Gem Diamonds Sold $228M Worth of Rough in 2009, Expanding Polished Sales

Gem Diamonds enjoyed rising rough diamond prices in the fourth quarter of fiscal 2009, especially for larger top-quality, top-color goods, the company said in its quarterly report.

The diamonds miner sold 101,559 carats mined at its Letseng mine in Lesotho for a total of $155.8 million during 2009, an average value of $1,534 per carat.

Forth quarter sales grew by 41 percent by volume and 56 percent by value compared to the previous quarter.

The company also sold 206.6 carats of polished diamonds for $12.5 million. These sales include three D color, IF diamonds, weighing a total of 25.7 carats that were sold for $2.5 million, at an average price of $97,234 p/c.

Gem Diamonds stated it intends to continue developing the polished diamond side of the business.

Sales of diamonds from its Kimberley mine in Australia grew 12 percent, compared to the third quarter, to $72.4 million. In terms of volume, 312,450 carats were produced, a 109 percent increase. However, the average price per carat for the Kimberley goods plunged 46 percent to $232 p/c.

Gem Diamonds said the drop in average price is a result of high prices achieved in the third quarter, resulting from a higher proportion of fancy yellow diamonds sold in the third quarter compared to a higher proportion of commercial goods sold in the fourth quarter. The average price achieved for the second half of 2009 was $348 p/c versus $160 p/c in the first half of the year.

"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,” Gem Diamonds CEO Clifford Elphick said in the release.

Prices for rough diamonds from Letseng have risen from an average of $1,017 p/c in the first quarter of 2009 to $2,070 p/c in December 2009, Elphick added.

Gem Diamonds emerged from the global downturn with no debt and $113 million in cash. Gem is “assessing other opportunities in light of the improvement of the rough diamond market," Elphick concluded.