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Letšeng Mine 4Q Sales -41% on Weak Diamond Prices

Gem Diamonds Completes Ellendale Sale

Jan 31, 2013 3:54 AM   By Avi Krawitz
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RAPAPORT... Sales from the Letšeng mine in Lesotho fell 41 percent year on year to $48.2 million as rough ‎prices slumped during the period.‎

Gem Diamonds, which owns 70 percent Letšeng, estimated that rough diamond prices ‎dropped about 12 percent in 2012, with the weakest period hitting in the third quarter. ‎

‎“The Eurozone crisis, reduced liquidity from the lending banks, high stock levels in the ‎manufacturing sector and low demand from the emerging markets in the East resulted in ‎diamond prices in the third quarter of 2012 weakening to well below those seen at the start of ‎the year,” said Gem Diamonds' CEO, Clifford Elphick.‎

He added, however, that prices steadied in the fourth quarter as market conditions improved. ‎Gem Diamonds sold 28,324 carats of Letšeng goods for an average price of $1,703 per carat ‎during the quarter, representing a decline in average prices of 33 percent compared with the ‎same period a year earlier, but an increase of 2 percent from the preceding third quarter.‎

The company noted that prices continued to improve at its January tender as the market has ‎stabilized ahead of the Chinese New Year. ‎

Production at Letšeng rose 1 percent year on year to 30,181 carats during the fourth quarter. ‎Full year production increased 2 percent to 112,367 carats and Gem Diamonds expects ‎production to increase to between 115,000 carats and 130,000 carats in 2013. Sales in 2012 ‎dropped 30 percent to $207.9 million with the average price for the year declining by 30 ‎percent to $1,932 per carat. ‎

Gem Diamonds reported that fourth quarter sales at the Ellendale mine in Australia fell 4 ‎percent to $30.5 million with the average price of its commercial goods up 2 percent to $184 ‎per carat. Gem Diamonds sold 4,644 carats of fancy yellow stones from Ellendale to Tiffany & ‎Co., as part of their off-take agreement, with average prices of these goods increasing 19 ‎percent to $50 to $91 per carat. Full year Ellendale sales rose 28 percent to $113.6 million with ‎production up 30 percent to 155,996 carats. ‎

Gem Diamonds on Thursday completed the sale of Ellendale to Goodrich Resources Limited for ‎‎$15 million (AUD 14.4 million).   ‎

Gem Diamonds is in the process of developing the Ghaghoo mine in Botswana and expanding ‎its operations at Letšeng‎. ‎
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Tags: Avi Krawitz, Gem Diamonds Clifford Elphick Diamonds Rapaport Letšeng Ellendale Tiffany & Co.
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