Gem Diamonds profits up

Koobonye Ramokopelwa
Monday, 21 March 2016
Gem Diamonds profits up

☛Pays special dividends

☛Reduces production at Ghaghoo

 

Mining junior, Gem Diamonds this Tuesday presented a strong set of financial result in the midst of a downward trend in prices for rough and polished diamonds. 

A decision taken by the board, which emphasised focus on ‘maximising revenue from core assets through enhancing operational efficiencies’, is now paying dividends, said Non-Executive Chairman Roger Davis. 

For the year ended December 2015, the British-based company made a profit of $67, 4 million (about P741 million), a jump of 12 percent when compared to the year before. The group, which owns Botswana’s Ghaghoo diamond mine, has posted improved profits, shining above diamond stalwarts such as De Beers and Alrosa which are currently huffing and puffing as a result of a historic decline in diamond prices.  

Chief Executive, Clifford Elphick is thrilled that his company continues to sail far away from troubled waters. Muted global economy has affected the multi-billion Pula diamond business the world over. “Although 2015 was a challenging year for the diamond mining industry, it is encouraging to report that the group has delivered strong set of operational and financial results. The group continued to implement its strategic objectives of capital discipline by investing in low cost high return capital projects,” said the former Personal Secretary to Harry Oppeinheimer of De Beers’ group. 

The London Stock Exchange-listed group said key objectives for the development of phase 1 of Ghaghoo mine have been achieved. 

The average grade recovered during the year under review met the expected reserve grade. 

 This has led to the achievement of 2000 tonnes per day, said Elphick in an emailed statement. Ghaghoo is the company’s flagship project located right at the centre of Central Kalahari Game Reserve (CKGR). The group said it will cut production at Ghaghoo mine for 2016 in a bid to conserve cash consumed during its final development stage.

 “It is important to note that Ghaghoo remains a key future option for the group and its expansion opportunities, when diamond prices improve,” said the company. Meanwhile, shareholders of Gem Diamonds are also smiling as special dividend of $0, 35 has been declared. This is in addition to the ordinary $0, 05 dividend that has been recommended. Going forward, Gem Diamonds said there are signs that there will be improvement in prices in the short to medium term. 

This is amid weak economic growth prospects across most economies. Letseng mine in Lesotho was a star performer for the period under review. Diamonds at the mine contributed to the strong results at an average price of $2,999 per carat. 

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