LSE-listed Gem Diamonds has released its operational and sales performance for the period 1 January 2018 to 31 March 2018.
Gem Diamonds has a net cash position of US$48.1 million, a $46.7 million improvement from the Q4, 2017 net cash position of $1.4 million.
$43.2 million of available facilities had been drawn down, resulting in undrawn and available facilities of $ 41.1 million.
During the period, Letšeng paid dividends of $16.2 million, which resulted in a net cash flow of $10.2 million to Gem Diamonds and a cash outflow from the group as a result of withholding taxes of US$1.1 million and payment of the Government of Lesotho’s share of dividend of $4.9 million.
“We are delighted with the outcome of the sale of The Lesotho Legend, which demonstrates the exceptional quality of the diamond itself, as well as reaffirming the unique quality of Letšeng’s diamond production," comments Gem Diamonds CEO, Clifford Elphick.
"It is encouraging to see the improvement in the frequency of large diamond recoveries during the period with seven diamonds greater than 100 carats being recovered, supported by strong production results driving an 8% increase in carats recovered.
"The market for Letšeng’s high-quality diamonds has remained robust over the Period, achieving an average price of $ 3 276 per carat, up 48% from the previous quarter.
"It is also pleasing to see the significant progress that has been made in the business transformation initiatives,” adds Elphick.
The strong demand for Letšeng’s large high-quality white rough diamonds has continued, as evidenced by the average price achieved of $3 276 per carat during the period.
Letšeng treated a total of 1.3 million tons of ore during the period, 59% of which was sourced from the main pipe, and 41% from the satellite pipe.
The balance of the ore (0.3 million tons) was treated through the Alluvial Ventures contractor plant, of which 66% was sourced from the main pipe and 34% from low-grade stockpiles.
Waste stripping has reduced in line with the long-term mine plan.
A new scrubber shell is currently being installed in Plant 2.
During this planned shutdown, additional maintenance will be done to the plant in an effort to further improve the availability of the plant.
This planned shutdown is not anticipated to have any material impact on production.
The mining services complex project was completed on time and under budget, during April.
The project was completed with no LTI or any significant or major environmental incidents.
During March 2018 the Company lodged an application for the renewal of the Letšeng Mining Lease.
On 18 April, an announcement was made by the Prime Minister of Lesotho at the Commonwealth Heads of Government meeting in London, of the Lesotho Government’s intention to renew the Letšeng Mining lease until 2034.
The terms of the renewed Mining Lease will be subject to statutory negotiations with the Lesotho Mining Board.
The Business Transformation four-year target of $ 100 million remains on track.
Initiatives which have been implemented to date will contribute approximately $27 million to the four-year target and comprise $23 million of cumulative recurring benefit and $4 million of once-off savings.
Of the cumulative recurring benefit of $23 million, $15 million will result from increased revenue and $8 million from reduced costs.
This increased revenue of $15 million will be generated from additional carats recovered from re-treated tailings through the mobile XRT sorting machine and the extension of the third plant operator’s tenure to mid-2020.
The cost reduction of $8 million is mainly due to a reduction in blasting consumables through changing blasting patterns, explosive mix and charging practices.
Cost reductions have also been achieved through reducing the corporate office footprints and office, administration and travel costs across the UK, South Africa and Lesotho.