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Letšeng's Prices Fall 23% in 4Q

Jan 26, 2012 3:26 AM   By Avi Krawitz
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RAPAPORT... Prices of diamonds recovered at the high value Letšeng mine in Lesotho fell 23 percent year on year in the fourth quarter of 2011 as economic uncertainty took its toll on the market.  

''The fourth quarter of 2011 saw rough diamond prices down from their highs in the first half of the year due, in the main, to the continuing effects of the Eurozone crisis,'' said Clifford Elphick, Gem Diamonds' chief executive. ''However, the last two Letšeng tenders of the year saw an improvement in demand, with a modest strengthening of prices in most categories.''

Gem Diamonds, which owns 70 percent of the mine, with Lesotho's government, reported that the average price achieved at Letšeng fell to $2,543 per carat, from $3,291 per carat a year earlier. The company noted that prices achieved for Letšeng type higher-quality polished diamonds declined by about 5 percent to 10 percent from July through the fourth quarter.

Gem Diamonds posited that the polished market remained under pressure during the period due to tight industry liquidity, geopolitical uncertainty and inconsistent demand from retailers.

Total sales from Letšeng increased 2 percent to $82.3 million as the volume of carats sold rose 32 percent to 32,353 carats. Sales included the 550-carat Letšeng Star (pictured), which sold in October for $16.5 million. Production grew 35 percent to 29,783 carats.

For the full year of 2011, sales rose 57 percent to $299 million as the volume of sales grew 22 percent to 107,700 carats and the average price of the goods increased 29 percent to $2,776 per carat. Production rose 24 percent to 112,367 carats in 2011 and is expected increase to around 113,000 carats this year.

The average price of output from Gem Diamonds’ Ellendale mine grew 72 percent to $792 per carat in the fourth quarter, spurred by the company’s sales agreement with Tiffany & Co. for the mine’s output of special yellow stones. The average price of these goods jumped 23 percent to $4,269 per carat, while the average price of Ellendale’s commercial goods fell 5 percent to $180 per carat.

Sales of Ellendale production grew 5 percent to $31.8 million for the quarter and by 14 percent to $88.7 million for the full year. Gem Diamonds explained that it is still weighing its options regarding its future involvement in the mine.

Shares of Gem Diamonds were up 2 percent to 214.1 pence a share in early morning trade on the London Stock Exchange (LSE).

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Tags: Avi Krawitz, diamonds, Ellendale, Gem Diamonds, Lesotho, Letšeng, Rapaport, Rough Diamonds
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