Gem Diamonds Issues Reserved 2025 Production Outlook

Gem Diamonds announced plans for reduced output and sales volume in 2025 during an investor call Tuesday, amid a move to mining lower-grade ore. 

The company is set to produce between 84,000 and 88,000 carats of rough from its Letšeng mine in Lesotho next year, compared to the 98,000 to 101,000 carats it expects for 2024. The outlook for sales volume for 2025 is 82,000 to 86,000 carats rather than the 100,000 to 103,000 carats forecast by the end of the current year. For the first nine months of 2024, Gem Diamonds reported sales volume of 83,610 carats and output of 80,550 carats. 

The lower guidance is the result of a weaker product mix, as the company moves to mining lower-grade ore. Mining from the satellite kimberlite at Letšeng, which contains higher-grade ore, has been completed, and production for 2025 will derive primarily from the main-body ore, the company said. 

Gem Diamonds is not currently selling rough in its regular fashion due to market challenges, CEO Clifford Elphick pointed out. 

“One of the major competitors we have is selling diamonds in an indiscriminate way, which is hurting us,” he noted. “Once the market is stronger, we will go back to a regular tender system.” 

Elphick also observed that the company saw some stability over the past month at its Dubai tenders, with notable increases of 3% to 5% in prices for rough ranging from 2 to 3 carats as well as for 5-carat goods. However, the miner is worried about a potential knock-on effect from the recent price decreases by De Beers for rough from its final tender of the year. 

The CEO also explained that the company had been hit by several factors, including the Middle East conflict, given many of its customers are Israeli. It is concerned as well about the impact Donald Trump’s election may have in terms of trade wars, tariffs and uncertainty. While Elphick is maintaining a positive outlook built on holiday sales and restocking, he does not believe a market rebound is in sight in the short term. 

“I don’t think a market recovery during the balance of this year is in the cards, but I hope I’m wrong,” he added. “Strong sales followed by strong restocking normally leads to better feelings in the market, positive sentiment and price increases. I have a gleam in my eye that this might well be the case. We will start to know that in mid to end of January.”

Image: The Letšeng mine. (Gem Diamonds)

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