FULL YEAR RESULTS FOR THE YEAR ENDED 31 DECEMBER 2009Back
16 Mar 2010
Gem Diamonds (LSE: GEMD) a leading diamond mining company reports its full year results for the year ended 31 December 2009:
- Revenue US$244.4 million.
- EBITDA US$53.4 million.
- Cash generated by operations US$72.2 million.
- Profit before tax from continuing operations US$37.1m.
- Attributable profit US$15.5 million (14 US cents per share).
- US$113.8m gross cash with no debt provides the Company with a platform for growth in recovering markets.
- Central costs reduced by 37% to US$13.2 million.
- Implementation of strategy to preserve cash and reduce costs across the Group.
- Implementation of a targeted mining strategy enabled both Letšeng and E9 to extract maximum value.
- Letšeng produced over 700 rough gem diamonds of over 10.8 carats ('special stones') which equates to 78% of revenue.
- A 35.1 carat diamond from Letšeng sold for US$ 1.8m at an average of US$51 253 per carat.
- Average price of US$1 534 per carat for Letšeng in 2009.
- At Ellendale operations at the higher value E9 ramped up. E9 achieved or exceeded all of its 2009 targets.
- Average price of US$2 480 per carat achieved for Ellendale's fancy yellow diamonds in 2009.
- Despite the downturn, the average price for Ellendale's production rose in 2009 to US$232 per carat compared to US$184 per carat for 2008.
- Recommencement of beneficiation strategy demonstrates value add.
- Total in situ resource carats maintained at circa 30 million carats.
- Received 3 HSSE related awards based on the external HSSE audit score Letšeng of and Ellendale.
Gem Diamonds maintains profitability despite rough diamond prices falling over 60% from their 2008 highs during the worst recession faced by the diamond industry for decades.
- Effective execution of cash preservation and cost reduction strategy.
- Capital raising of US$ 98.8 million (net) enabled the company to repay all debt.
- Long term supply agreement with a subsidiary of Tiffany & Co. for all Ellendale yellow diamonds to strengthen Gem Diamonds position in the luxury end of the market.
- DRC assets sold with Gem Diamonds maintaining the right to a 65% interest and 3% royalty in any kimberlite projects developed.
Outlook for 2010
- Diamond market has strengthened in the second half of 2009.
- Opportunities for growth assessed in light of market conditions.
- There is a genuine shortage of supply at the top end of the market amongst the larger, better quality goods.
- Medium and long term supply shortfall impacting the market
- External research shows that Letšeng produces 31% of all rough gem quality diamonds in excess of 25 carats.
Clifford Elphick, CEO, commented:
"2009 was an extremely challenging year for the diamond mining industry as a whole. However, our ability to react swiftly to changing market conditions enabled us to weather the worst of the economic crisis and maintain production and profitably at our two key operations. Consequently, with signs of a recovery in the market we are well placed to benefit from an upturn in the global economy. Additionally, increasing demand in non-traditional markets such as China and India has re-inforced the positive supply / demand fundamentals which will provide further long term growth opportunities for Gem Diamonds, particularly with our focus on the high end of the market.
2009 saw us cut back on all non-core expenditure with the majority of development projects put on care and maintenance. We are currently reviewing growth possibilities. Following the capital raising in April 2009 we have US$113.8 million gross cash and no debt on the balance sheet."
The Company will be hosting an analyst presentation on its Full Year Results today, which will take place at 9.30am. A live webcast of the presentation will be available at www.axisto.com/webcasting/investis/gemdiamonds/2009-full-year-results/index.htm
Annual Results for the Year Ended 31 December 2009 (218 Kb PDF)
For further information:
Gem Diamonds Limited
Clifford Elphick, Chief Executive Officer
Glenn Turner, Chief Commercial and Legal Officer
Tel: +44 (0) 203 043 0280
Richard Chetwode, Investor Relations
Tel: +44 (0) 203 043 0280
Mob: +44 (0) 759 0064 883
Gem Diamond Technical Services
Sherryn Tedder, Corporate Affairs
Tel: +27 (0)11 560 9600
Mob: +27 (0) 83 943 4505
Pelham Bell Pottinger
James MacFarlane/ Charles Vivian
Tel: +44 (0) 20 7861 3232