21st May 2015 07:38
LONDON (Alliance News) - Gem Diamonds Ltd Thursday said production from the Letseng mine in Lesotho fell in the first four months of 2015, but said revenue benefited from increased sales and better prices, as its mine in Botswana remains on track to begin production in the second half.
The diamond miner said it recovered 31,369 carats from the Letseng mine in Lesotho in the four months to April 30, down 8% from the four-month period ended December 31, when it recovered 34,205 carats. The average grade also fell to 1.58 carats per hundred tonnes from 1.63 carats.
Despite that production fall, sales from Lesotho increased to 35,940 carats from 31,614 carats and achieved a better average price of USD2,146 per carat, up from USD2,140 per carat in the last four months of 2014. In the first four months of 2015, sales totalled USD77.1 million after experiencing a 14% lift from USD67.7 million.
"It is pleasing to see that the prices achieved for the first three Let?eng tenders of 2015 are on a par with those of the fourth quarter of 2014, despite a noticeably weaker overall market for the first quarter of 2015 as reported by other diamond producers," said Chief Executive Clifford Elphick.
Gem Diamonds has recovered a 314 carat white diamond from the Letseng mine since the beginning of 2015, which was sold into a partnership arrangement in May. A further three high-quality diamonds of over 100 carats each also were recovered.
The Plant Two, Phase One upgrade was completed on budget and on schedule at Letseng in the period, and is operating well and on track to achieve its increased head feed target of an additional 250 000 tonnes of ore per year, Gem Diamonds said.
Since the start of 2015, despite production falling, the company mined more ore, totalling 7.3 million tonnes compared to 6.8 million tonnes in the last four months of 2014, which the company said "was in line with the revised mine plan".
The company's other operation, the Ghaghoo mine in Botswana, is currently being developed. The company said it has developed the current production area to make more ore available for the plant at the site to treat. Since the start of 2015, 67 330 tonnes of ore have been treated to recover 16,174 carats.
As the production area expands and more production faces become available, together with the planned delivery of additional mining equipment scheduled for late May, the mine is on track to ramp up to full production in the second half of 2015 as planned, it said in a statement.
"The progress at Ghaghoo has also been satisfying with increasing tonnages achieved each month during the period as planned, with an average grade of 29 carats per hundred tonnes being achieved in recent weeks, in excess of the reserve grade," said Elphick.
On Thursday, Gem Diamonds had cash on hand totalling USD92.5 million, with a net cash position of USD56.9 million.
Gem Diamond shares were down 2.2% to 146.00 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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