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Gem Diamonds’ 2015 Revenue -8% as Prices, Sales Dip

Mar 16, 2016 4:12 AM   By Rapaport News
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RAPAPORT... Gem Diamonds reported revenue dropped 8 percent to $249.5 million last year as the average price of gems from the Letšeng mine in Lesotho slumped and rough carat sales slid.

The average price at Letšeng fell 9 percent and rough sales by volume were down 6 percent, according to a statement March 15.

Profit for the year nonetheless jumped 12 percent as the miner cut costs.

The company’s board has recommended an ordinary cash dividend of $0.05 per share and a special dividend of $0.035 per share representing the cash saving arising from the settlement of a precious tax assessment. These follow a maiden dividend of $0.05 per share in June 2015.

The price per carat at Letšeng fell 9 percent to $2,299 per carat from $2,540 in 2014. The volume sold fell 6 percent to 102,778 carats, meaning total rough sales by value fell 15 percent to $236.3 million.

The miner recovered 11 diamonds of more than 100 carats each, setting a new record for the mine, which is known for its large gems. The biggest stones were 357 carats and 314 carats.

Speaking to investors Tuesday, Clifford Elphick, Gem Diamonds’ chief executive officer, said the market for large stones were still promising and price will likely be sustained despite a recent increase in reported finds of exceptional diamonds.

“We have fewer than 50 large diamonds per year in total,” Elphick said. “In Beijing alone there are couple of hundred billionaires. At this stage I don’t think it’s a problem. We’re nearly run over in the rush of people trying to find [large diamonds]. I’m pretty confident we’re nowhere near saturation point or anything that’s going to have an effect on prices.”

Sales from the Ghaghoo mine, from which Gem Diamonds started selling rough in 2015, were not included in group revenue because the Botswanan mine did not start commercial production for accounting purposes. However, the average price was stated as $162 per carat and 89,107 carats were sold.

The company it was “considered prudent” to restructure Ghaghoo in the short term by downsizing the operation, the statement said.
Tags: Botswana, Gem Diamonds, Ghaghoo, Lesotho, Letšeng, mining, Rapaport News
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