Gem Diamonds H1 Rough Prices Up, Letseng Production Declines

Gem Diamonds Limited reported a decline in production at its Letseng mine in Lesotho, shrinking 5 percent to 44,748 carats in the first half of the fiscal year. Prices, however, jumped 32 percent to $1,728 per carat. Sales of 41,544 carats from Letseng generated $71.8 million, the company said Monday in a trading update.

During the six month-period, the company sold at least ten stones at more than $30,000 per carat, including a 27.91 carat diamond for $58,724 p/c, the highest per carat price achieved for a Letseng white diamond sold on rough tender since July 2008.

A 3.56 carat stone sold for $33,708 p/c.

At Gem Diamonds’ Ellendale mine in Australia, the company mined 81,501 carats in the first six months of the fiscal year. The miner sold 77,198 carats of Ellendale’s goods for $33.5 million, or $434 p/c. This is a 171 percent leap in the average price of the mine’s goods.

Gem Diamonds CEO Clifford Elphick said the company met a number of operational challenges at Letseng and Ellendale. “With the unique nature of Letseng’s very high value, low diamond content resource, fluctuations in production are expected, however management believe that production targets for 2010 will be achieved by year end.

“In the case of Ellendale, the seasonal nature of operations results in a better performance in the second half of the year. Management expects to achieve all production targets in the second half of 2010, but may still be slightly behind targets for the full year.”

In regards to some of the company’s other assets, Gem Diamonds said it is considering an underground mine at Gope in Botswana. The Chiri project in Angola remains on care and maintenance while a small low capital mine option is under review.

The group is considering ending its work at the PT Galuh Cempaka mine in Indonesia and is in the process of selling the assets and equipment at its Central African Republic operations.