5th Nov 2019 12:04
(Alliance News) - Gem Diamonds Ltd said on Tuesday it renewed the lease for the Letseng mine in Lesotho and reduced its outlook on diamond sales, as prices "remain under pressure".
In the trading update for the third quarter ending September 30, the miner said its capital expenditure has been reduced by USD7 million, reducing expected capital spend for 2019 to around USD12 million.
The company said it sold 25,631 carats during the quarter, down 10% from 28,379 in the second quarter, while achieved prices declined by 6% to USD1,417 per carat from USD1,501.
"Prices for smaller and commercial type goods remain under pressure with polished inventory levels remaining high," the company said. "Larger high-quality diamonds have also experienced some price pressures in 2019, contributing to the lower prices achieved during the period."
Production from the Letseng mine totalled 27,539 carats in the third quarter, up 1% from 27,210 in second quarter.
Gem Diamonds said there was lower-than-expected contribution from the mine's Satellite pipe, which is being developed in addition to the Main pipe. It said that as the mine transitioned into the new cutback to accommodate the planned increase in contribution from the Satellite pipe, a deviation was identified in the anticipated contact face position.
"Due to the contact variance in the Satellite pipe, the forecast contribution for 2019 has been reduced. The overall impact on carats recovered for the year remain unchanged; however carats sold have been reduced due to the lower contribution from the higher-grade Satellite pipe," the company said.
Gem Diamonds also said it has renewed the lease for its Letseng mine with the government of the Kingdom of Lesotho.
Gem Diamonds, which owns 70% of Letseng mine, said the lease is renewed for an immediate period of ten years with an exclusive right to renew the lease for a further ten years.
Gem Diamonds shares were up 2.9% in London at 63.07 pence each on Tuesday.
By Loreta Juodagalvyte; [email protected]
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