H1 2015 TRADING UPDATE

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30 Jul 2015

Gem Diamonds Limited (LSE: GEMD) is pleased to provide a Trading Update detailing the Company’s operational and sales performance for the period 1 January 2015 to 30 June 2015 (H1 2015) (the Period), ahead of its Half Yearly results which will be released on 19 August 2015.

OPERATIONAL RESULTS:

Letšeng:
Successful delivery of projects and solid operational performance; prices achieved for high value diamonds remain firm despite difficult market conditions
  • Average price of US$ 2 264 per carat was achieved in H1 2015 (US$ 2 338 per carat in H2 2014)
  • 13 rough diamonds achieved a value of greater than US$ 1.0 million each
  • In addition to the 314 carat Type IIa white diamond previously reported, another outstanding quality 357 carat Type IIa white diamond was recovered and is expected to be sold in Q3 2015
  • Further four diamonds of over 100 carats each were sold in the Period, including a top quality 108 carat Type IIa rough diamond which sold for US$ 65 226 per carat
  • The Plant 2 Phase 1 upgrade and the Coarse Recovery Plant construction were successfully completed on time and within budget. On the first day of its operation, the new XRT unit recovered a high quality 52 carat Type IIa diamond
Ghaghoo:
Recovered grade in latter part of H1 2015 was above reserve grade; recovery of larger diamonds beginning to fill gaps in size frequency distribution model
  • Recovered grade fluctuated between 28 and 30 cpht in the last two months of H1 2015 (compared to the reserve grade of 27.8 cpht)
  • Small size blue and pink coloured diamonds recovered; confirming presence of these valuable diamonds in the ore body
  • 5 stoping tunnels opened providing increased ore availability
  • A 48 carat diamond was recovered in July 2015 with an increasing number of diamonds in the 10 to 30 carat size range being recovered, albeit still below modelled frequencies
  • A second parcel of 29 891 carats of commissioning phase production sold for US$ 4.9 million in July 2015 (US$ 165 per carat) in a difficult market

FINANCIAL:

  • The Group had US$ 83.8 million cash on hand as at 30 June 2015, of which US$ 70.5 million is attributable to Gem Diamonds
  • The Group has drawn down US$ 34.2 million of its available facilities, resulting in a net cash position of US$ 49.6 million
  • A maiden annual dividend of 5 US cents per share (US$ 6.9 million) was paid on 9 June 2015
Gem Diamonds’ CEO, Clifford Elphick commented:

“The recovery of large high quality diamonds continues to define the Letšeng mine and it is pleasing to see that prices for these goods have remained firm despite the current difficult diamond market conditions. The Plant 2 Phase 1 upgrade was completed on time and within budget and will achieve its increased head feed target of an additional 250 000 tonnes on an annualised basis. In addition, the construction of the Coarse Recovery Plant is complete, and during commissioning, the first diamonds from run of mine ore were recovered.

The development of the Ghaghoo mine is progressing slower than planned due to difficult ground conditions which have hampered slot development in the first five production tunnels and constrained production ramp-up. Specialist expertise has been employed to ensure there is no further major ingress of water as the access decline and rim tunnel on Level 1 both begin advancing through the water fissure area in order to gain access to the second production section. A second parcel of Ghaghoo commissioning goods was sold in July for US$ 4.9 million (US$ 165 per carat) in a difficult market. Encouragingly, a number of larger diamonds and small coloured diamonds have also been recovered during the Period.”

30 Jul 2015 H1 2015 Trading update (421KB PDF)