15th Mar 2016 08:33
LONDON (Alliance News) - Gem Diamonds Ltd shares rose on Tuesday after the miner said it will pay a special dividend after reporting a rise in profit during 2015 despite its revenue coming in slightly lower year-on-year.
Gem Diamonds shares were trading up 8.6% to 107.46 pence per share on Tuesday morning.
The miner said its pretax profit from continuing operations rose in 2015 to USD99.0 million from USD95.4 million in the previous year despite revenue falling to USD249.5 million from USD270.8 million.
Lower royalty and selling costs, reduced operating expenditure and lower corporate expenses partly cushioned the fall in revenue to produce underlying earnings before interest, tax, depreciation and amortisation of USD103.5 million compared to the USD106.0 million reported in 2014.
Depreciation and amortisation costs were also lower in the year whilst it booked a slightly higher gain on foreign exchange in 2015 than it did the year before.
The diamond miner said it will keep its 5.0 cent dividend flat for 2015, building on the maiden dividend paid in 2014. However, Gem Diamonds said it will also pay a 3.5 cent special dividend for 2015.
"We are focused on making the Ghaghoo mine a significant contributor to the group's financial success, as well as concentrating on the continued development and further financial strength of the Letseng operation," said Chief Executive Clifford Elphick.
Gem Diamonds said the restructuring of the Ghaghoo mine in Botswana will be a priority as it tries to optimise the costs and reduce the cash consumption of the mine this year, and said it will consider expansion opportunities ta the mine once market conditions improve.
At the Letseng mine in Lesotho, Gem Diamonds said 2016 will see the full benefit of the coarse recovery plant, and said the plant 2 phase 1 upgrade should further enhance the potential at Letseng which will in turn add to the delivery of returns to shareholder over the short, medium and long term.
By Joshua Warner; [email protected]; @JoshAlliance
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