Mining group posts a profit in 2009 despite poor diamond prices.
Gem Diamonds moved into profit in 2009 as cost-cutting measures helped to bolster its full-year results to December 31 against a backdrop of poor diamond prices.
Gem Diamonds posted a pre-tax profit of US$37.1 million (£24.6 million) compared with a loss of US$367.4 million (£244.1 million) in 2008. Revenues in 2009 fell to US$244.4 million (£162.3 million) from US$296.9 million (£179.3 million) the previous year.
Gem Diamonds said in a statement: “2009 was an extremely challenging year for the diamond mining industry as a whole. However, our ability to react swiftly to changing market conditions enabled us to weather the worst of the economic crisis and maintain production and profitably at our two key operations [Letšeng mine in Lesotho and Ellendale mine in Australia].’
Average price per carat at its Letšeng mine fell to US$1,017 (£675) in the first quarter of 2009 from US$2,687 (£1,785) in the second quarter of 2008. Gem Diamonds said that diamond prices at its Ellendale mine also suffered a sharp decline.
The diamond market is however starting to bounce back and Gem Diamonds has noted an improvement in prices in the early months of 2010. The company added: “Diamond prices have continued to improve in early 2010 following a better-than-expected 2009 Christmas season in the US, albeit relative to the post-crisis fourth quarter sales in 2008. In addition evidence suggests that demand for diamond jewellery in India and China continues to grow strongly, although not making up for the slowdown in US consumption of diamond jewellery.”