TIDMGEMD
RNS Number : 7451F
Gem Diamonds Limited
31 October 2018
31 October 2018
GEM DIAMONDS LIMITED
Q3 2018 Trading Update
Gem Diamonds Limited (LSE: GEMD) ("Gem Diamonds" or the
"Company" or the "Group") provides the following Trading Update
detailing the Group's operational and sales performance for the
Period from 1 July 2018 to 30 September 2018 ("Q3 2018" or the
"Period").
Letšeng:
-- Recovered two greater than 100 carat diamonds during the Period.
-- After Period end, on 15 October, a 357-carat diamond was
recovered, bringing the number of diamonds greater than 100 carats
recovered during 2018 to thirteen.
-- Recovered 35 755 carats during the Period, up 27% from Q2 2018.
-- Sold eight diamonds for more than US$ 1.0 million each,
generating revenue of US$ 21.0 million during the Period.
-- No Lost Time Injuries (LTI's) occurred during Q3 2018.
Innovation:
-- In line with the continuing strategy of early detection of
large diamonds and diamond damage reduction, the Company approved a
US$ 3 million pilot plant to be constructed at Letšeng. This
project employs innovative technology to identify diamonds within
kimberlite ore and uses non-mechanical means of liberating the
encapsulated diamonds. The plant will be commissioned during Q2
2019.
Business Transformation:
-- The Company remains on track to achieve its cumulative target
of US$ 100 million in incremental revenue, productivity
improvements and cost savings for the 4-year period to end
2021.
Ghaghoo:
-- The formal sale process for the Ghaghoo mine continues;
further updates will be provided in due course.
Financial:
-- At the end of the Period, the Group had US$ 73.0 million of
cash on hand of which US$ 57.9 million is attributable to Gem
Diamonds. The Group's net cash position was US$ 36.2 million (of
which US$ 25.3 million was attributable to Gem Diamonds). US$ 36.8
million of available facilities had been drawn down, resulting in
undrawn and available facilities of US$ 56.8 million.
Gem Diamonds' CEO, Clifford Elphick, commented:
"Letšeng delivered solid production figures for the Period with
an increase in tonnes treated and carats recovered of 26% and 27%
respectively compared to the previous Period. Post period-end, the
thirteenth diamond greater than 100 carats for 2018 was recovered,
resulting in the highest number of these recoveries in a single
calendar year.
The results of the proof of concept trials to identify and
liberate diamonds within kimberlite ore have progressed well and
this technology will now be tested on site at Letšeng as part of a
pilot project.
The business transformation process has maintained momentum and
remains on track to achieve its cumulative 4-year target of US$100
million in incremental revenue, productivity improvements and cost
savings by the end of 2021."
1. Diamond Market
The demand and prices for Letšeng's large high-quality white
rough diamonds has remained firm.
2. Letšeng
2.1. Production
Q3 2018 Q2 2018 % Change YTD 2018
---------- ---------- --------- -----------
Waste tonnes stripped 6 693 245 6 746 706 -1% 20 186 111
------------------------- ---------- ---------- --------- -----------
Ore tonnes treated 1 806 638 1 438 757 26% 4 798 440
------------------------- ---------- ---------- --------- -----------
Carats recovered 35 755 28 070 27% 97 351
------------------------- ---------- ---------- --------- -----------
Grade recovered (cpht)* 1.98 1.95 2% 2.03
------------------------- ---------- ---------- --------- -----------
* Grade recovered includes carats recovered through the
re-treatment of tailings material through the mobile XRT sorting
machine.
Letšeng treated a total of 1.5 million tonnes of ore during the
Period, 54% of which was sourced from the Main pipe and 46% from
the Satellite pipe. The remaining balance of the ore was treated
through the Alluvial Ventures contractor plant. Waste stripping
continued in line with the requirements of the long-term mine
plan.
Following the successful replacement of the scrubber shell and
other significant maintenance during the major shutdown in Plant 2
during Q2 2018, plant utilisation and availability returned to
nameplate capacity resulting in increased tonnages treated for the
Period.
The statutory negotiation process relating to the renewal of the
Letseng Mining Lease is continuing with the Lesotho Mining Board
and updates will be provided in due course.
2.2. Rough diamond sales
Q3 2018 Q2 2018 % Change YTD 2018
Carats sold 30 275 29 284 3% 91 971
-------- -------- --------- ---------
Total value
(US$ millions) 55.7 63.0 -12% 224.9
----------------- -------- -------- --------- ---------
Achieved US$/ct 1 841 2 150 -14% 2 445
----------------- -------- -------- --------- ---------
During the Period, the highest diamond price achieved was US$ 60
428 per carat for a 138.20 carat, Type IIa, white diamond. The
reduction in average US$ per carat compared to Q2 2018 is a result
of lower quality recoveries during the Period.
2.3. Revised guidance for 2018
Following improved mining efficiencies, strong production during
the Period and consistent grade recoveries, production guidance for
waste tonnes mined, satellite pipe contribution and carats produced
and sold has been revised upwards from that previously reported in
March 2018.
Notwithstanding inflationary pressure on local costs, both
direct cash costs (before waste) and operating costs per tonne
treated are anticipated to remain within guidance. However, the
significant increase in fuel price per litre of c24% compared to
the budget price has impacted waste cash costs resulting in
guidance being increased to M34 - M36 per tonne.
FY 2018 FY 2018
Revised Guidance Previous Guidance
October 2018 March 2018
---------------- -----------------
Waste tonnes mined (Mt) 25 - 27 24 - 26
---------------- -----------------
Ore treated (Mt) No change 6.4 - 6.6
---------------- -----------------
Satellite pipe ore contribution
(Mt) 2.1 2.0
---------------- -----------------
Carats recovered (Kct) 120 - 124 114 - 118
---------------- -----------------
Carats sold (Kct) 118 - 122 112 - 116
---------------- -----------------
Direct cash costs (before waste)
per tonne treated (Maloti) No change 165 - 170
---------------- -----------------
Operating costs per tonne treated(1)
(Maloti) No change 280 - 290
---------------- -----------------
Mining waste cash costs per tonne
of waste mined (Maloti) 34 - 36 31 - 33
---------------- -----------------
Total capital (US$ million) No change 24 - 26
---------------- -----------------
1. Operating costs per tonne excludes royalty, selling costs,
depreciation and mine amortisation, but includes inventory, waste
and ore stockpile adjustments.
3. Health, Safety, Social and Environment (HSSE)
The Group-wide Lost Time Injury Frequency Rate stands at 0.20
for the year-to-date. The Group-wide All Injury Frequency Rate
year-to-date is 1.32, trending towards an improvement over the 2017
full year rate of 2.02.
No major or significant community or environmental incidents
occurred across the Group during the Period.
FOR FURTHER INFORMATION:
Gem Diamonds Limited
Susan Wallace, Company Secretarial department
ir@gemdiamonds.com
Celicourt Communications
Mark Antelme / Joanna Parker
Tel: +44 (0) 207 520 9261
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
The Gem Diamonds Limited LEI number is 213800RC2PGGMZQG8L67.
ABOUT GEM DIAMONDS:
Gem Diamonds is a leading global diamond producer of high value
diamonds. The Company owns 70% of the Letšeng mine in Lesotho and
100% of the Ghaghoo mine in Botswana. The Letšeng mine is famous
for the production of large, top colour, exceptional white
diamonds, making it the highest dollar per carat kimberlite diamond
mine in the world. www.gemdiamonds.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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