TIDMGEMD
RNS Number : 2439W
Gem Diamonds Limited
17 August 2022
17 August 2022
GEM DIAMONDS LIMITED
H1 2022 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 from 1
January 2022 to 30 June 2022 ("H1 2022" or the "Period").
Highlights:
-- 57 075 carats were sold during the Period (H2 2021: 54 573
carats), generating revenue of US$99.6 million (H2 2021: US$97.3
million) and achieving an average price of US$1 745 per carat (H2
2021: US$1 783 per carat).
-- The highest price achieved in the Period was US$66 059 per
carat for an 8.41 carat pink diamond.
-- 15 diamonds sold for more than US$1.0 million each,
generating revenue of US$25.8 million during the Period.
-- Three diamonds greater than 100 carats (244.34, 127.58 and
124.65 carats) were recovered during the Period, which were sold in
the first tender after Period end for US$13.9 million.
-- Carats recovered during the Period were 55 157 (H2 2021: 56 504).
Corporate and Financial:
-- The Group ended the Period with US$24.2 million cash on hand.
-- Drawn down facilities amounted to US$12.1 million resulting
in a net cash position of US$12.1 million at Period end (Q4 2021:
net cash of US$20.9 million).
-- The Group had undrawn and available facilities of US$69.9 million at Period end.
-- The 2021 dividend of 2.7 US cents per share (US$3.8 million)
proposed by the Board in March 2022 was approved at the Annual
General Meeting on 8 June 2022 and has been paid.
-- During the Period, the Company purchased 1 520 170 of its
shares at a weighted average purchase price of 60.05 GB pence
(78.07 US cents) per share under its share buyback programme. The
shares are currently held as treasury shares.
-- The purchaser for the Ghaghoo diamond mine did not meet the
extended long stop date of 10 May 2022 resulting in the agreement
lapsing on that date. The Group continues to pursue potential sales
opportunities while other disposal or closure alternatives are also
being considered.
Gem Diamonds' CEO, Clifford Elphick, commented:
"We continue to see a firm diamond market for the high quality
Letšeng diamonds in 2022. We are managing the economic impact of
global events which are contributing significantly to the slowing
down of global economic growth and which are materially impacting
energy and commodity prices and disrupting supply chains
worldwide.
The sanctions imposed on the Russian diamond producer Alrosa
have exacerbated a shortage of rough diamonds in the market,
supporting continued strong demand and robust prices for Letšeng's
high-quality rough diamonds"
1. Diamond Market
Strong demand and robust prices achieved for Letšeng's diamonds
reflected the continued positive sentiment in the diamond market.
The Group hosted another Dubai tender viewing in March 2022 which
was well-attended and contributed positively to the firm prices
achieved during the Period.
2. Letšeng
2.1. Rough diamond sales
H1 2022 Q2 2022 Q1 2022 H2 2021 H1 2022 vs H2 2021 % Change
Carats sold 57 075 28 614 28 461 54 573 5%
-------- -------- -------- -------- ----------------------------
Total value (US$ millions) 99.6 47.5 52.1 97.3 2%
-------- -------- -------- -------- ----------------------------
US$/carat 1 745 1 660 1 831 1 783 -2%
-------- -------- -------- -------- ----------------------------
2.2. Production
H1 2022 Q2 2022 Q1 2022 H2 2021 H1 2022 vs H2 2021 % Change
Waste tonnes stripped 6 289 380 2 436 654 3 852 726 8 495 967 -26%
---------- ---------- ---------- ---------- ----------------------------
Ore tonnes treated 3 017 664 1 453 010 1 564 654 3 032 710 -
---------- ---------- ---------- ---------- ----------------------------
Satellite pipe contribution (tonnes) 1 378 404 744 039 634 365 1 654 169 -17%
---------- ---------- ---------- ---------- ----------------------------
Carats recovered (1) 55 157 26 727 28 430 56 504 -2%
---------- ---------- ---------- ---------- ----------------------------
Grade recovered (cpht) (1) 1.83 1.84 1.82 1.86 -2%
---------- ---------- ---------- ---------- ----------------------------
(1) Includes carats produced from the Letšeng Plants, the
Alluvial Ventures (AV) plant and the recovery tailings treatment
facility.
The 26% reduction in waste tonnes mined and the 17% reduction in
Satellite pipe contribution to tonnes treated in H1 2022 is in line
with plan. Satellite pipe contribution increases in H2 2022 and is
on track to meet guidance as set out below.
Letšeng's Plants treated a total of 2.58 million tonnes of ore
during the Period, 53% of which was sourced from the Satellite pipe
and 47% from the Main pipe. In addition, 0.44 million tonnes of
Main pipe material were treated through the third-party processing
contractor, Alluvial Ventures. This contract ended on 30 June 2022
as planned.
2.3. G uidance for 2022
During the Period, Letšeng experienced excessive rain, increased
power disruptions on the energy supply network and negative impacts
on the supply of critical parts and spares of equipment which
impacted production. However, the 2022 production metrics remain on
track to be achieved, albeit at the lower end of original guidance
published in March 2022. The related cost impact of disruptions to
the supply chain, combined with significant increases in fuel,
explosives and other consumables prices were experienced in the
Period, exacerbated by the Russian invasion of Ukraine. This is
expected to continue into H2 2022, resulting in a revision to the
full year cost guidance as set out in the table below. A review of
capital projects for 2022 has resulted in a significant reduction
of capex for 2022.
FY 2022 FY 2022
Revised Guidance Original Guidance
June 2022 March 2022
---------------- -------------------
Waste tonnes mined (Mt) No change 10 - 12
---------------- -----------------
Ore treated (Mt) No change 5.6 - 5.8
---------------- -----------------
Satellite pipe ore contribution (Mt) No change 2.8 - 3.0
---------------- -----------------
Carats recovered (Kct) No change 112 - 116
---------------- -----------------
Carats sold (Kct) No change 110 - 114
---------------- -----------------
Direct cash costs, (before waste) per
tonne treated (Maloti) 250 - 270 220 - 230
---------------- -----------------
Operating costs per tonne treated (Maloti) 330 - 350 275 - 285
---------------- -----------------
Mining waste cash costs per tonne of
waste mined (Maloti) 62 - 65 51 - 53
---------------- -----------------
Total capex (US$ million) 19 - 23 25 - 30
---------------- -----------------
3. Sustainability
The Group won three awards at the Investing in African Mining
Indaba Junior ESG Awards in May 2022, in the categories of Health
and Safety, Responsible Water and Protection of Biodiversity.
In addition, Gem Diamonds' Sustainability and Climate Change
Reports have been nominated as finalists by the influential
investor media platform ESG Investing in two reporting categories,
namely (i) Best Sustainability Report: Metals and Mining and (ii)
Best Climate-Related Reporting: Small Cap.
During the Period, two LTI's occurred at Letšeng , and the
Group-wide All Injury Frequency Rate was 0.82. Letšeng continued to
advance its Critical Control Management programme, aimed at
eliminating work-related risk to employee health and safety. 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 / Felicity Winkles
Tel: +44 (0) 208 434 2643
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 large high
value diamonds. The Company owns 70% of the Letšeng mine in Lesotho
and is currently in the process of selling its 100% share of the
Ghaghoo mine in Botswana. The Letšeng mine is famous for the
production of large, exceptional white diamonds, making it the
highest dollar per carat kimberlite diamond mine in the world.
www.gemdiamonds.com
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END
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