GEM Diamonds edged towards net cash at the close of a robust first half of its 2019 financial year in which high value diamond recoveries protected it against a deterioration in prices that is underway in the lower end of the market.
Clifford Elphick, CEO of GEM Diamonds, said in a trading update today, however, that larger goods might yet be affected by market weakness. “Prices for the smaller and commercial goods have been under pressure for some time with the larger goods having been less affected, although showing recent signs of weakness,” he said.
“We continue to expect Letšeng’s unique, ultra-high-quality goods to be less vulnerable over time to market pressures,” he said.
GEM decided to hold back the dividend at the close of its previous financing year owing to concern about the condition of the diamond market at the low-end of the price range. “It was on the cusp in the board meeting,” said Elphick at the time.
Letšeng produced 13% less carats totalling 56,668 compared to 65,279 carats in the first half of the previous financial year. However, the high value of stones recovered – including a 13.32 carat pink diamond representing a Letšeng record of $656,934 per carat – resulted in an average price of $1,697 per carat – a 10% year-on-year improvement.
Elphick said mining had started in higher value areas of Letšeng orebody so that the second half production would be high enough to meet guidance of between 114,000 and 118,000 carats.
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