Gem Diamonds – Page 3

Dividend-paying Gem Diamonds working on technologies to reduce diamond damage

Diamond mining and marketing company Gem Diamonds is advancing innovative technologies that reduce diamond damage by extracting rock nonmechanically and being able to see diamonds in a certain size of rock, Gem CEO Clifford Elphick said on Thursday when the London-listed company reported positive operational and financial results, the Covid-19 pandemic notwithstanding.

On revenue of $189.6-million and underlying operational earnings of $53.2-million, Gem directors have proposed dividends of 2.5c a share in a year in which it recovered 16 diamonds larger than 100 ct each compared with 11 in 2019.

Gem achieved an average value of $1 908/ct, with the highest value of $38 827/ct achieved for a white rough diamond.

Its Letšeng mine, located in the Maluti mountains of Lesotho, is known for the recovery of large quality diamonds, including 2020’s 439 ct Letšeng Icon, which the company displayed during the presentation, along with six other large stones, one of them an 112 ct yellow diamond.

Gem Diamonds owns 70% and the Lesotho government 30% of the mine’s holding company Letšeng Diamonds.

Elaborating on damage-reducing technologies, Elphick said at the presentation covered by Mining Weekly: “There are two aspects to it. The one is to get the diamonds out of the rock using non-mechanical means. We’ve ticked the box there. That has gone well and we’re very comfortable with the final stage of the process.

“The first stage of the process was to see the diamonds in the rock. That didn’t deliver as well as we thought it might do. We have brought that plant back to Johannesburg. We have pulled it apart, taken out what wasn’t working. We’re busy putting it back together again. Of course, as things move, computing power improves. The detection units are improving as well as the pixilation capabilities, and so we are upgrading that plant and moving to pilot plant two.

“The ambition remains the same: to be able to see diamonds in a certain size of rock and then to be able to eject them at the speed which is required to meet a commercial need. We can do this at slow speeds but that doesn’t really help us. It’s a question of improving and making this faster. So, technology advances, we seem to rush forward and then crawl forward and then have a rush forward, and that’s exactly where we are. We’ve got a team coming here from Europe in the next month to take this forward to the next step,” Elphick outlined.

Letšeng has an opencast life-of-mine that stretches to the 2030s. “We’ll need to start looking at the underground, and that will come at some point in time,” said Elphick.

On Gem’s climate-change adaption plan, Elphick spoke of a lot of work going into the company’s adoption of the United Nations Sustainable Development Goals: “A lot of work goes into this and we make a major effort there,” he said.

On the 2020 diamond market, he noted that demand growth, particularly in China, the US, India and Australia, was showing strong post-Covid recovery, which was pushing its way through to stock market valuations. “And we know there’s a correlation between stock market valuations and diamond prices; that correlation was a little bit disturbed, but is now back, we think, with diamond prices rising quite strongly. Inflation started to appear but very much recent information it seems as it’s not quite as frothy as one might have expected, but no doubt as the world roars back from the Covid crisis, we may well see some inflation, and, of course, that’s helpful for diamond prices,” he said.

He described the 2020 holiday retain season as being strong, with the maturing Chinese and Indian consumer markets continuing to show strong growth trends.

Midstream inventory and debt levels decreased substantially and this part of the diamond pipeline was in relatively much better shape than for some time.

“And we’re not finding, at this point, the synthetic diamonds are having any impact on the demand or the prices for the sorts of goods that the Letšeng orebody delivers,” he said, adding that being the highest dollar per carat kimberlite producer was a good position to be in.

“We’ve had a good year in terms of recoveries on almost all categories, but particularly the top end,” he said.

Elphick said Gem had been participating in trials to capture additional value, involving its goods being polished into the high-end luxury brands strategy, and the company was capturing some of the additional value between rough and polished and finding its way into the brand. So far we’ve had a good experience and we’re pushing these trials out further to see what it might mean in the longer term. We’re quite excited about that,” Elphick said.

Mining Weekly put these two questions to Gem relating to going green and decarbonising:

What steps is Gem taking to be carbon neutral. Is Gem replacing fossil electricity with renewable energy, and when will Gem likely be carbon neutral? Or will the company opt for carbon offsets?
What value does Gem place in potentially becoming a miner and a marketer of carbon-neutral diamonds, or is the market not demanding decarbonised diamonds currently?
In response, Elphick said: “Diamonds are carbon so it is difficult to sell non-carbon diamonds. I’m not trying to be facetious, but we haven’t got into this in as much detail as your question is assuming.

“There is a big debate on the footprint of mining and there’s quite a complicated answer. There is a little bit of work being done particularly on man-made diamonds to what their carbon footprint and how their carbon footprint is hugely in excess of naturally mined diamonds.

“If you wouldn’t mind us coming back to you in time with a more considered answer to get into best practice, but at this point frankly I don’t have an intelligent answer to give you. Buying carbon offsets. That’s the same issue.

“With respect to replacing fossil electricity with renewable energy, we have looked at this in some detail, particularly solar and wind, and the combination. We have assessed this quite often and unfortunately the outcome of that is not good enough from a cost perspective to make a transition right now.

“It is moving in the right direction and there will come a minute when that is right. Of course, we have to also access, not just a straight-forward cost question, but the cost of not doing this and what that does to our contribution to the planet. It’s not just a simple cost answer, but just to give you comfort there that we have looked at this in great detail over a number of years,” Elphick said.

Profit for the year from continuing operations was $27.5-million and attributable profit from continuing operations $16.9-million.

Earnings a share from continuing operations were 12.1c and cash on hand $49.8-million as at December.

At Letšeng, 100 780 ct were recovered in the 12 months to December 31, with waste mined totalling 15.6-million tonnes.

Ore treated of 5.4-million tonnes was below the 6.7-million tonnes of 2019.

Source: miningweekly.com

Miner Finds 442-Carat Diamond That May Be Worth $18 Million

A small diamond miner that has dug some of the world’s most valuable gems from a mountainous African kingdom has found another huge stone.

Gem Diamonds Ltd. said Friday it had an unearthed a 442-carat diamond at its Letseng mine in Lesotho. While it’s hard to establish a price for such stones before cutters can evaluate them, it could sell for as much as $18 million, Edward Sterck, analyst at BMO Capital Markets, wrote in a note.

Given the rarity of such large stones, demand for big diamonds has traditionally been resilient, even at times when the wider industry has struggled.

The Letseng mine is famous for the size and quality of the diamonds it produces and has the highest average selling price in the world. Two years ago Gem Diamonds found a 910-carat stone, the size of two golf balls, that sold for $40 million.

The find comes as the global diamond industry has been brought to its knees by the pandemic. Jewelry stores have closed and India’s cutting industry, which handles almost all of the world’s stones, has come to a halt. The miners that dominate the industry, De Beers and Russian rival Alrosa PJSC, have seen their rough diamond sales collapse.

“The recovery of this remarkable 442 carat diamond, one of the world’s largest gem quality diamonds to be recovered this year, is further confirmation of the caliber of the Letseng mine and its ability to consistently produce large, high quality diamonds,” Clifford Elphick, Gem’s chief executive officer, said in the statement.

Source: bloomberg

Gem Diamonds recovers 100 diamonds larger than 100 carats

Commenting on the results, Clifford Elphick, CEO of Gem Diamonds, says:

“Gem Diamonds delivered solid operational results which together with the targeted gains of the Business Transformation programme and continued emphasis on cost controls, confirmed our status as one of the lowest-cost producers in the industry.”

“The operational results were characterised by the achievement of all guided operational metrics and the recovery of 11 diamonds greater than 100 carats each, which also brought the total number of diamonds of greater than 100 carats recovered at the Letšeng mine to 100.

“This, together with a 13.32 carat pink diamond that was recovered and sold for a Letšeng record of US$656 934 per carat, reaffirms the unique quality of the Letšeng production.

“The Letšeng mining lease was renewed for an effective 20-year period which creates long-term stability for Letšeng.

“This, together with the continued emphasis on cost controls, positions the Company well for an upturn in the market for Letšeng’s quality production which appears to have begun.”

Source: miningreview

Gem Diamonds Retrieves Another Five Big Stones

Gem Diamonds has recovered five large, high-quality stones at its Letšeng mine in Lesotho, continuing a strong first quarter for the company’s production.

The company unearthed four white diamonds weighing 88, 56, 53 and 33 carats between February 28 and March 3. It also found a “top-quality” 13-carat pink diamond.

Those are in addition to the recovery of a 114-carat stone the miner reported last week. It found a 183-carat, white, type IIa diamond last month.

The miner is ahead of where it was this time last year in terms of its large-stone recoveries. In 2019, Gem Diamonds didn’t find any stones over 100 carats until late March. During that year, the company unearthed a 13.33-carat pink diamond similar to the one it found last week. That stone sold to Graff for $8.8 million, fetching a record average price of $656,933 per carat for Gem Diamonds.

While the recovery of large stones bodes well for the company, it has had to cancel a rough tender that was set to take place in Israel from March 8 to 12 due to the coronavirus, the Israel Diamond Exchange reported. Its Belgium auction will proceed as planned.

Source: Diamonds.net

Gem Diamonds Recovers 183-Carat Diamond

Gem Diamonds Limited has announced the discovery of an exceptional 183-carat white Type IIa diamond from the Letseng mine in Lesotho on February 3.

The miner also announced that it also recovered two different high quality diamonds, one of 89 carats and the other of 70 carats, from the mine.

The Letseng mine is the highest dollar per carat kimberlite diamond mine in the world.

Diamond miners dented by liquidity crisis among India’s polishers

Diamond miners are feeling the pressure after a funding crunch in the world’s polishing hub dented sales of rough gemstones.

Since celebrity jeweller Nirav Modi fled India in 2018 accused of having defrauded a state bank of nearly $2bn, banks have sharply cut back lending to diamantaires, who cut, polish and trade the world’s diamonds.

“Bankers have blacklisted the jewellers industry,” said Shantibhai Patel, president of the Indian Bullion and Jewellers Association in Gujarat, the country’s diamond-cutting centre.

The squeeze has forced diamantaires to buy less from diamond producers such as De Beers, Rio Tinto and Gem Diamonds — which have seen sales and margins suffer as a result.

De Beers is on course to report its worst annual sales in at least four years. In response, the world’s largest producer reduced prices for its rough diamonds by 5 per cent last month at its November sale, the biggest discount in years, Bloomberg reported. De Beers declined to comment on its pricing.

Across the sector, rough diamond prices have fallen 15 per cent since last November, according to Polished Prices. Industry experts say a further 10-15 per cent drop would push some smaller producers to file for bankruptcy.

“It’s a liquidity crisis that’s affecting the middle of the pipeline,” said Edward Sterck, an analyst at BMO Capital Markets. “Diamond manufacturers can’t afford to pay rough diamond prices . . . It’s a function of necessity that prices have come down.”

Diamantaires — 90 per cent of which are based in India — buy rough diamonds from producers such as De Beers that they then cut with lasers and polish for use in jewellery.

The flight of Mr Modi, whose clients included actress Kate Winslet, prompted banks to tighten up lending terms for manufacturers. Bank credit to the diamond industry, of which Indian companies receive about four-fifths, fell 20 per cent to $8bn this year, according to WWW International Diamond Consultants.

As a result, diamond cutters are working through existing stocks rather than buying on the global market. According to India’s Gem and Jewellery Export Promotion Council, imports of rough diamonds into the country fell 22 per cent year over year to $7.3bn between April and October.

This has struck diamond mining companies hard. Stuart Brown, chief executive at Toronto-based Mountain Province Diamonds, said the rough stone market was “challenging” in its third-quarter results.

Mid-sized producers including Canada’s Lucara Diamond and the UK’s Petra Diamonds all reported lower prices for their diamonds in the latest quarter. Lucara reported a selling price of $390 a carat, a 13 per cent drop from last year and a steep fall from 2014, when gems sold for $644 a carat. Dire market conditions drove Quebec-based Stornoway Diamond into bankruptcy in September.

The diamond industry differs from other commodities given the large influence of the two largest producers on pricing, and the fact that diamonds vary in size, quality and colour. De Beers is a “price setter” that offers uncut stones to traders for fixed prices and quantities at sales, known as “sights”.

Production cuts and concessions, including discounts and flexibility to return stones, have provided some relief to De Beers and its customers. Sales rose last month but were still below $400m — the lowest in a November sight on record.

Mr Patel welcomed the Anglo American-owned company’s price cut, but expected little uplift in the foreseeable future. “There’s no work,” he said. “For one year, one and a half years, we’re not expecting any bullish trends.”

But Colin Shah, managing director of manufacturer Kama Schachter, is hopeful that the worst was over for diamantaires. He said that manufacturers were adjusting to the tougher norms in place after the Modi scandal, which could get liquidity flowing again.

“There’s much more [scrutiny] than there used to be,” he said, referring to banks’ lending practices. “Inventories have come down, everyone has made their business models leaner . . . I think the second half of 2020 will be better.”

Industry executives point to tightening supply over the next few years that will help restore diamonds’ key feature: rarity. Rio Tinto’s Argyle mine, which outputs 90 per cent of the world’s valuable pink diamonds, is set to close next year.

Meanwhile, retail demand for diamonds has been robust, particularly in the US where spending on diamond jewellery grew 4.5 per cent to $36bn last year. French luxury group LVMH’s $16.6bn acquisition of Tiffany, agreed last week, was seen by analysts as a vote of confidence in long-term consumer demand for diamond jewellery.

But other industry figures say more drastic action by diamond mining companies is needed to help bedraggled manufacturers. Martin Rapaport, founder of the world’s largest diamond trading platform, said the price cut was insufficient. “It’s not enough to recapitalise the industry,” he said.

“They need to drop prices as much as 50 per cent to return liquidity to the market. It’s too little too late.”

Source: ft.com

Letšeng Yields 161ct. Rough

Gem Diamonds has recovered a diamond weighing 161 carats from its Letšeng mine in Lesotho.

The miner found the “high-quality” white, type IIa stone on October 28, it said. Including this rough, Gem Diamonds has retrieved five white stones over 100 carats this year. It also produced a further three of that size in other colors.

In 2018, the mine, known for its large, high-quality stones, yielded 15 diamonds over 100 carats.

Source: diamonds.net

Gem Diamonds first half year profits drop 75 percent compared to 2018

Gem Diamonds published its results for the first half of 2019, reporting a revenue of $91.3 million, compared to $167.7 million during the first half of 2018.

The miner’s earnings before interest, taxes, depreciation and amortization (EBITDA) stood at 25.3 million, compared to 70.7 million in 2018. Its attributable profit, from continuing operations was $6.6 million against $26.8 million in 2018.

The considerable fall in income and profits also had its impact on the basic earnings per share: 4.8 US cents from continuing operations , opposite 19.4 US cents in 2018.

Commenting on the company’s results, Clifford Elphick, Chief Executive of Gem Diamonds, said:

“Letseng achieved $ 1,697 per carat for the period with the sale of the 13.32 carat pink diamond achieving a Letseng record of $ 656,934 per carat, reaffirming the unique quality of Letseng’s diamond production.

The prices achieved for the period are 10 percent up from the prices achieved in the preceding six month period, notwithstanding the planned limited contribution from the Satellite pipe ore and current diamond market conditions.

The Group has successfully implemented the business transformation program, already achieving $42 million net of fees, and is on track to deliver the planned $100 million in cost savings and efficiencies by 2021.”

Source: idexonline

Letšeng Mine recovers a 114 Carat Yellow Diamond

Gem Diamonds has recovered its third yellow diamond over 100 carats this year, following a two year dearth of stones in that hue and size.

The miner found the 114.2-carat rough on August 22 at its Letšeng mine in Lesotho, it said Monday. The company unearthed a 135-carat, yellow diamond from the deposit in June, and a similar 134-carat stone was brought up in March. Prior to those recoveries, Letšeng hadn’t yielded a yellow diamond over 100 carats since June 2017, when Gem Diamonds retrieved a 151.52-carat rough at the site.

The discovery is also the sixth over 100 carats the miner, known for its large-stone retrieval, has unearthed so far this year. These include three white diamonds, weighing 123.5, 140 and 161 carats.

During the first six months of the year, the miner recovered three stones over 100 carats, compared to 10 of that size during the same period a year ago. The lack of large stones in comparison with last year has hurt Gem Diamonds’ revenue. Sales of rough diamonds fell 44% to $94.5 million in the first half, with the average price dropping from $2,742 per carat to $1,697.

Source: diamonds.net

GEM DIAMONDS OPTIMISTIC ABOUT LARGE DIAMONDS’ PRICES DESPITE MARKET

Gem Diamonds, which operates the Letšeng diamond mine in Lesotho, has published its sales performance for the first half of the year ended June 20, 2019. Gem Diamonds sold 55,714 carats during the period, achieving an average price of $1,697 per carat – 10% more than the average price for H2 2018. Revenue for the period totaled $41.6 million USD.

During the period, the miner sold a 13.32 carat pink diamond for a Letšeng record of $656,934 per carat, and recovered three diamonds greater than 100 carats. It sold 15 diamonds for more than $1 million each. Gem Diamonds added that it is on track to deliver its targeted $100 million “in incremental revenue, productivity improvements and cost savings over the 4-year period to end 2021”.

Gem Diamonds concluded by announcing that prices for the smaller and commercial goods “have been under pressure for some time with the larger goods having been less affected, although showing recent signs of weakness”. However, the miner expects “Letšeng’s unique, ultra-high-quality goods to be less vulnerable over time to market pressures”.

Source: israelidiamond