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Gem Diamonds boosted by operational improvements at Letšeng; plans maiden divi

Last updated: 06:14 18 Mar 2014 EDT, First published: 07:14 18 Mar 2014 EDT

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A more stable diamond market and operational improvements at its flagship Letšeng mine saw global producer Gem Diamonds (LON:GEMD) post a 5% increase in revenue last year.

The firm's focus on 2013 of reducing diamond damage at the famous mine in Lesotho paid off, while this year's focus remains on optimising operations.

It will also be further developing the Ghaghoo mine in Botswana, which is on-track for commercial production in the second half, the firm said.

The miner is also aiming to pay a first dividend at the end of 2014 on the back of the strong performance.

For the 12 months to December 31, revenue came in at US$213 million, which was generated from the sale of 97, 294 carats from Letšeng.

That compares to revenue of US$202 million from the sale of 107,617 carats in 2012.

Underlying earnings, or EBITDA, was US$77 million, up 18% from US$66 million in 2012, the company revealed.

The Letšeng mine, acquired by the firm in 2006, is known for producing large, exceptional white diamonds and in the last eight years, it has produced four of the 20 largest white gem quality diamonds ever recorded.

Earlier this month, it told how it had ceived US$13.5mln from the sale of two exceptional plus 160 carat (ct) rough diamonds recovered from the mine at the end of January.

Today, chief executive Clifford Elphick said: "I am delighted that the company is able to report a pleasing set of results for 2013, during which good progress was made on all strategic initiatives, including the reduction of diamond damage at Letšeng. 

"Operations in 2014 have begun well and we are looking forward to bringing the Ghaghoo mine into production in H2."

Looking ahead, Gem said it expected diamond prices to remain relatively stable during 2014, with potential for an increase due to a firmer US market and continued growth in China. 

"Together with our refined and focused strategy and flexible business model, the group is well positioned to take advantage of this positive trend," it said.

Shares rose 0.14% to 173.75p.

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