London-listed Gem Diamonds has posted a loss a share of $0.07 and lower underlying earnings before interest, taxes, depreciation and amortisation of $8.4-million for the six months ended June 30, on the back of a downturn in the rough diamond market.
This compares with the earnings a share of $0.027 and underlying Ebitda of $20.9-million posted for the prior comparable six months of 2022.
The company’s attributable loss came to $1-million for the six months under review, compared with a profit of $3.8-million reported for the prior comparable period.
The company recovered 50 601 ct from the Letšeng diamond mine, in Lesotho, in the reporting period, compared with 55 157 ct recovered in the prior comparable half-year.
Gem achieved an average value of $1 373/ct sold, compared with an average value of $1 745/ct achieved in the prior comparable period.
The highest price achieved was $282 889/ct for a 6.63 ct pink diamond.
The group had $7.3-million of cash on hand at the end of June and unused facilities of just under $73-million.
CEO Clifford Elphick explains that the decrease in the number of large, high-value diamonds recovered, combined with market pressure has negatively impacted the average dollar per carat and revenue achieved during the period.
“The downturn in the rough diamond market, together with increased grid electricity interruptions – which increased operating costs – impacted negatively on the company’s interim financial results,” he elaborates.
The company will remain focused on improving large diamond recoveries and critically reviewing all operational and capital expenditure in the remainder of the year.
The Letšeng team in March started with a programme to review its operational structures and requirements, primarily to optimise the operations and drive down operating costs.
The workforce element of this rightsizing programme was completed in June, with the focus now turning to further optimisation of the current operations by implementing efficiencies and identifying more opportunities for reduced cost.
As part of this process, a number of changes were made in the senior leadership structure of Letšeng, including the appointment of Mootane Thinyane as CEO and Gideon Scheepers as operations director.
The process also involved 327 positions being affected at the mine and its contractors. Total severance payments in this regard amount to LSL23.2-million.
Meanwhile, the newly built modules for the replacement primary crushing area at Letšeng have been completed. Commissioning of the modules started in mid-July.
The underground feasibility study to assess the viability of an earlier shift to underground mining of the Satellite Pipe has progressed as planned and will inform the trade-off decision between further openpit cutbacks and underground mining.
The construction of a 300 000 ℓ bioremediation plant for run-off water treatment has started and is expected to be completed in the fourth quarter of the 2023 calendar year.
The Ghaghoo diamond mine, in Botswana, remains on care and maintenance while Gem discusses alternatives with affected stakeholders, including the potential closure of the mine.
Gem remains committed to reducing its Scope 1 and 2 carbon emissions by 30% by 2030, including by improving energy efficiency and considering renewable energy sources.