London-listed Gem Diamonds delivered a solid financial performance for the financial year ended December 31, despite the volatile global economic environment following Russia’s invasion of Ukraine, which resulted in high levels of inflation and interest rates and significantly higher diesel prices.

Gem was also forced to increase its diesel consumption as a result of the loadshedding, or power cuts, implemented by South African State-owned power utility Eskom, which, in turn, affected power supplies in Lesotho, where Gem’s Letšeng mine is located.

Throughout the financial year, the diamond miner implemented various initiatives to reduce costs, drive efficiencies and effectively manage increased operating costs.

For the period, Gem’s revenue was $188.9-million compared with $201.9-million in 2021 and its underlying earnings before interest, taxes, depreciation and amortisation were  $43.7-million compared with $57.4-million in 2021.

Gem achieved a profit for the year of $20.2-million compared with $27.4-million in 2021 and an attributable profit of $10.2-million compared with $14.8-million in 2021.

Earnings a share were $0.07.  

Gem had cash on hand of $8.7-million as at December 31.

Operationally, the group says, the Letšeng mine operated safely, responsibly and efficiently throughout 2022, achieving its operational objectives notwithstanding a number of challenges experienced during the year.

These included regular loadshedding by Eskom, supply chain challenges, exceptionally high rainfall, the Lesotho national elections in October 2022, which required a compulsory two-day site-wide shutdown, and a secondary crusher breakdown.

An Energy and Decarbonisation Committee was established in 2022, focused on identifying, assessing and implementing opportunities to improve energy security in light of the unreliable electricity grid.

At Letšeng, 106 704 ct of diamonds were recovered; 10.2-million tonnes of waste tonnes were mined; 5.5-million tonnes of ore were treated; and an average value of $1 755/ct was achieved.

The highest dollar per carat price achieved for a white rough diamond during the year was $53 834/ct.

“Demand for Letšeng’s large, high-value diamonds remains strong. The reopening of China, the second largest diamond market, is expected to pave the way for a rapid rebound in economic activity, which bodes well for diamond prices in 2023,” comments CEO Clifford Elphick.

Letšeng’s safety performance improved in 2022 with the implementation of an organisational safety culture maturity programme yielding positive results. Letšeng recorded zero fatalities and three lost-time injuries (LTIs) during 2022, resulting in an improved LTI frequency rate and all injury frequency rate of 0.13 and 0.70, respectively.

The group also adopted the recommendations of the Task Force on Climate-related Financial Disclosures in 2021 and concluded Phase 2 of its three-year TCFD roadmap in 2022.

This included the adoption of a decarbonisation strategy and carbon pricing model. The group has committed to a decarbonisation target of a 30% reduction of its Scope 1 and 2 carbon emissions by 2030, from a 2021 base.