JOHANNESBURG (miningweekly.com) – LSE-listed diamond-miner Gem Diamonds had weathered the downturn and was assessing opportunities to grow its business in light of the improvements seen in the rough diamond market, CEO Clifford Elphick said on Friday.

In an update to shareholders, the diamond-miner noted that reports from the Thanksgiving and Christmas holiday season in the US, which remained the largest diamond jewellery consumer, indicated a rise in diamond jewellery sales, compared with the year before, while strong demand from India and China continued.

"The recovery in sentiment in the rough diamond market and resultant recovery in rough diamond prices through 2009 has been impressive, even though prices are still below the 2008 highs,” Elphick commented.

Prices for rough diamonds from the company’s Letšeng mine, in Lesotho, had risen to about $2 070/ct by December, compared with $1 017/ct in the third quarter of the year.

Rough diamonds from Letšeng had sold for an average of $1 894/ct for the three months ended December 31, 2009, but averaged at about $1 534/ct for the full 2009 year.

A total of 26 294 ct were sold during the fourth quarter of the year, a 41% increase on the 18 642 ct sold in the previous quarter, while total sales increased by 56% to $49,8-million, compared with $31,9-million in the third quarter of the year.

Rough diamond sales for the full year amounted to 101 559 ct at a value of $155,8-million.

A further 206,6 ct of polished diamonds from Letšeng were sold for $12,5-million during the full year, while four polished diamonds, weighing a total of 25,7 ct had been sold for a combined $1,8-million during the fourth quarter.

Management intended continuing to develop the polished diamond side of its business, Gem stated.

Meanwhile, the diamond-miner said that the Ellendale mine, in Western Australia, had recorded a satisfactory performance in the fourth quarter of 2009.

Ellendale, which is owned and operated by Gem’s 100%-owned Kimberley Diamond Company, sold 81 026 ct of diamonds at an average price of $272/ct during the fourth quarter of the year, a 109% increase on the 38 686 ct sold during the third quarter.

However, the price of the diamonds declined by 46% compared with the average price of $505/ct achieved during the previous quarter.

Gem explained that the prices achieved during the third quarter of the year were higher owing to the timing of sales, which had resulted in a higher proportion of fancy yellow diamonds being sold during that quarter.

Nevertheless, the $22,1-million in revenue from Ellendale for the fourth quarter was 12% higher than the $19,6-million earned in the third quarter of the year.

Overall, 312 450 rough diamonds from Ellendale were sold during the full year, resulting in revenues of $72,4-million.

Meanwhile, Gem reported that the E4 pipe at Ellendale, the Cempaka mine, in Indonesia, the Gope project, in Botswana and the Chiri project, in Angola, remained on care-and-maintenance.

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