Half year results for the year ended 30 June 2010


24 Aug 2010

Gem Diamonds (LSE: GEMD) a leading diamond mining company reports its half year results for the half year ended 30 June 2010:

Operational highlights:

  • Letšeng continues to produce large high quality diamonds:
    • A total of 245 rough diamonds over 10.8 carats in size were sold
    • 35 diamonds reached prices in excess of US$20 000 per carat
    • A 27.91 carat diamond sold for US$58 724 per carat, the highest price for a Letšeng rough white diamond sold on tender since July 2008
  • At Ellendale strong prices achieved for fancy yellow diamonds; and other production back at pre-crash price levels.
  • Investigating growth strategy through targeted acquisitions and the development of existing assets.HSSE - Company record of 2.8 million man hours worked without an LTI over the past eight months

Financial Highlights:

  • Revenue of US$103.9 million
  • EBITDA of US$18.5 million
  • Gross cash generated from operating activities of US$27.9 million
  • Profit before tax from continuing operations of US$7.8 million
  • Attributable earnings of US$3.0 million (1.72 US cents per share)
  • US$108.3 million gross cash with no debt provides the Company with a platform for growth.

Market Outlook:

  • Sustained recovery in prices for rough and polished diamonds
  • Medium and long-term supply/demand imbalance remains
Clifford Elphick, CEO, commented:

"Letšeng continues to recover large diamonds of the highest quality and colour. The recovery in rough and polished diamond prices has been broadly based and at the top end this was well illustrated in June when Letšeng sold a 27.91 carat white diamond for US$58 724 per carat, achieving the highest US$ per carat for a Letšeng white diamond sold on rough tender since July 2008. At Ellendale the long term agreement with Tiffany for the purchase of its rare fancy yellow diamonds has continued to show the benefits of working with this partner.

The management of Gem Diamonds is focussed on the following areas:
  • To substantially increase production at Letšeng
  • To evaluate moving underground at the Letšeng Satellite pipe to maximise NPV through the reduction of waste stripping
  • To minimise diamond damage at Letšeng (which occurs at all diamond mines, but with Letšeng's unique production, has a far greater impact)
  • To introduce Letšeng's own sales and marketing strategy
  • To proceed with the mining licence application and development of an underground mine at Gope
  • To increase the resource base at Ellendale
  • To continue to evaluate external growth opportunities

All of these are intended to increase the value of the company to shareholders."

Half Year Results for the half year ended 30 June 2010 (253 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 (Pty) Ltd

Sherryn Tedder, Media
Tel: +27 (0) 11 560 9618
Mob: +27 (0) 83 943 4505

Pelham Bell Pottinger

James MacFarlane
Tel: +44 (0) 207 861 3864 / +44 (0) 7841 672 831

James Henderson
Tel: +44 (0) 207 861 3160 / +44 (0) 7774 444 163

Charles Vivian
Tel: +44 (0) 207 861 3126 / +44 (0) 7977 297 903

About Gem Diamonds:

Gem Diamonds is an international diamond mining company that has pursued a long term growth strategy through targeted acquisitions and the development of its existing assets. Due to the recovery in diamond prices in 2010 the Company's focus has been to place itself in a position to take advantage of long term growth opportunities.

The Company's mining portfolio comprises producing kimberlite and lamproite mines in Lesotho and Australia, as well as development projects in Angola and Botswana. The Company also owns a diamond cutting technology company.

With Letšeng's production of the world's most sought after remarkable white diamonds and Ellendale's production of rare fancy yellow diamonds, Gem Diamonds remains focused on higher value diamonds. This segment of the market is likely to deliver attractive long term returns.