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Annual Results

Gem Diamonds' revenues and earnings fall

15 March 2017 07:21

Gem Diamonds' revenue fell to $189.8m in the year to the end of December while underlying earnings before interest, tax, depreciation and amortisation of $62.8m was down from $103.5m in 2015.

Profit for the year fell to $32.3m from $67.4m and attributable profit (before exceptional items) was down at $17.7m from $41.8m in 2015.

The board has resolved not to propose the payment of a dividend.

Chief executive Clifford Elphick said: "Letseng has performed well operationally and achieved all production metrics within targets and guidance.

"Demand and prices achieved for the large, high quality diamonds recovered from Letseng have remained firm, but the decline in 2016 in the recovery of diamonds larger than 100 carats has had a disappointing impact upon revenue and cash flow.

"This recovery rate is consistent with the normal, short term variability of the resource. Based on a detailed geological understanding of the resource, we remain confident that Letseng will continue to produce exceptional diamonds.

"At Ghaghoo, solid progress was made developing the mine. Given the low prices achieved for this category of diamonds, the mine was placed on care and maintenance in February 2017.

"Ghaghoo provides Gem Diamonds with flexibility to restart operations, when prices for this category of diamonds recover.

"The supply demand fundamentals for the diamond industry remain strong. Focus in 2017 will be on cash generation.

"At Letseng, the implementation of the updated life of mine plan is expected to improve cash flows through an optimised waste mining profile."

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