Gem Diamonds sees revenue jump 41 per cent amid hopes of upturn
Gem Diamonds saw its revenue increase 41 per cent today after a hike in the price of the precious stones had producers optimistic of a better 2020 for the troubled market.
The miner, which has operations in Lesotho, said revenue hit $51.3m (£39.5m), up from $36.3m in the previous quarter.
A 21 per cent rise in prices to $1713 per carat was the prime driver of the growth, but the firm also sold 29,945 carats worth of the gems, 17 per cent more than the previous quarter.
In addition the FTSE-listed firm said that it sold seven diamonds for more than $1m each in the period, generating a total revenue of $15.6m in the period.
At the beginning of February Gem recovered three 183, 89 and 70 carat diamonds, which will be sold in March.
The diamonds all came from the firm’s flagship Letšeng mine in Lesotho, from which Gem has now recovered 100 diamonds of more than 100 carats.
The firm added that it had renewed the lease on the mine for an additional 10 years, with the right to renew for a further decade after that.
Sign up to City PM’s Midday Update newsletter, delivered to your inbox every lunchtime
Chief executive Clifford Elphick said: “Letšeng delivered solid operational results. Carats sold are up 17 per cent on the prior quarter. There was an increase in volumes treated for the year and a significant reduction in the waste profile.
“This, together with the Business Transformation programme delivering its targeted gains and continued emphasis on cost controls, positions the Company well for the anticipated upturn in the market which appears to have begun.
The swing to a stronger market for Letšeng’s diamonds was confirmed by the 21 per cent increase in the average price achieved during the period of US$1 713 per carat.
“This improvement continued into 2020 with the first tender achieving US$1 753 per carat. The first tender of 2020 did not include the remarkable recoveries of the 183, 89 and 70 carat diamonds on 3 February’’.
The diamond market struggled in 2019 due to a combination of oversupply, ongoing trade tensions and increased sales of lab-grown diamonds all responsible for a decline in sales.
At the end of January De Beers, the diamond mining arm of Anglo American, recorded its highest sales of the gems since April last year in further signs that the global market is beginning to recover.