Gem Diamonds, which operates the Letšeng mine in the mountainous kingdom of Lesotho in southern Africa, famous for producing the world’s most valuable stones, is in the midst of a banner year as a record number of large diamond recoveries (+100ct) pushed revenue to $167.7 million, up 81% from $92.9 million in H1 2017. The company set a half year record of ten diamonds greater than 100 carats, including the recovery of the 910 carat Lesotho Legend, which was sold in March to an Antwerp company for $40 million ($43,912 per carat). Gem's average price of $2,742 per carat achieved represents a 54% increase over the $1,779 per carat earned in H1 2017. They also recovered another two giant stones since the end of H1. The Legend is the second largest gem quality diamond recovered this century and the largest recovered at the Letšeng mine to date.
Gem Diamonds' tender sales in Antwerp also resulted in record rough tender revenue for a half year of $169.2 million, compared to $88.8 million in H1 2017. The company sold 25 diamonds with a sales value of greater than $1 million each. Their underlying EBITDA before exceptional items took a giant leap to $68.4 million compared to $13.0 million in H1 2017. Total carats recovered for the first half reached 61,596, a 22% improvement over the 50,478 carats unearthed in H1 2017, despite lower than planned availabilities of their processing plants in Q1. The slightly lower tonnage treated was offset by a higher mine core factor and higher head feed grade owing to the volume of Satellite material treated. The tailings re-treatment facility produced an additional 5,368 carats from recovery tailings material that was generated before the upgrade of the recovery process. The recovered grade for the Period was 1.88 carats per hundred tons (cpht) against an expected reserve grade of 1.83 cpht.
"Letšeng’s improved recoveries combined with the discovery and subsequent sale of the Lesotho Legend has generated a strong set of results," said CEO Clifford Elphick. "Letšeng produced a record number of diamonds greater than 100 carats for any six-month period in the mine’s history reaffirming the exceptional and unique quality of Letšeng." He adds, "The market for Letšeng’s high-quality diamonds has remained robust, with an average price achieved of $2,742* per carat during the Period, up 54% compared to H1 2017 of $1,779. It is also pleasing to report on the progress of the Business Transformation. This has already seen initiatives achieved in revenue, productivity improvements and cost savings to the value of $47 million of the 2021 $100 million target."
The strong first half led Thomas Biesheuvel of Bloomberg to point out that Gem Diamonds is currently outshining the rest of the mining world on the stock market, and has been the standout performer in the FTSE All-Share Mining Index, gaining almost 70 percent this year. "In comparison", he writes, "almost every other miner is in negative territory." Biesheuvel says Gem Diamonds has struggled for years with failed growth plans and problems recovering big diamonds without breaking them, but has had a resurgence this year.