London, England — MININGREVIEW.COM — 18 November 2008 – Gem Diamonds Limited – a global diamond producer with African operations in Lesotho, Botswana, Angola, the Democratic Republic of Congo and the Central African Republic – says the company’s performance for 2008 will be significantly below its expectations in August, and could result in a loss for the full year of 2008.
Announcing this in a news release issued here, the company explained that, as a result of the current global financial crisis and the sharp falls in diamond prices, there was significant uncertainty over what realised diamond prices would be for the remainder of Q4 of 2008.
It added that Gem Diamonds was reviewing current sales practices, and that if diamond prices remained at.their.Q4 2008 levels next year, the company would deliver an improved performance in 2009.
Looking at its African projects, the company said Letseng mine in Lesotho would continue to operate at full levels of production. In 2009 it was proposed to operate to a mine plan that yielded the best margin and cash flow generation. Consequently all capital projects would be reviewed against this objective and only critical items would be executed.
It added that all alluvial and dredging exploration activities in the Democratic Republic of Congo (DRC) would cease with immediate effect, and would be placed on care and maintenance for an indefinite period. The same applied to bulk sampling activities in the Central African Republic.
In Botswana, Gem Diamonds intended to proceed with negotiations with the government for a mining licence for the Gope project. The company intended to develop a mine when market circumstances were appropriate. And in Angola the company was continuing with an evaluation programme at Chiri with a view to assessing the viability of the project.
“The current actual and proposed actions are aimed at placing Gem Diamonds in an optimum position from a profit and cash generation perspective,” said the release, “while also reducing expenditure on projects which will not contribute to earnings in the short term.”