27th Jan 2015 08:54
LONDON (Alliance News) - Gem Diamonds Ltd saw its shares drop early Tuesday after it warned that diamond prices had weakened in recent months and were set to fall further, even though it said it was still on track to pay its first ever dividend on the back of strong results for 2014.
In a statement, the diamond miner said it recovered 25,525 carats at its Letseng mine in the fourth quarter of 2014, down from 28,365 carats in the third quarter, while it achieved an average value of USD2,140 a carat, down from USD2,603 a carat in the previous quarter.
Its average price for the whole of 2014 was still USD2,540 a carat, up from USD2,043 a carat in 2013, while production rose to 108,569 carats, from 95,053.
"The long term outlook for the diamond market remains strong, however during the fourth quarter the diamond market saw a weakening of prices following a year of price growth. This trend may continue into the first quarter of 2015," Chief Executive Clifford Elphick said in a statement.
Still, the CEO said GEM Diamonds remains on track to declare a maiden dividend after it reports its 2014 financial results in March.
The company said it ended the year with USD110.7 million in cash, of which USD99.4 million is attributable to the company. It had also drawn down USD37.1 million of its total USD78.7 million debt facilities, meaning its net cash balance was USD73.6 million.
Elphick was positive about the company's operational performance during the year. He said production was up at its Letseng mine in Lesotho, and it's on track to upgrade the plant at the mine in the first quarter of this year and commission the new course recovery plant in the second quarter.
The company is forecasting that it will recover 100,000 to 105,000 carats at Letseng in 2015.
He added that the company has undertaken significant work to stop the fissure water that it intersected at its Ghaghoo mine in Botswana, and it has started a production ramp-up at the mine. The first sale of diamonds will take place in February, and the CEO said the company has already made encouraging recoveries of larger and coloured diamonds.
It said it will give guidance for the mine at the end of the second quarter, once production stabilizes.
Gem Diamonds shares were down nearly 4.0% at 162.25 pence early Tuesday.
By Steve McGrath; [email protected]; @stevemcgrath1
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Gem Diamonds Di