Slow Market Dents Gem Diamonds Results

RAPAPORT... Revenue at Gem Diamonds fell in the first half of the yearamid weakness in the market. Sales of rough diamonds from the Let??engmine in Lesotho plunged 44% to $94.5 million by value, and dropped10% to 55,714 carats by volume, the miner reported last week. The average price declined to $1,697 percarat, compared with $2,742 per carat in the same period a year ago. Total sales were slightly below investment bank Berenberg's $95.5 millionestimate, which forecast the average price at $1,728 per carat. However, the average price is likely to rise as mining moves to the higher-value portions of the deposit in the second half, Berenberg noted."[The first half] was difficult and has not been aided by aweak market, but Gem remains our preferred name in a challenging diamondsector," the bank said. Production at Let??eng fell 8% to 56,668 carats, as the minerretrieved ore from a lower-grade portion of the pipe. Gem Diamonds also treatedlower volumes of ore, resulting in a smaller quantity of carats recovered, itexplained. The company found three diamonds larger than 100 carats inthe January-to-June period, compared with 10 in that category during the sameperiod a year ago. The highest per-carat price the company achieved for a whitediamond during the first half was $48,225 for a 70.69-carat, D-color, type IIastone, while a 13.32-carat pink garnered $656,934 per carat, its highest per-caratprice for a Let??eng diamond. Some 15 diamonds fetched more than $1 million eachduring the period. In the first six months of the year, Gem Diamonds finishedconstruction of a pilot plant, which will help it identify diamonds withinkimberlite and remove them without breakage. Commissioning and ramp-up of thenew plant will take place in August. The company also entered into an agreement to sell itsGhaghoo mine in Botswana for $5.4 million. It expects to complete the sale inthe second half of the year. Image: The Let??eng mine. (Gem Diamonds)