Gem Diamonds reports decline in carats recovered

(Sharecast News) - Gem Diamonds said in a trading update on Tuesday that throughout the first half, a total of 12 diamonds were sold, each exceeding $1m, bringing in revenue of $21m during the six-month period. The company said a remarkable price of $282,889 per carat was fetched for a 6.63 carat pink diamond in the half-year, which was recognised as the third-highest dollar per carat achieved for a Letšeng rough diamond.

A white diamond did not lag far behind, obtaining a price of $34,441 per carat for a 58.07 carat type IIa diamond.

The group said it made the discovery of two diamonds surpassing the 100 carats mark, one of which was sold during the period, while the other was slated for sale in the third quarter.

Gem Diamonds reported a substantial increase in waste tonnes stripped, reaching 4,846,680, which was a 25% rise.

Ore tonnes treated saw a marginal decline of 1% to 2,467,250 tonnes, while the contribution from the satellite pipe was 1,269,987 tonnes, which was a decrease by 23%.

The group reported a 2% drop in carats recovered, totaling 50,601 carats, while carats sold saw a 3% increase with 52,163 carats being sold.

Gem said the total value stood at $71.6m, making for a 19% dip, with an achieved dollar per carat rate of $1,373, down by 22%.

Looking ahead, Gem Diamonds revised its guidance for Letšeng's full year, reporting that issues with increasing grid electricity interruptions had led to a reduction in the volume of ore processed during the period.

Furthermore, there was an unanticipated internal basalt dilution in specific domains of ore, which further impacted the throughput.

To counter those challenges, an operational strategy was rolled out in the second quarter, which involved opening crusher gaps and slowing the throughput in the processing plant.

Following the intervention, the full-year guidance for tonnes treated had been recalibrated to a range of 4.9 million to 5.1 million tonnes.

Encouragingly, the initial outcomes of the strategy had shown promise in enhancing plant stability and recoveries.

While carats recovered and sold remained within the original guidance due to better grade performance, the reduction in tonnes treated had affected unit costs.

The firm said the updated direct cash costs per tonne treated ranged between LSL 285 (£11.74) to LSL 305, and operating costs now hovered between LSL 380 and LSL 395 per tonne treated.

"The global rough diamond market has experienced a downturn in 2023," the Gem Diamonds board said in its statement.

"A decrease in the number of large, high-value diamonds recovered, combined with market pressure has negatively impacted the average dollar per carat and revenue achieved during the period."

At 1009 BST, shares in Gem Diamonds were down 0.92% at 16.2p.

Reporting by Josh White for Sharecast.com.