H1 2013 Trading Update

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29 Jul 2013

Gem Diamonds Limited (LSE: GEMD) (“Gem Diamonds”, the "Group” or the “Company”) reports a trading update for the half year period 1 January to 30 June 2013 (“H1 2013”) (“the Period”). Gem Diamonds’ financial results for the period will be detailed in its Half Year 2013 Results Announcement which will be released on 15 August 2013.

During the Period:

Letšeng:
  • Installation of the four cone crushers in Letšeng’s Plants 1 and 2, aimed at reducing diamond damage, was completed on time and on budget.
  • 3 diamonds over 100 carats in size were recovered during the Period: a 164 carat white diamond (which was sold for US$ 9 million into a partnership arrangement); a 103 carat yellow diamond (which sold for US$ 810 000); and a 100 carat white diamond (which sold for US$ 6.45 million in July 2013).
  • Mining was conducted almost exclusively in the lower value, lower grade Main pipe:
  • An average value of US$1 741 per carat was achieved for the first 5 tenders of 2013 (US$ 1 690 per carat in H2 2012).
  • 9 rough diamonds achieved a value in excess of US$ 1 million each.
  • 44 rough diamonds achieved prices greater than US$ 20 000 per carat.
  • A total of 252 rough diamonds greater than 10.8 carats in size were recovered, equating to 67% of Letšeng’s revenue for the Period.
  • Subsequent to Period end, the July tender achieved an average of US$ 2 202 per carat.
Ghaghoo:
  • The decline tunnel progressed into competent basalt following completion of the sand portion and the open face tunnel shield was successfully removed in early July 2013.
  • Construction of the Plant is complete, with commissioning planned to commence in Q2 2014 to coincide with the ore becoming available.

Cash:

  • The Group maintains its strong cash position with US$ 61.5 million cash as at 30 June 2013, of which US$ 54.6 million is attributable to Gem Diamonds.
  • As at Period end no draw-downs have been made on either of the US$ 20 million or Maloti 250 million (US$ 25 million) facilities.
  • Subsequent to the Period end, on 19 July 2013, Kimberley Diamond Company made an early repayment of Au$ 10.5 million to Gem Diamonds for the outstanding portion of the loan which formed part of the sale of the Ellendale mine in January 2013.
Gem Diamonds’ CEO, Clifford Elphick commented:

“Letšeng continues to demonstrate that it is a high quality mine following the recovery of three diamonds weighing in excess of 100 carats each. We are now focused on moving mining operations to the higher value, higher grade satellite pipe, which should positively impact revenues during H2 2013.  The secondary and tertiary cone crushers have now been installed and are expected to reduce diamond breakage and we continue to evaluate other low cost initiatives focused on realizing additional value from our Letšeng mine through Project Kholo Optimised.”

29 Jul 2013 H1 2013 Trading Update (306KB PDF)