JOHANNESBURG (miningweekly.com) - Diamond prices have firmed in the first three months of 2010, Gem Diamonds CEO Clifford Elphick said on Monday.

In the company's interim management statement, Elphick said that the better-than-expected Christmas sales in the US, restocking in the cutting centres and continued strong demand for diamond jewellery in India and China had resulted in strong rough and polished diamond prices.

"It is pleasing to note that improved consumer demand in the quarter is impacting positively on polished prices, which have risen, albeit not as sharply as the rise in rough prices. The fundamentally positive supply demand picture remains."

The average price achieved during the first quarter of the year at the company's tenders was 72% higher than the comparable period last year at $ 1 753/ct. Gem Diamonds' April 2010 tender achieved an average price of $2 002/ct.

Gem Diamonds reported in $88,5-million cash on hand at the end of the quarter.

The company sold 15 468 ct from its Letšeng diamond mine, in Lesotho, in the period under review, and achieved an average price of to $1 753/ct, compared with 22 243 ct sold, at an average price of $1 017/ct in the first quarter of 2009.

It sold 12 diamonds from Letšeng at prices greater than $20 000/ct in the first quarter of 2010, including a 33,87 ct diamond, which sold for $53 484/ct and a 57,24ct diamond, which sold for $49 552/ct.

At Ellendale, in Australia, Gem Diamonds sold 32 286 ct, at an average price of $489/ct, which was 379% higher the average price a year earlier.

In the first quarter of 2009, 156 943 ct were sold from the Ellendale operation, at an average price of $102/ct.

The company explained that the number of carats sold in the first quarter of 2009 included both its E9 pipe and E4 pipe production, as well as a substantial portion of inventory of lower-value commercial goods carried over from 2008, whereas the first quarter of 2010 only included production from the E9 pipe.

"Despite the number of carats sold in first quarter 2010 falling by 79%, the total sales value was only 2% lower than in the same period in 2009," Gem Diamonds pointed out.

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