Large Stones Boost Gem Diamonds Results

RAPAPORT… Gem Diamonds’ sales and profit increased in 2018 as the miner produced
a record number of large stones at its Letšeng mine, including the 910-carat
Lesotho Legend.



Revenue rose 25% to $267.3 million for the year, the miner
said Wednesday. Sales volume jumped 17% to 125,111 carats, a record for the
company. The average price climbed 10% to $2,131 per carat, reflecting the
larger percentage of higher-value recoveries at the Lesotho site. Production
grew 13% to 126,875 carats, while profit for the year more than doubled to $46.6 million, compared with $17.2 million in 2017. 


“Gem Diamonds achieved a good set of results, characterized
by the recovery of 15 diamonds greater than 100 carats, a record for a single
calendar year,” said Gem Diamonds CEO Clifford Elphick. “Production in 2018
also included the highest recovery of diamonds greater than 20 carats, with 80%
of revenue primarily generated by diamonds greater than 10 carats.”


Recoveries of diamonds weighing more than 20 carats leaped
to 257, a 21% increase over the 213 such stones extracted the previous year. A
total of 44 diamonds sold for more than $1 million in 2018, achieving a value
of $137.2 million. That number includes the Lesotho Legend, which the company
sold last March for $40 million.


During the year, the company sold a 4.06-carat pink diamond
for $64,067 per carat — the highest per-carat price it achieved for a stone last
year. It also sold a 138-carat white diamond, which fetched $8.4 million, or
$60,428 per carat, the company’s highest per-carat price for any white
stone from Letšeng in 2018.

Gem Diamonds will not pay a dividend to its
investors, as it is focusing on strengthening its balance sheet, the company
said. Its shares fell 6% in early trading Wednesday.


Image: The Letšeng mine in Lesotho. (Gem Diamonds)