JOHANNESBURG (miningweekly.com) – In a challenging period for the diamond mining industry, LSE-listed Gem Diamonds’ Letšeng mine, in Lesotho, achieved a 28% year-on-year increase in production to 28 698 ct for the quarter ended March 31, owing to higher grades sourced from the satellite pipe.
Letšeng diamonds achieved an average price of $1 938/ct during the first three tenders of this year, compared with an average price of $2 157/ct for the first three tenders of 2015.
“The prices achieved for Letšeng’s top quality and large diamonds have remained steady and have contributed to an average price of $1 938/ct for the first three Letšeng tenders,” CEO Clifford Elphick said in a trading update to shareholders on Tuesday.
He added that downsizing of the company’s Ghaghoo operation, in Botswana, was advanced.
Gem Diamonds announced earlier this year that it would downsize the operation owing to the underperforming smaller-sized diamond market.
“Development of the second production block on Level 1 has progressed well and will be the main source of ore for the remainder of the year,” he said.
Elphick added that a parcel of 14 114 ct of diamonds recovered at Ghaghoo had been sold during the period under review at an average price of $160/ct, which was 7% above the price achieved for the quarter ended December 31, 2015.
ROUGH DIAMOND MARKET
Gem Diamonds pointed out that positive actions taken by the major diamond producers had led to an overall steady sentiment in the diamond market in the first quarter of this year.
However, although there were signs of improvement in the quarter, the diamond market as a whole remained cautious during the period.
“The continued slowdown in Chinese retail demand, a strong US dollar and reports of continued high levels of polished inventory contributed to a cautious approach being adopted in the purchasing of rough and polished diamond,” the company said.
Investment banking and research firm Liberum expected rough diamond prices to remain largely flat for the next 12 months owing to a high level of rough inventories and weak global demand for luxury goods.
It noted that while rough diamond prices had recovered this year from previous lows, particularly in South African rand terms, it was difficult to envisage this continuing into the second half of the year.
“We now enter the seasonally quieter demand period for the industry,” Liberum added.