Half Year 2014 Results

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20 Aug 2014

Operational performance and project delivery drives excellent H1 results

Gem Diamonds Limited (LSE: GEMD) (“Gem Diamonds”, the “Company” or the “Group”) today announces its half year results for the six months ending 30 June 2014 (“H1 2014” or “the Period”).

FINANCIAL RESULTS:

Excellent financial performance with significant growth in revenue, strong cash flow further enhancing the balance sheet and on track to consider declaring a maiden dividend for 2014 financial year

  • Revenue of US$148.9 million, up 54% (US$96.5 million in H1 2013).
  • Underlying EBITDA of US$62.2 million, up 87% (US$33.2 million in H1 2013).
  • Attributable profit of US$19.7 million, up 129% (US$8.6 million in H1 2013).
  • Basic EPS of 14.28 US cents, up 129% (6.23 US cents in H1 2013).
  • Cash on hand of US$113.9 million as at 30 June 2014 (US$98.4 million attributable to Gem Diamonds).

OPERATIONAL RESULTS:

Extremely strong operational performance with continued focus on process improvements and growth projects set to unlock further value
LetŠeng:
  • Carats recovered of 54 678, up 29% (42 268 carats in H1 2013).
  • Average value of US$2 747* per carat achieved for the first five tenders of 2014, up 58% (US$1 741* per carat in H1 2013).
  • 3 diamonds greater than 100 carats recovered – a 162.02 carat, a 161.31 carat and a 132.55 carat, achieving a total sales value of US$21.0 million.
  • Ore treated of 3.2 million tonnes, up 6% (3.0 million tonnes in H1 2013).
  • Waste tonnes mined of 10.0 million tonnes, up 2% (9.9 million tonnes in H1 2013).

*Includes carats extracted for polishing at rough valuation.

Ghaghoo:
  • The Phase 1 capital project completed on time and on budget.
  • Processing plant being commissioned, with 2 400 carats recovered as at end of June 2014.
  • Development of three production tunnels on Level 1 underway.
  • Production build-up underway.
Commenting on the results today, Clifford Elphick, Chief Executive of Gem Diamonds, said:

“The first half of 2014 was a very strong start to the year for Gem Diamonds with an exceptional performance at Letšeng.  The ongoing focus on low capex, value accretive projects, resulting in increased diamond liberation and reduced diamond damage have been implemented at Letšeng and are bearing fruit.  This, together with the current mine plan and the higher proportion of Satellite Pipe ore mined during the Period, has resulted in a 29% increase in carats recovered compared to the corresponding 2013 Period. Strong sales and robust demand throughout the Period has underpinned the positive start to the year.

At Ghaghoo, good progress has been made with the mine having been built on time and on budget and commissioning has begun. The first diamonds produced during the commissioning of the plant have, as anticipated, been of a higher quality and average size than those mined during the exploration phase. A 20 carat and two 10 carat diamonds have been recovered from the first 2 400 carats recovered as at end of June 2014. This compares to the largest diamond recovered in the exploration sampling of 7 carats. During the development of the underground production level a significant ingress of water was encountered which has been dealt with quickly and efficiently. It is not anticipated that there will be any impact on the planned production targets for 2015.

Extensive mineral resource management work following the latest drilling and evaluation campaign at Letšeng has greatly enhanced the resource and reserve position of the Company, approximately doubling Letšeng’s in-situ value of the reserve to US$ 4.6 billion. All of Letšeng’s optimal open pit, with a life of mine of 21 years, is now fully contained in the Probable Reserve category.

The Company has increased its cash position to a Group cash balance of US$114 million which is significant given the Board’s stated intention of considering paying a maiden dividend for the 2014 year.”

The Company will be hosting an audio presentation on its half year results today, 20 August 2014, at 9:30 am BST. 

A live audio webcast of this presentation will be available on the Company’s website:  www.gemdiamonds.com

FOR FURTHER INFORMATION:
Gem Diamonds Limited

Sherryn Tedder, Investor Relations
Tel: +27 (0) 11 560 9600 
Mob: +27 83 943 4505

Bell Pottinger

Charles Vivian / James MacFarlane 
Tel: +44 (0) 207 861 3232

ABOUT GEM DIAMONDS:

Gem Diamonds is a leading global diamond producer of high value diamonds. The company owns 70% of the Letšeng mine in Lesotho, in partnership with the Government of Lesotho which owns the remaining 30%; and 100% of the Ghaghoo mine in Botswana. The Letšeng mine is famous for the production of large, high value, exceptional white diamonds, making it the highest dollar per carat kimberlite diamond mine in the world. Since Gem Diamonds’ acquisition of Letšeng in 2006, the mine has produced four of the twenty largest white gem quality diamonds recorded.

Gem Diamonds has a growth strategy based on the expansion of the Letšeng mine and bringing the Ghaghoo mine into production, while maintaining its strong balance sheet. The Company seeks to maximise revenue and margin from its rough diamond production by pursuing cutting, polishing and sales and marketing initiatives further along the diamond value chain. With favourable supply/demand dynamics expected to benefit the industry over the medium to long term, particularly at the high end of the market supplied by Gem Diamonds, this strategy positions the Company well to generate attractive returns for shareholders in the coming years.

www.gemdiamonds.com

20 Aug 2014 Half Year 2014 Results (690KB PDF)