Interim Management Statement

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12 May 2014

Gem Diamonds Limited (LSE: GEMD) reports its Interim Management Statement (IMS) for the Period 1 January 2014 to 9 May 2014 (the Period).

Highlights:

Letšeng:
Continued strong performance underpinning the strength of the Letšeng asset as a world class mine
  • 26 055 carats recovered in Q1 2014, up 39% on Q1 2013.
  • 30 060 carats sold in the first three exports of 2014, up 4% on Q1 2013.
  • An average value of US$ 2 723 per carat was achieved for the first three sales of 2014, up 70% on Q1 2013.
  • 17 rough diamonds achieved a value in excess of US$ 1.0 million each during the Period.
  • 44 rough diamonds achieved a value in excess of US$ 20 000 per carat during the Period.
  • A total of 171 rough diamonds greater than 10.8 carats in size were sold in the Period, equating to 81% of Letšeng’s revenue for the Period.
  • Two exceptional large diamonds (a 162.02 carat and a 161.31 carat) were recovered in January 2014 and sold in February for US$ 11.1 million and US$ 2.4 million respectively.
Ghaghoo:
Strong progress at Ghaghoo continues to build long term value potential
  • Kimberlite was intersected in the first production tunnel on level 1 in early May 2014.
  • Drilling of the first (of three) ventilation holes was completed during the Period, and the second is well advanced.
  • Commissioning of the plant is progressing well and on schedule.

Cash:

Robust financial position and cashflows providing financial flexibility to meet medium term objectives
  • The Group maintains its strong cash position with US$ 89.1 million cash as at 30 April 2014, of which
  • US$ 78.6 million is attributable to Gem Diamonds. (US$ 71.2 million as at 31 December 2013, of which US$ 62.6 million was attributable to Gem Diamonds). 
  • During the Period, Letšeng declared a dividend of US$ 20.5 million which resulted in a net cash flow of US$ 12.9 million to Gem Diamonds and a cash outflow from the Group as a result of withholding taxes of US$ 1.5 million and payments of the Government of Lesotho’s portion of the dividend of US$ 6.1 million.
Gem Diamonds’ CEO, Clifford Elphick commented:

“Strong diamond prices continue to be seen at the Letšeng tenders and this, coupled with the continuing contribution of ore sourced from the Satellite pipe at Letšeng, has resulted in an increase in carats sold and an improvement in the average dollar per carat achieved. We continue to pursue low capital value-accretive projects to optimize the Letšeng mine and further capitalise on the high quality and potential of the asset.

In addition, the development of Ghaghoo remains on schedule, with the first ore having been put through the plant as part of the commissioning process.”

12 May 2014 Interim Management Statement (287KB PDF)