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Record rough tender revenues for Gem in H1

Gem Diamonds (LSE:GEMD) achieved record rough tender revenues for the first half of 2018 from its 70%-owned Letšeng mine in Lesotho.
Record rough tender revenues for Gem  in H1 Record rough tender revenues for Gem  in H1 Record rough tender revenues for Gem  in H1 Record rough tender revenues for Gem  in H1 Record rough tender revenues for Gem  in H1

Gem has recovered 11 over-100ct diamonds from its Letšeng mine in Lesotho

Rough tender revenues for the January-June period were US$169.2 million, 43% higher than the previous half-year period.

It sold 61,696 carats, an 8% increase from the July-December 2017 period, at an average price of $2,742 per carat, up 33%.

A revenue of $99.1 million was generated from the sale of 25 diamonds alone, which all sold for more than $1 million each.

The high revenues are no surprise, with one of the diamonds, the Lesotho Legend, a high-quality 910ct, D colour, type IIa diamond, sold for $40 million, or $43,912/ct in March, and nine other stones over 100ct recovered during the half-year.

The highest prices achieved were $62,433/ct for a 2.26ct pink diamond and $56,028/ct for a 66.27ct type IIa white diamond.

Gem recovered 61,596ct during the six-month period, steady from the previous half-year period, although the grade increased to 2.06 carats per hundred tonnes, from 1.88cpht in the July-December 2017 period.

It stripped 13.5 million tonnes of waste in the January-June period, down 8% from the previous six-month period in line with the mine plan, with the volume of ore treated also down 8% to 3Mt.

Gem said Letšeng paid dividends of $51.8 million during the half-year, resulting in a net cash flow of $32.6 million to Gem and a cash outflow from the group as a result of withholding taxes of $3.7 million and payment of the Government of Lesotho's share of dividend of $15.5 million.

At the end of June, the group had $70.5 million of cash on hand, of which $58.1 million was attributable to Gem, and a net cash position of $29.8 million, $22.1 million attributable to Gem.

It said it had drawn down $40.7 million of available facilities, leaving undrawn and available facilities of $38.2 million.

Gem CEO Clifford Elphick said the total 11 over-100ct diamonds recovered so far in 2018 was the company's highest number in a single year.

"Greatly improved recoveries combined with the discovery and subsequent sale of the Lesotho Legend has generated a strong financial performance for the first half," he said, adding the market for Letšeng's high-quality diamonds had remained robust.

Gem also noted it had received initial non-binding offers for its mothballed Ghaghoo mine.

The company's shares reacted well, rising 2.6% Friday to £1.185 (US$1.54).