TIDMGEMD
RNS Number : 9456L
Gem Diamonds Limited
25 July 2017
25 July 2017
GEM DIAMONDS LIMITED
H1 2017 Trading Update
Gem Diamonds Limited (LSE: GEMD) ("Gem Diamonds" or the
"Company" or the "Group") provides the following Trading Update
detailing the Group's operational and sales performance for the
Period from 1 January 2017 to 30 June 2017 ("H1 2017" or the
"Period") ahead of its Half Yearly Results which will be released
on 17 August 2017.
Letšeng:
-- Achieved an average price of US$ 1 779(1) per carat for the
Period, up 20% from US$1 480 per carat in H2 2016
-- Achieved an average price of US$ 2 385(2) per carat at the
recent tender which closed on 19 July 2017
-- Recovered four diamonds greater than 100 carats during the Period
-- Exceptional 98.42 and 80.58 carat D-colour Type IIa diamonds
were also recovered during the Period
-- Recovered 50 478 carats during the Period at a grade of 1.59cpht
-- 18 diamonds sold for more than US$ 1.0 million each
generating revenue of US$ 37.0 million during the Period
-- Post Period end, an exceptional 126.75 carat D-colour Type
IIa diamond was recovered, bringing the total greater than 100
carat diamond recoveries to date to five
-- Zero Lost Time Injuries for the Period
(1) Refer to section 2.1 "Letšeng rough diamond sales" for
further details
(2) This average price per carat includes the lower-value
smaller commercial production, included at an estimated value,
which will be sold in the next tender to be held in September
Financial:
-- The Group had US$ 20.0 million cash on hand at the end of the
Period of which US$ 16.1 million is attributable to Gem
Diamonds
-- US$ 34.2 million of available facilities have been drawn
down, of which US$ 25.0 million relates to the Ghaghoo facility,
resulting in a net debt position of US$ 14.2 million at the end of
the Period. The Group had US$ 36.2 million worth of undrawn and
available facilities at the Period end.
-- Post Period end, the Group successfully restructured its
current US$ 35.0 million Revolving Credit Facility held at the
Company (of which US$ 25.0 million has been drawn down relating to
Ghaghoo) into a new US$ 45.0 million facility
Gem Diamonds' CEO, Clifford Elphick commented:
"The improvement in the greater than 100 carat diamond
recoveries at Letšeng is encouraging with the US$ per carat
achieved trending positively at US$1 779, up 20% from US$1 480 in
H2 2016. The market for Letšeng's high-quality diamonds has
remained firm over the Period with the last tender of the Period
achieving over US$2 200 per carat. This positive trend has
continued with the most recent July tender achieving an average
price of US$ 2 385(2) per carat. A Group-wide, externally supported
cost efficiency and bench-marking review has commenced and has
already identified opportunities that are being actively pursued.
Further progress on this review will be reported on during Q4."
1. Diamond Market
The market for both rough and polished diamonds remained
cautious during the Period. The strong demand for Letšeng's large
high-quality white rough diamonds has continued.
2. Letšeng
H1 2017 H2 2016 % Change
------------------------- ----------- ----------- ----------
Waste stripped (tonnes) 15 004 160 14 488 160 4%
------------------------- ----------- ----------- ----------
Ore treated (tonnes) 3 178 631 3 309 798 -4%
------------------------- ----------- ----------- ----------
Carats recovered 50 478 50 825 -1%
------------------------- ----------- ----------- ----------
Grade recovered (cpht) 1.59 1.54 3%
------------------------- ----------- ----------- ----------
Waste mined during the Period was 15.0 million tonnes, in line
with the requirements of the mine plan announced in March.
Letšeng treated a total of 2.6 million tonnes of ore during the
Period, 69% of which was sourced from the Main pipe, and 31% from
the Satellite pipe. The balance of the ore (0.6 million tonnes) was
treated through the Alluvial Ventures contractor plant, which was
sourced from the Main pipe and low-grade stockpiles. The lower than
planned ore tonnes treated was due to reduced plant availability
and downtime associated with the installation and commissioning of
the split front-ends for Plants 1 and 2, which was previously
announced in the Q1 2017 Trading Update. The availability issues
have largely been addressed by the contractor and mine management.
During the Period, 0.9 million tonnes of Satellite pipe material
was processed, in line with the mine plan to process 1.8 million
tonnes in the year.
During the Period, 50 478 carats were recovered at a grade of
1.59 cpht against an expected reserve grade of 1.63 cpht mainly due
to the underperformance of the Main pipe contact material and
internal changes in the geology of this pipe. A core drilling
programme will be implemented during the second half of the year to
improve confidence in the geology at depth, including volume,
grade, and revenue inputs of the resource.
Guidance is maintained, albeit at the lower end of the
range.
2.1. Letšeng rough diamond sales
H1 2017 H2 2016 % change
---------------------------- -------- -------- ---------
Carats sold 49 930 52 997 -6%
---------------------------- -------- -------- ---------
Total value (US$ millions) 88.8 78.4 13%
---------------------------- -------- -------- ---------
Achieved US$/ct(*) 1 779 1 480 20%
---------------------------- -------- -------- ---------
Four tenders have been held in the Period. 49 930 carats were
sold for US$ 88.8 million, achieving an average price of US$ 1
779(*) per carat (full year 2016 - US$ 1 695(*) per carat). The
current average price achieved is up 20% from the US$ 1 480(*) per
carat achieved in the previous 6-month period, H2 2016.
Contributing to the achieved US$ per carat was an 8.65 carat
pink diamond which achieved US$ 164 855 per carat, making it the
sixth highest price per carat achieved by a Letšeng rough diamond.
One of the large high value white diamonds sold, achieved the
highest price per carat for a Letšeng white diamond since February
2016.
(*) Includes carats extracted at rough value for polishing.
3. Ghaghoo
Care and maintenance status was successfully achieved ahead of
plan on 31 March 2017.
During the Period, an earthquake with an epicentre 25km from the
mine occurred. There was superficial damage to the surface
infrastructure, however the earthquake damaged the seal of the
underground water fissure, leading to an influx of water. This
resulted in an increase in the water pumping costs associated with
care and maintenance of approximately US$ 0.6 million. The fissure
will be required to be resealed and plans are underway to complete
this process during Q3 2017.
There were no sales of Ghaghoo goods during the Period. The
remaining carats on hand (c. 13 000 carats) are anticipated to be
sold during Q3 2017.
4. Health, Safety, Social and Environment (HSSE)
There were no Lost Time Injuries (LTI) during the Period,
resulting in a Group-wide Lost Time Injury Frequency Rate (LTIFR)
of 0.00 for the Period. The Group-wide All Injury Frequency Rate
(AIFR) for the Period was 1.69 which is an improvement on 2016's
rate of 1.93.
No significant community or environmental incidents have
occurred across the Group during the Period.
FOR FURTHER INFORMATION:
Gem Diamonds Limited
Susan Wallace, Company Secretarial department
ir@gemdiamonds.com
Celicourt Communications
Mark Antelme / Jimmy Lea
Tel: +44 (0) 207 520 9261
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
The Gem Diamonds Limited LEI number is 213800RC2PGGMZQG8L67.
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 and
100% of the Ghaghoo mine in Botswana. The Letšeng mine is famous
for the production of large, top colour, exceptional white
diamonds, making it the highest dollar per carat kimberlite diamond
mine in the world. The Ghaghoo mine in Botswana has been placed on
care and maintenance until market conditions allow for
recommencement of production. www.gemdiamonds.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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