Gem Diamonds ‘Cautious Ahead Of the U.S. Christmas Season’

Mid-tier diamond miner Gem Diamonds reported firming rough diamond prices in the third quarter and strong demand for the high-value goods mined at their Letseng and Ellendale mines. However, despite the good sales, the company expressed caution ahead of the holiday season, citing weak retail sales and destocking in the U.S.

In an interim management statement published Monday, the company reported diamond sales of $51.5 million in the third quarter. Goods from the Letseng mine in Lesotho averaged $1,710 per carat. The mine produced 23,756 carats during the quarter and 18,642 were sold.

Fifteen diamonds sold at prices greater than $20,000 p/c in the third quarter, at an average price of $27,712 p/c.

Goods from the Ellendale mine in Australia fetched $505.40 p/c. Diamond sales from Ellendale were impacted by the timing of tenders, which resulted in a higher proportion of fancy yellow diamonds. Gem Diamonds produced 58,611 carats at the mine during the quarter, and sold 38,686 carats.

The company reported that while prices of rough diamonds have “trended upwards” during the quarter, they remain “substantially” below pre-September 2008 levels.

Looking downstream, Gem Diamonds offered a wary outlook. “Whilst the industry as a whole has seen retail demand in the important U.S. market stabilizing, albeit at lower levels, Gem Diamonds remains cautious ahead of the U.S. Christmas season.”