Plunging diamond prices put Gem Diamonds profits under pressure

Gem Diamonds 2

Gem Diamonds says that the exceptional quality and size of diamonds discovered at its Letšeng mine is helping it maintain profits despite the current challenging conditions in the diamond market.

The Letšeng mine in Lesotho has produced the world’s highest percentage of large diamonds, above 10 carats, giving it the highest dollar value per carat of any diamond mine. “Prices for these goods have remained firm,” said Clifford Elphick, Chief Executive of Gem Diamonds.

But the depressed state of the broader diamond market has cut pre-tax profits at Gem Diamonds from $56.2 million in the first half of 2014 to $40 million in the first six months of this year.

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Revenue fell from $149 million to $118 million.

Spot prices for diamonds under 0.5 carats are down over 25% since March last year while prices for over 3 carats have remained flat.

Gem Diamond’s second mine, Ghaghoo in Botswana, has undershot expectations. “The development of the Ghaghoo mine is progressing slower than planned due to difficult ground conditions which have hampered slot development in the first five production tunnels and constrained production ramp-up,” said Mr Elphick.

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Rob Corder

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