpick.
Notably, Gem Diamonds said it recovered 47 diamonds from Ghaghoo that were greater than 4.8 carats each, including three diamonds larger than 10.8 carats each - the largest being a 12.99 carat diamond.
"At Ghaghoo the downsizing of the operation is advanced and the buffer zone around the sand ingress has been successfully created. Development of the second production block on Level 1 has progressed well and will be the main source of ore for the remainder of the year," said Elhpick.
Gem Diamonds said it had cash of USD68.8 million at the end of March, excluding the proceeds from the most recent tender to be held at Letseng, of which USD60.6 million was attributable to the company. At the end of 2015, cash stood at USD85.7 million.
Gem Diamonds shares were up 0.3% to 135.38 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Gem Diamonds Di