Gem Diamonds Formalises Botswana Mine Sale, Lesotho Shines

Gem Diamonds has revealed that 2018 marked a very positive year for the company with strong operational and financial performance driving an improved cash position. The company stated that robust tender revenues achieved at Letšeng during 2018 were underpinned by strong operational results with a record 15 diamonds greater than 100 carats and an improved number of diamonds greater than 20 carats being recovered during the year.

Gem revealed in its Full Year Results for the year ending 31 December 2018 that included in these recoveries, was the remarkable 910 carat Lesotho Legend that sold for US$40 million and contributed significantly towards the Group’s improved revenue, cash position and strengthened balance sheet.

“Against the backdrop of a challenging year for the diamond mining industry, Gem Diamonds achieved pleasing results characterised by the recovery of 15 diamonds greater than 100 carats, a record for a single calendar year. Production in 2018 also included the highest recovery of diamonds greater than 20 carats in weight,” the company stated.

The most notable recovery for the year was the 910 carat Lesotho Legend, which sold for US$40.0 million (US$43 956 per carat). This diamond is the largest recovered from Letšeng to date and is the fifth largest gem-quality diamond ever recovered. The recovery of a diamond of this quality and size affirms the world-class calibre of the Letšeng mine.

“While this diamond was an exceptional find, it was one of several notable recoveries1including a 4.06 carat pink diamond, which achieved the highest dollar per carat for the year of US$64 067 per carat and a 138.20 carat white diamond which sold for US$8.4 million (US$60 428 per carat), making it the highest dollar per carat achieved during the year for a Letšeng white rough diamond.”

Group revenue of US$267.3 million in 2018, primarily derived from its mining operations in Lesotho (Letšeng), was 25% higher than that achieved in 2017. Letšeng achieved an average of US$2 131** per carat (US$1 930** per carat in 2017) following an improvement in the frequency of the recovery of large, high-quality white diamonds, including the sale of the Lesotho Legend. The total carats sold increased by 17% to 125 111 carats, the highest number ever to be sold in a calendar year.

Ghaghoo care and maintenance operation

Costs incurred at Ghaghoo for the year amounted to US$5.7 million (including US$1.1 million costs associated with the potential sale of the mine) and have been recognised in the income statement. Costs continued to be incurred in 2018 relating to the dewatering of the underground and the re-sealing of the fissure, which was damaged following an earthquake in 2017. 

In early 2017 the Ghaghoo mine in Botswana was placed on care and maintenance as a consequence of the weak state of the diamond market for the category of diamonds produced by this operation. During the year, a formal sale process commenced, and further updates on this process will be provided in due course.

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