26 Jul 2017
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Gem Diamonds’ revenues dip in 2016
Profits take a dive
By: Diamond World News Service
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Mar 18 2017 9:52AM
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Reference: 14000  

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Image Courtesy: Gem Diamonds Limited
Image Courtesy: Gem Diamonds Limited
Gem Diamonds Limited announced its full year results for the year ending 31 December 2016, in which it noted a dip in revenues on y-o-y basis. Its revenues stood at US$189.8 million (US$249.5 million in 2015), while profits was worth US$32.3 million (US$67.4 million in 2015). Attributable profit (before exceptional items) US$17.7 million (US$41.8 million in 2015).

There was US$176.5 million non-cash impairments relating mainly to the decision to place Ghaghoo on care and maintenance, attributable loss of US$158.8 million.

Diamonds from the Letšeng mine achieved a lower average value of US$1 695* per carat from US$2 299 in 2015) due to fewer +100 carat diamonds recovered. Of the 108 206 carats recovered in 2016, five diamonds larger than 100 carats each were recovered and the largest was a 160.2 carat Type II white diamond. A 11.8 carat pink diamond, sold for US$187 700 per carat, making it the third highest price per carat sold by Letšeng.

At Ghaghoo, carats recovered were 40 976 from 91 499 in 2015, while average value achieved was US$152 per carat (US$162 per carat in 2015). Total sales of diamonds from the mine valued US$7.2 million for 47 266 carats. The operation was placed on care and maintenance in February 2017 due to low prices achieved for this category of diamonds.

Clifford Elphick, Chief Executive of Gem Diamonds, said: “Letšeng has performed well operationally and achieved all production metrics within targets and guidance. Demand and prices achieved for the large, high quality diamonds recovered from Letšeng have remained firm, but the decline in 2016 in the recovery of diamonds larger than 100 carats has had a disappointing impact upon revenue and cash flow. This recovery rate is consistent with the normal, short term variability of the resource. Based on a detailed geological understanding of the resource, we remain confident that Letšeng will continue to produce exceptional diamonds.” He also stated that “At Ghaghoo, solid progress was made developing the mine. Given the low prices achieved for this category of diamonds, the mine was placed on care and maintenance in February 2017. Ghaghoo provides Gem Diamonds with flexibility to restart operations, when prices for this category of diamonds recover.”

“Speaking on the year ahead he said, “The supply demand fundamentals for the diamond industry remain strong. Focus in 2017 will be on cash generation. At Letšeng, the implementation of the updated life of mine plan is expected to improve cash flows through an optimised waste mining profile.”

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