HomeDiamonds & GemstonesGem's diamond sales drop 20%

Gem’s diamond sales drop 20%

A night shot of
the first processing
plant at the Letseng
mine in Lesotho
London, England — MININGREVIEW.COM — 22 January 2010 – Rough diamond sales at London-listed Gem Diamonds fell 20% to US$228 million (R1.7 billion) last year after the company shut mines and prices fell due to the global downturn “’ but the outlook has improved sharply.

The company “’ which shut its Indonesia mine and part of its Australian operations as diamond prices slumped “’ said in a trading update released here that the market had rebounded.

“The recovery in sentiment in the rough diamond market and resultant recovery in rough diamond prices through 2009 has been impressive, even though prices are still below the 2008 highs,” said chief executive Clifford Elphick.

Analyst Louise Collinge at Evolution Securities said Gem Diamonds had shown solid operational performance. “We believe that Gem offers low risk exposure to the diamond market, and we retain our buy recommendation and our 301 pence target price,” she added in a note.

The average price per carat for rough or unpolished diamonds at Gem’s flagship Letseng mine in Lesotho doubled to US$2 070 (R15 525) in December from US$1 017 (R& 627) in the first quarter of last year.

The Lesotho mine specialises in large, high quality diamonds.

At its Ellendale mine in Australia, the company slashed output of lower quality gems and sold 312 450 carats last year “’ down 42% “’ but managed to boost the sales price per carat by 25 percent to US$232 (R1 740).

“Gem is also continuing to assess ways of further enhancing the performance of its producing assets, and of assessing other opportunities in light of the improvement of the rough diamond market,” Elphick said.