Gem Diamonds to Reopen Letšeng Mine Despite COVID-19 Lockdown

Mining and Exploration
24/04/2020 17:04

Gem Diamonds has been granted permission by the government of Lesotho to reopen its Letšeng Mine following the three week lockdown, with effect from Monday 27 April. The country will remain on lockdown for more than another week, until May 5. The miner said it is taking all of the necessary precautions to protect its people. The mine is located in the Maluti Mountains of Lesotho at an elevation of 3,100 m (10,000 ft). It is the world's highest diamond mine.

Gem Diamonds reiterated that, to date, they have had no reported cases of COVID-19 at or near the Letšeng mine or at any of its office sites. In accordance with best practice, they write, as advised by the World Health Organisation, Letšeng has instituted compulsory personal testing for all persons entering its operations. In case of any suspected cases, Gem Diamonds has access to laboratory testing facilities for rapid diagnosis. All suspected cases will be immediately quarantined and the Letšeng mine has established separate accommodation and medical access in this event.

In their trading update published earlier this week, Gem Diamonds announced that its first-quarter revenue had declined as the coronavirus negatively impacted the average price achieved for their rough diamonds. “Prices for Letšeng’s diamonds have been negatively impacted in March 2020 due to the global COVID-19 pandemic, but have demonstrated a resilience in this global crisis,” the company said Tuesday.

Sales fell 9% to $47.3 million from $51.9 million in Q1 a year ago and 8% from the $51.3 million sold last quarter. The average price on  year-on-year basis fell 15% to $1,615 per carat from $1,900 per carat, and declined 6% from the $1,713 per carat earned in Q4 2019. The price decline was partially offset by a 7% increase in sales volume to 29,298 carats, compared to 27,335 carats sold in Q1 last year. CEO Clifford Elphick commented, "The positive results of the flexible tender sales process demonstrated the continued demand for Letšeng’s high quality diamonds, with an average price of $1,615 achieved during the period, notwithstanding the extremely uncertain and challenging global conditions.’’

Due to the travel and other restrictions imposed by various governments (particularly Belgium, India, Israel) the viewings of Letšeng large diamonds scheduled for tender in March 2020 were cancelled. A successful flexible tender sale process was conducted generating US$18.8 million of revenue. This revenue was in addition to the quarterly Letšeng small diamond tender that closed on 18 March 2020, achieving US$7.8 million. The miner sold 11 diamonds in Q1 for more than US$1.0 million each, generating revenue of US$20.7 million during the period. This means nearly 44% of the miner's quarterly earnings came from the sale of 11 individual stones. They sold eight for more than a million dollars in Q1 2019.