JOHANNESBURG (miningweekly.com) – Global diamond producer Gem Diamonds has recovered 47 165 ct from the Letšeng mine, in Lesotho, during the first six months of 2009, a improvement of 6% on the corresponding period in 2008, the company said on Thursday.

The London-listed miner had recovered 68 687 ct from its Ellendale mine in Australia, which was 63% lower than a year earlier, as the company had put its E4 pipe on care-and-maintenance.

While more carats were recovered, first-half sales fell by 28%. Gem Diamonds had sold 56 663 ct from the Letšeng mine during the six-month period, generating sales of $74,1-million,which was down 18% on the $89,95-million generated a year earlier.

The company sold 192 732 ct from its Ellendale E9 pipe, generating $30,8-million in the six-month period, compared with $59,55-million a year earlier,

Rough diamond prices had firmed across most all categories during the second quarter of 2009, following on from the unprecedented falls in the fourth quarter of 2008, and the first quarter of this year.

A total of 20 diamonds from Letšeng sold at prices greater than $20 000/ct in the first half of the year, including a 49ct stone which sold for $37 100/ct, a 52 ct stone sold for $36 942/ct and a 126 ct stone which sold for $32 685/ct.

“The diamond market experienced further falls in prices of rough diamonds at the beginning of the first half of this year, however in recent months prices first stabilised and then strengthened,” said Gem Diamonds CEO Clifford Elphick.

“While I remain cautious about the strength of consumer demand in the important US market, large diamonds from our flagship mine Letšeng, remain some of the most sought after, attracting high prices per carat.”

Elphick said Gem Diamonds remained focused on cash preservation and generating maximum cash flow from its higher value assets, the Letšeng and Ellendale E9 operations, in Australia.

Since placing the operations at E4 in Ellendale on care-and-maintenance in February 2009, significant operational progress has been made in maximising returns from Ellendale’s E9 pipe.

Mining unit costs at both Letšeng and Ellendale have continued to be negatively impacted on by the recent strength of the Lesotho loti and Australian dollar to the US dollar.

Despite the continued operational improvements at the E9 pipe at Ellendale in Australia, the strength of the Australian dollar has meant that the E9 pipe remained marginal at current diamond prices.

Gem Diamonds said it would review progress at Ellendale at a board meeting next month.

Gem Diamonds would release its financial results for the interim period on August 26.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.