JOHANNESBURG (miningweekly.com) – London-listed diamond-miner Gem Diamonds was satisfied with the performance of its two operating mines, Letšeng, in Lesotho, and Ellendale, in Australia, with the group recording an attributable profit of $3,3-million in the six months ended June 30, 2009.

This was compared with an attributable profit of $1,3-million recorded in the first half of the 2008 financial year.

Earnings a share for continuing operations had improved to $0,07 a share, compared with $0,02 a share the year before.

Revenues were down 29% to $117,8-million in the first half of the year, compared with $166,8-million the year before, owing to weaker diamond markets, particularly in the first quarter of the year.

“The weakness in rough diamond prices experienced by all rough diamond producers in the last quarter of 2008 continued into the first quarter of 2009. Prices stabilised thereafter and have shown improvement in the second quarter,” CEO Clifford Elphick commented in a statement to shareholders on Wednesday.

The Letšeng mine had continued to produce large diamonds, with 20 diamonds sold at prices greater than $20 000/ct.

Overall, the mine had achieved an average price of $1 017/ct in the first quarter of the year, compared with $2 111/ct the year before. Prices improved to an average of $1 308/ct for the first six months of the year.

Operations at the Ellendale mine had been focused on cost-efficient production at the E9 pipe during the six months, with the E4 pipe put on care-and-maintenance in February.

“The mine has consistently increased its plant throughput over recent months from E9 ore,” said Elphick.

The relocation of the dense-media separation (DMS) module from the mine’s E4 processing facility to its E9 processing facility had been completed in May.

Subsequently, the E9 processing facility had achieved a record throughput of 0,39-million tons in June.

Waste stripping and ore mined would be increased in the second half of the year in order to build an adequate stockpile of ore ahead of the 2009/10 wet season, the diamond-miner stated.

While diamond prices achieved at Ellendale were still substantially lower than those achieved in the middle of 2008, prices had improved from the lows recorded in the first quarter of the year.

The average $/ct price had increased to $160/ct in the first half of the year, compared with lows of $103/ct in the first quarter.

Elphick, meanwhile, noted that after undertaking a successful £75-million ($107-million) capital raising in April, it had entered the second half of the year with a strong balance sheet and no debt.

He added that demand for top quality and top colour large diamonds was continuing.

“At the retail end of the chain, demand for diamond wedding jewellery remains strong in the Middle East, Asia and the US. We are also seeing growth in demand for diamonds from China. However, we still remain cautious on the US market at this stage, particularly the forthcoming Thanksgiving and Christmas season,” he said.