Gem Diamonds Ltd (LON:GEMD) , which works the big Letšeng la Terai diamond pipe in Lesotho has announced today that it has recovered yet another mega diamond - a 196 carat high quality (top colour and top clarity) white stone which is likely to fetch a major premium when it is sold.
Without the occasional large diamond find, the Letšeng pipe would probably be sub-marginal at best, but it does have a history of producing the occasional big stones on a relatively consistent basis and the effect of these on the mine's economics is very significant. As Gem notes, since its acquisition of Letseng from JCI in mid-2006 it has produced three of the world's twenty largest recorded diamonds, namely, the 603 carat Letšeng Promise, recovered in August 2006, which sold for US$12.4 million; the 493 carat Letšeng Legacy, recovered in September 2007 which sold for US$10.4 million; and the 478 carat Light of Letšeng, recovered in September 2008, which sold for US$18.4 million.
Commenting on the find, Gem's CEO, Cliff Elphick, said "Letšeng continues to live up to its reputation as a unique producer of exceptional diamonds and the recovery of this remarkable 196 carat white diamond reinforces its position as one of the great mines in the diamond industry. In order to increase the returns from this world class asset, management is focused on a number of workstreams which aim to substantially expand production and increase value at Letšeng."
Gem Diamonds owns 70% of Letšeng Diamonds in partnership with the Government of the Kingdom of Lesotho, which owns the remaining 30%. Operated by De Beers between 1977 and 1982, Letšeng reopened operations in 2004 and was acquired by Gem Diamonds in late 2006 for US$118.5 million.
The mine, located in the Maluti Mountains, is the highest diamond mine in the world at an average altitude of 3,100m above sea level and is one of the coldest places in Africa which makes for extreme working conditions.
The mine is extremely low grade (less than 2 carats per hundred tonnes) and is well known for producing these large diamonds, having the highest percentage of large diamonds (greater than 10.8 carats) of any kimberlite diamond mine, giving it the highest dollar value per carat of any such mine. Without the recovery of these big stones it would not be economic.
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