Gem Diamonds improves cash position

Finance

Publishing Date: 19 Aug 2011 10:04am GMT
Author: Mining Journal

Gem Diamonds Ltd earned four times more cash from its operations in the first six months of 2011, compared with a year earlier.

“Management‘s focus in the first half of 2011 has been on cashflow generation and the further implementation of the strategic growth plan,” said the company in its half year results report to the end of June.

A strong diamond market helped revenues nearly double to US$196.5 million with the company's two mines in Australia and Lesotho. The operations generated US$111.3 million in cash before interest and tax, compared with just US$27.2 million a year earlier.

Investments in property, plant and equipment amounted to US$54.9 million. The largest component of this investment was US$42.5 million, incurred in waste stripping at both mining operations.

Chief executive Clifford Elphick said: “Lower stocks of rough and polished diamonds in the cutting centres and strong diamond jewellery demand from India and China have resulted in record rough diamond prices being achieved, reflected in rising polished diamond prices.”

He added: “The current economic uncertainty, however, remains a risk.”