Africa-focused Gem Diamonds became on Wednesday the latest miner to show signs of a slow but steady recovery in the market after showing it had swung to positive cash flow and slashed debt on the back of rising diamond prices.
The company reduced its net debt position by $6.6 million in the July-September quarter, ending the period with $1.1 million in cash. This compares to a net debt of $5.5 million in the first half of the year.
The sale of seven diamonds for more than $1 million each helped the miner’s bottom line, generating revenue of $25.6 million during the period.
The company achieved an average diamond price in the third quarter of $2,215 per carat, up from $1,714 per carat in the first half of the year.
“These prices achieved, on a like-for-like basis, are higher than those realized in the pre-covid-19 market conditions of the second half of the 2019 [financial year]”, chief executive Clifford Elphick said in the statement.
The apparent ongoing recovery in the diamond market is still thought to be fragile. De Beers, the world’s largest diamond producer by value, said in early October it was too early to be sure of a sustained upturn in trading conditions.
“Whilst the market has been defibrillated, we think it will remain in intensive care for some time, although any improvement is good news for the smaller pure play producers with weak balance sheets,” BMO Analyst Edward Sterck said in a note last month.
Letšeng back at full tilt
Gem Diamond’s Letšeng mine in Lesotho returned to full ore mining and treatment capacity in a phased manner during the second quarter, the company said.
Enhanced focus on stability and overall uptime of the Letšeng plants resulted in a conscious decision to reduce the instantaneous feed rate to each plant to reduce feed variability and enhance recovery, Gem noted.
Since acquiring Letšeng in 2006, Gem Diamonds has found more than 60 white gem quality diamonds over 100 carats each, which makes the mine the world’s highest dollar per carat kimberlite diamond operation.
The company recently secured a 10-year extension for its mining lease, with the government of Lesotho granting the company exclusive rights for further renewals.
At an average elevation of 3,100 metres (10,000 feet) above sea level, Letšeng is also one of the world’s highest diamond mines.
Source: mining.com