Gem Diamonds Limited (GEMD:LSE)
The company is on track to achieve full year production guidance at Letšeng, despite extreme weather disruptions. In Q3 2016: 24,388 carats were recovered at Letšeng, compared to 28,682 carats in Q2 2016. The weather conditions restricted access to the pits, therefore ore was sourced from surface stockpiles which resulted in a reduction of grade recovered.
CEO, Clifford Elphick commented: “Prices achieved for Letšeng’s high quality diamonds have remained robust”.
During the sales period of 1 July 2016 to 30 September 2016: 37,990 carats were sold for proceeds of US$61.5 million, achieving an average price of US$1,619 per carat. Twelve diamonds were sold for greater than US$1 million each, resulting in a contribution of US$24.5 million to sales. Included in the sales figures are small diamonds to be sold in the final sale in December 2016.
The average price attained year to date is US$1,785/carat, as there were fewer than expected +100 carat diamonds recovered. The lower average dollar per carat is a consequence of a continued deficiency of high quality large diamonds and not a lack of demand or price weakness
At Ghaghoo, steady progress was made with the goal of reducing costs and increasing production. Treated ore of 54,337 tonnes represented an increase of 21% from Q2 2016. On-going development of the mine is under review for the time being, as market conditions for commercial quality diamonds is not robust. Although, mining in the undiluted areas of the kimberlite ore has produced encouraging recoveries of larger diamonds which demonstrates the fundamental potential of the mine.
As of 30 September 2016, the Group had US$44.1 million in cash of which US$39.6 million is attributable to Gem Diamonds. The Group had US$53.2 million worth of undrawn and available facilities.