Gem Diamonds Posts 54% Jump in Revenue in H1

gem-diamondsLondon: Gem Diamonds Limited reported its revenue rose 54 percent to $148.9 million in the half year ending June 30. The miner reported attributable profit of $19.7 million, up 129 percent from a year earlier.

“Excellent financial performance with significant growth in revenue, strong cash flow further enhancing the balance sheet and [the firm is] on track to consider declaring a maiden dividend for 2014 financial year,” the firm said in a statement.

“Extremely strong operational performance with continued focus on process improvements and growth projects [are] set to unlock further value.”

At its 70-percent owned Letšeng mine in Lesotho, carats recovered rose 29 percent on the year to 54,678.

The average price per carat achieved for the first five tenders of 2014 was up 58 percent on a year before to $2,747. The miner said that three diamonds greater than 100 carats recovered.

CEO Clifford Elphick said: “The first half of 2014 was a very strong start to the year for Gem Diamonds with an exceptional performance at Letšeng. The ongoing focus on low capex, value accretive projects, resulting in increased diamond liberation and reduced diamond damage have been implemented at Letšeng and are bearing fruit.

“This, together with the current mine plan and the higher proportion of Satellite Pipe ore mined during the period, has resulted in a 29-percent increase in carats recovered compared to the corresponding 2013 period. Strong sales and robust demand throughout the period has underpinned the positive start to the year.”

The miner said that extensive mineral resource management work following the latest drilling and evaluation campaign at Letšeng “has greatly enhanced the resource and reserve position of the company, approximately doubling Letšeng’s in-situ value of the reserve to $ 4.6 billion. All of Letšeng’s optimal open pit, with a life of mine of 21 years, is now fully contained in the Probable Reserve category”.

The company added that “good progress” has been made at its Ghaghoo operation with the mine built on time and on budget and that commissioning has begun.

“The first diamonds produced during the commissioning of the plant have, as anticipated, been of a higher quality and average size than those mined during the exploration phase. A 20-carat and two 10-carat diamonds have been recovered from the first 2,400 carats recovered as at end of June 2014. This compares to the largest diamond recovered in the exploration sampling of seven carats.

“During the development of the underground production level a significant ingress of water was encountered which has been dealt with quickly and efficiently. It is not anticipated that there will be any impact on the planned production targets for 2015.

“The company has increased its cash position to a group cash balance of $114 million which is significant given the board of director’s stated intention of considering paying a maiden dividend for the 2014 year.”