OTHER

Gem's strong sales outweigh operational difficulties

Southern-Africa-based miner Gem Diamonds trimmed its production guidance for 2022, after a troubled October, but is reaping the benefit of high diamond prices.

Gem's strong sales outweigh operational difficulties

In October Gem halted production for two days at its Letšeng mine in Lesotho, to allow for votes in a general election. In addition, October saw a secondary crusher breakdown at its Plant 2, and continued power disruptions. Repairs to the secondary crusher have been completed and the plant is running at normal capacity.

As a result of the disruptions, Gem Diamonds said its full-year guidance for ore treatment is now 5.45Mt, down from a previous range of 5.60-5.80Mt.

Gem is now guiding for recovery and sales of around 104,000ct, down from a previous guidance of 112,000-116,000ct. Sales are guided for 105,000ct, down from around 110,000-114,000ct.

But balancing recent operational issues were third-quarter results that highlighted higher diamond prices.

Gem reported revenue in September quarter of US$56.6 million, up by 19.7% year-on-year. The increase in revenue was thanks to higher diamond prices, with an average price of US$2,028/ct, compared to US$1,589 a year earlier.

Diamond production in the quarter was 25,018ct, in the quarter, taking the year-to-date total to 80,174ct, down from 82,266ct over the same period last year.

And analysts downplayed the effect of the guidance revision.

"We believe the benefit from a weaker Rand and resilient diamond prices will help to reduce the impact of this revision," Panmure Gordon said in a note.

Liberum was upbeat on rough diamond prices.

"We have been surprised by the robustness of rough diamond prices being reported by the diamond companies, considering the weakness we are seeing in polished prices," Liberum said in a note. "It's possible these companies are enjoying a substantial non-Russia premium."

Gem Diamonds shares in London were up 2.4% at 29.90p, at 12.04 London time.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Journal Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Journal Intelligence team.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Q1 Mining Equities Report 2023

Discover new trends in mining investment with insights into capital raisings and share price performance of more than 2,500 companies.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.