Southern Africa – The Letšeng mine has consistently continued to produce large, exceptional quality diamonds for Gem Diamonds during the six months ending 30 June 2015.

Despite continued high inventory levels and liquidity concerns in the rough diamond market during the first half of 2015, combined with global macro-economic uncertainties, placing downward pressure on both rough and polished diamond prices, Letšeng’s high quality diamond production has remained resilient.

Letšeng mine recovered 50 019 carats during the first half of the year, compared with 54 678 carats in the first half of 2014.

The mine also achieved rough tender revenue of US$106.3 million, while achieving an average value of $2 264 per carat.

Letšeng mine recovered five diamonds greater than 100 carats and an average grade of 1.61 cpht, through the treatment of 3.1 Mt of ore.

As part of Gem Diamonds’ broader strategy to identify and implement low capital, value enhancing opportunities at Letšeng, the mine successfully delivered both of its low capex incremental growth projects, the Plant 2 Phase 1 upgrade and the new Coarse Recovery Plant, on schedule and within budget.

The implementation of these two projects will see an increase in tons of ore treated and carats recovered in the remainder of the year and beyond. While value accretive opportunities continue to be explored, there are no other major capital projects planned at Letšeng in the foreseeable future.

During the Period, Letšeng also announced an optimised Life of Mine plan, which significantly enhances the mines NPV through optimising waste stripping and increasing the percentage of the higher grade, higher value Satellite ore available to be treated over the life of mine.

For the remainder of the year it is expected that prices for Letšeng’s high quality diamonds will remain firm.

Ghaghoo update

Gem Diamonds started production at its Ghaghoo diamond mine in Botswana late in 2014
Gem Diamonds started production at its Ghaghoo diamond mine in Botswana late in 2014

The challenging market conditions experienced during the first half of the year has however had a negative effect on prices achieved for Ghaghoo’s more commercial quality production. The prices for Ghaghoo production should however stabilise during the remainder of the year, the company said in a statement.

Gem Diamonds chief executive Clifford Elphick says the Ghaghoo mine development and ramp up to full planned production rates continues to progress, despite challenges in localised ground conditions.

The first parcel of Ghaghoo commissioning diamonds was sold in February 2015 for $2.1 million, achieving $210 per carat. In July, a second parcel was sold for $4.9 million, achieving $165 per carat, a lower price given the current market conditions.

“Encouragingly, as production begins to ramp up, a number of larger white diamonds and small coloured diamonds were recovered during the period,” says Elphick.

Development of the Ghaghoo mine continues to progress with production being ramped up, albeit slower than planned due to difficult localised ground conditions which have hampered slot development across the first five production tunnels.

Water management has been a focus at the mine, with specialist expertise having been brought in to seal off the water fissure to avoid any further major ingress of water as work progresses slowly and carefully through the water fissure area.

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