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Higher prices give Gem Diamonds a lift

Rising sales volumes and an uptick in diamond prices saw London-listed Gem Diamonds post a 41% increase in revenue in the December quarter – a sign that diamond market could at last be beginning to thaw.
Higher prices give Gem Diamonds a lift Higher prices give Gem Diamonds a lift Higher prices give Gem Diamonds a lift Higher prices give Gem Diamonds a lift Higher prices give Gem Diamonds a lift

Gem Diamonds' Letseng mine is located in the Maluti Mountains of Lesotho

Staff reporter

Revenue amounted to US$51.3 million in Q4, up from US$36.3 million, as the average price per carat rose by 21% to US$1,713. The Lesotho and Botswana-focused player also increased the number of carats sold by 17% to 29,945, including four stones of greater than 100 carats.

"Following pressure on the prices for the larger high-quality diamonds seen during 2019, signs of improvement were noted in December 2019 and this has continued into 2020," Gem said in a statement.

"Diamond prices for the smaller commercial type goods remained under pressure during 2019 with polished inventory levels remaining high. However, improvements in demand were noted in December 2019 as the midstream started to restock.

"Further improvement in the prices of these goods has been confirmed during January and February 2020," said the company.

Analysts at BMO said an improvement in diamond market conditions "could be the catalyst to restore investor interest".

However, Numis Securities pointed out that Gem's free cash flow generation remains modest, "and the diamond market remains very challenging".