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Gem Diamonds 3Q Sales Flat

Oct 28, 2010 3:22 AM   By Avi Krawitz
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RAPAPORT... Gem Diamonds reported that third quarter sales rose by less than 1 percent to $51.9 million.  Sales from Letseng increased 18 percent to $37.8 million despite a slight drop in prices from the operation during the third quarter. Gem Diamonds sold 22,503 carats of Letseng rough during the period, up 21 percent from one year earlier as the average price of the production fell 2 percent to $1,680 per carat. The company noted that prices bounced back strongly in October under its new marketing strategy.

“Diamond prices have continued to strengthen, driven by continued demand mainly from the East,” said Clifford Elphick, Gem Diamonds' chief executive.

The company implemented its new sales and marketing strategy at its October tender, which achieved an average price of $2,422 per carat. The tender was conducted in-house through its Belgium-based subsidiary Gem Diamonds marketing Services. The company noted, however, that the high values achieved were in the context that only 14 percent of ore mined in the third quarter was sourced from the lower grade satellite pipe at Letseng.  

The company has not yet sold the exceptional 196 carat white diamond that was recovered in August. Rather, third quarter sales were driven by 21 diamonds which achieved prices above $20,000 per carat. The highest price achieved was a 56.59 carat, D color, type IIa diamond which sold for $2.5 million, or $44,194 per carat. A 17.34 pink diamond sold for $1.2 million, or $67,474 per carat.

Gem Diamonds sales from its Ellendale mine in Australia fell 28 percent to $14.1 million as volumes sold dropped 45 percent to 21,436 carats. The average price achieved rose 30 percent to $656.60 per carat. These included 4,581 carats of fancy yellow diamonds sold to Laurelton, a subsidiary of Tiffany & Co., for an average $2,792 per carat. Laurelton recently agreed to a 25 percent price increase on Ellendale’s fancy yellow diamonds, which came into effect on October 1.

During the first nine months of the year, Gem Diamonds sales rose 0.6 percent to $157.2 million with Letseng sales up 3 percent to $109.6 million and Ellendale sales decreasing 5 percent to $47.6 million.

* Pictured: 196 carat rough mined at Letseng in August has yet to be sold.

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Tags: Avi Krawitz, Avi Krawitz, Ellendale, Gem Diamonds, Lesotho, Letseng, Mining Companies
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