REG - Gem Diamonds Limited - Full Year 2025 Results
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RNS Number : 0146X Gem Diamonds Limited 18 March 2026
Wednesday, 18 March 2026
Gem Diamonds Limited
Full Year 2025 Results
Gem Diamonds Limited (LSE: GEMD) ("Gem Diamonds", the "Company" or the
"Group") announces its audited Full Year Results for the year ending 31
December 2025 (the "Period").
Gem Diamonds also announces that its Annual Report and Accounts 2025 (which
includes the Report on Payments to Governments) and Sustainability Report 2025
have been published and are available to view on the Group website at
https://www.gemdiamonds.com/results-reports-presentations.php
(https://www.gemdiamonds.com/results-reports-presentations.php) .
The Annual General Meeting (AGM) is scheduled for 3 June 2026 and the Notice
of AGM will be published on the Company's website in due course.
FINANCIAL RESULTS:
• Revenue of US$98.4 million (US$154.2 million in 2024)
• Underlying EBITDA of US$3.9 million (US$29.7 million in 2024)
• Loss for the year before exceptional items of US$9.1 million
(profit of US$8.1 million in 2024)
• Attributable loss after exceptional items of US$104.0 million
(loss of US$2.9 million in 2024) driven primarily by the US$77.5 million
impairment of the Company's carrying value in Letšeng, influenced by the
prolonged downward pressure on the rough diamond market and the weakened US
dollar against the Lesotho loti
• Loss per share before exceptional items of 6.1 US cents (loss per
share after exceptional items of 74.4 US cents) (earnings per share of 2.1 US
cents in 2024)
• Net debt of US$20.1 million as at 31 December 2025 (2024:
US$7.3 million)
OPERATIONAL RESULTS:
Letšeng
• Carats recovered of 90 354 (105 012 carats in 2024)
• Waste tonnes mined of 2.0 million tonnes (5.4 million tonnes in
2024)
• Ore treated of 5.2 million tonnes (5.0 million tonnes in 2024)
• Average value of US$1 105 per carat achieved (US$1 390 in 2024)
• The highest dollar per carat achieved for a white rough diamond
during the year was US$34 717 per carat
Commenting on the results today, Clifford Elphick, Chief Executive Officer of
Gem Diamonds, said:
"The continued weakness in the diamond market required decisive action to
protect the financial viability of Letšeng and the rest of the Group, which
led to the launch of the Business Resilience Programme in the second half of
2025. These measures were essential to ensure that Letšeng remains a
sustainable operation capable of supporting employment, communities and
stakeholders over the longer term.
We are acutely aware of the human impact of these decisions and conducted the
process with care, transparency and support for affected employees.
I am grateful to our management and workforce for their daily commitment to
safety as reflected in our excellent safety performance for 2025.
Our focus remains on operating Letšeng in a safe and responsible manner while
we navigate a challenging period with limited access to higher-value Satellite
ore.
Maintaining our vital partnership with lenders remains a priority, and we aim
to renew our Group facilities before they expire in December 2026.
We are confident that the measures implemented in 2025 have better equipped
the Group to be well positioned for a recovery when market conditions
improve."
Safety performance
The Group maintained an excellent safety performance in 2025, achieving a
record low AIFR of 0.41 (2024: 0.61). The Group had zero fatalities (2024:
zero), two LTIs (2024: three) and an LTIFR of 0.14 (2024: 0.18).
Operational performance
All operational metrics were achieved in accordance with Letšeng's short-term
mine plan. The positive outcomes of operational efficiencies implemented since
2023 are clearly reflected in Letšeng's overall operational performance in
2025.
The Group achieved its decarbonisation target of a 30% reduction of its Scope
1 and Scope 2 carbon emissions against a 2021 baseline, ahead of its 2030
target date. The Group remains committed to maintaining this achievement
despite a scheduled increase in waste mining volumes from 2027, in accordance
with the current mine plan.
Financial performance
The Group achieved revenue of US$98.4 million, a 36% decrease compared to
2024, driven by the pressure on the diamond market, fewer and lower quality
diamonds due to the 74% ore contribution from the lower-grade Main Pipe, and a
decrease in the number of greater than 100 carat diamonds that were sold.
Underlying EBITDA for the Group decreased to US$3.9 million, reflecting an 87%
reduction. The significant decrease in revenue of US$55.8 million was the main
contributing factor, although this was offset to some extent by cost
efficiencies from the Business Resilience Programme and the royalty relief
provided by the Lesotho Government during H2 2025.
The Group recognised a US$77.5 million impairment of Letšeng's carrying
value which was impacted by the prolonged downward pressure on the rough
diamond market and the weakened US dollar against the Lesotho loti.
Refinancing of facilities
The Group ended the year in a net debt position of US$20.1 million and
available undrawn facilities of US$68.3 million. The Group's revolving credit
facilities expire in December 2026 and the formal renewal process is scheduled
to commence in Q2 2026, in the ordinary course of the Group's engagement with
its lenders, to ensure the availability of these facilities beyond the expiry
date.
This announcement contains selected information from the Company's full set of
Consolidated Financial Statements for the year ended 31 December 2025. Those
financial statements include a material uncertainty relating to the going
concern of the Group, as the renewal of the Group's facilities fall within the
12-month going concern period. For the Company's full set of Consolidated
Financial Statements for 31 December 2025, refer to pages 99 to 155 of the
Group's Annual Report and Accounts 2025.
The page references in this announcement refer to the Annual Report and
Accounts 2025 which can be found on the Company's website:
https://www.gemdiamonds.com/results-reports-presentations.php
(https://www.gemdiamonds.com/results-reports-presentations.php) .
The Company will host a live audio webcast of the full year results today,
18 March 2026, at 9:30 GMT. If you would like to attend the webcast please
register using this link: 2025 Full Year results presentation
(https://events.teams.microsoft.com/event/875ee1d2-2965-4e5a-aae5-a6d0baa67df4@d3dfa6ac-98a0-4787-9dcb-843395528dce)
.
The Gem Diamonds Limited LEI number is 213800RC2PGGMZQG8L67
FOR FURTHER INFORMATION:
Gem Diamonds Limited
Kiki Constantopoulos, Company Secretary
ir@gemdiamonds.com
Celicourt Communications
Mark Antelme / Charles Denley-Myerson
Tel: +44 (0) 207 777 6424
ABOUT GEM DIAMONDS:
Gem Diamonds is a leading global producer of high value diamonds. The Company
owns 70% of the Letšeng mine in Lesotho. 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.
CHAIRPERSON'S STATEMENT
Dear shareholders,
On behalf of the Board of Directors, I am pleased to share with you the Gem
Diamonds Annual Report and Accounts for 2025, which outlines the Group's
performance over the course of another challenging year.
The changes included in the UK Corporate Governance Code 2024 have been
implemented where relevant and the Governance report is available on page 47.
DIAMOND MARKET
2025 was a particularly difficult year for the diamond industry. Rough diamond
prices remained under pressure from a combination of elevated inventory
levels, weak demand in important markets and the growing prevalence of
synthetic diamonds, specifically in smaller size categories. These industry
dynamics were compounded by persistent global macro-economic headwinds such as
the impact of US tariffs and a weakening of the US dollar, and an increasingly
unstable geopolitical environment.
The Group approached these challenges with resolve and care. Protecting both
our people and the sensitive environment in which our Letšeng mine is located
remained paramount, even as we acted with urgency to reduce costs and identify
opportunities to improve operational efficiency and effectiveness.
BUSINESS RESILIENCE PROGRAMME
To this end, management launched a further effort to lower costs under the
banner of the Business Resilience (BR) Programme. This included streamlining
organisational structures, further optimising mining and processing activities
and implementing additional cost-saving measures. Together, these actions
reduced unit operating costs to record low levels. This discipline is
particularly important as the mine transitions from treating ore from both the
Main and Satellite Pipes to a period of sole reliance on lower-value Main Pipe
ore while work continues to establish future access to additional higher-value
Satellite Pipe material.
Full details of this programme are provided on page 26. The measures
implemented delivered immediate results, and we remain confident in our
ability to navigate the current challenging business environment and position
the Group for future recovery.
Other notable achievements in 2025 were the preparation for the implementation
of the Taskforce on Nature-related Financial Disclosures (TNFD)
recommendations and the IFRS Sustainability Disclosure Standards, IFRS S1 and
S2, issued by the International Sustainability Standards Board (ISSB); and the
final relinquishment of the Ghaghoo mining licence to the Government of
Botswana following the successful completion of a rigorous closure process. I
would like to thank the Government of Botswana for their active support during
this process.
STAKEHOLDER ENGAGEMENT
Our ability to implement these changes was strengthened by the understanding
and commitment of a broad range of stakeholders. We received valuable support
from senior representatives of the Lesotho Government, local community
organisations, our employees and contractors, as well as our key shareholders
and funding partners. Throughout the year, we sought to communicate openly and
transparently about the challenges facing the Letšeng mine and the diamond
industry more generally and the actions required to sustain the business. We
also provided opportunities for key stakeholders to observe first-hand the
work undertaken by management to maintain a lean, efficient and safe
operation.
On behalf of the Board, I extend my sincere thanks to all those who engaged
constructively with us during the year and contributed to the implementation
of these important measures.
BOARD CHANGES
As previously reported, Janet Blas joined the Board and became Chair of the
Audit Committee on 1 April 2025.
On 31 December 2025, Mazvi Maharasoa resigned from the Board to pursue other
opportunities. Mazvi has been associated with the Letšeng mine and Gem
Diamonds in various capacities for more than 25 years. On behalf of everyone
in the Group, I want to express my deepest thanks for the substantial
contribution she has made; our deliberations have been much the richer for her
wisdom and insight.
The new Board composition addresses the requirement to right-size the Board to
fit the current structure of the business, while remaining aligned with the
independence requirements of the UK Corporate Governance Code. The Board is
fully representative with respect to both gender and ethnic minority groups.
BOARD PERFORMANCE REVIEW
Once again, Board governance remained a high priority. The findings of the
internal Board performance review concluded at the end of 2024 were
implemented during the year, resulting in, among others, an optimisation of
the Committee meeting structure and schedule to improve efficiency and a
review of ongoing training provided to Directors to support them in performing
their duties.
In Q4 2025, an internal review was conducted by the Company Secretary by means
of an online survey that was completed by all Directors. The overall findings
of the performance review were positive, with no material matters identified
for action.
LOOKING TO THE FUTURE
Looking ahead to 2026, the Board's primary focus will remain firmly on
supporting executive and senior management to navigate the continued weakness
in the diamond market and the challenges facing the diamond industry. The
Letšeng mine is the source of many of the largest and finest diamonds
recovered anywhere on earth, and we will constantly strive to ensure it
operates as safely, efficiently and effectively as possible for the benefit of
all stakeholders.
APPRECIATION
On behalf of the Board, I extend my sincere thanks to everyone who worked so
hard on behalf of the Company during the past year. Specifically, I wish to
thank our operational teams for their resilience and focus during a difficult
year, our senior leadership team, who made difficult decisions with courage
and empathy, and my fellow Board members for the wisdom and guidance they
provided. I also want to thank our community partners, the Government of the
Kingdom of Lesotho and all our shareholders for their continued support.
Finally, I am due to retire from the Board in 2026 following the conclusion of
my nine-year tenure as Chair, and I will therefore not be offering myself up
for re-election at the 2026 AGM in June. The Company will make an announcement
on my successor in due course following recommendations from the Nominations
Committee.
It has been an enormous privilege to lead Gem Diamonds during a period of
profound change for both the Company and the wider diamond industry, and I
would like to thank everyone who supported me during my tenure. I wish the
Group, its employees and its shareholders every success in the future.
Harry Kenyon-Slaney
Chairperson
17 March 2026
RISK MANAGEMENT
HOW WE APPROACH RISK
The Group's risk management framework, which is fully integrated with
strategic and operational planning, aims to identify, manage and respond to
the Group's risks and uncertainties. The framework combines top-down and
bottom-up approaches with appropriate governance and oversight.
Risk management framework
Oversight BOARD OF DIRECTORS Top-down approach -the Board sets the risk appetite and tolerances, strategic
objectives and accountability for the management of the framework
The Board is responsible for the overall approach to risk management for the
Group and provides stakeholders with assurance that key risks are properly
identified, assessed, mitigated and monitored. The Board maintains a formal
Group risk management framework, assesses and approves the overall risk
appetite and tolerance, and formally evaluates the effectiveness of the
Group's risk management and internal control processes annually at a minimum.
It confirms that the process is appropriately aligned with the Group's
strategy and performance objectives.
Governance AUDIT COMMITTEE SUSTAINABILITY COMMITTEE
The Audit Committee monitors the Group's risk management processes, reviews The Sustainability Committee provides assurance to the Board that appropriate
the status of risk management, and reports on a biannual basis. It is systems are in place to identify and manage health, safety, social,
responsible for addressing the corporate governance requirements of risk environmental and climate change-related risks. It monitors the Group's
management. performance within these categories and drives proactive risk mitigation
strategies to secure safe and responsible operations and our social licence to
operate in the future.
Responsibility MANAGEMENT Bottom-up approach - ensures a sound risk management process and establishes
formal reporting structures
Management develops, implements, communicates and monitors risk management
processes and integrates them into the Group's day-to-day activities. It
identifies risks affecting the Group, including internal and external, current
and emerging risks. It implements appropriate risk responses consistent with
the Group's risk appetite and tolerance.
GROUP INTERNAL AUDIT
Group Internal Audit formally reviews the effectiveness of the Group's risk
management processes. The outputs of risk assessments are used to compile the
strategic three-year rolling and annual internal audit coverage plan and
evaluate the effectiveness of controls.
The Board is ultimately responsible and accountable for the Group's risk
management function. It is supported by its subcommittees and senior
management in overseeing the Group's most relevant and significant current and
emerging risks. These risks are actively identified, assessed, prioritised,
managed and mitigated as much as reasonably possible, as they could negatively
impact the Group's ability to execute its strategy.
While the Group's risk management framework focuses on risk identification and
mitigation, many of the factors that give rise to these risks also present
opportunities. Gem Diamonds tracks these opportunities and incorporates them
into the strategy where they appropriately support the Group's purpose.
The Board and its subcommittees have identified the following key strategic,
operational and external risks, which are set out in no order of priority.
1. Rough diamond demand and prices Risk: Risk response: Strategic impact:
Numerous factors beyond our control could affect the price and demand for • Monitoring market conditions and trends Extracting maximum value from our operations
diamonds. These factors include geopolitical tensions, macro-economic
conditions, global diamond production levels and consumer trends. Medium to • Flexibility in sales processes and utilisation of multiple sales Preparing for our future
long-term demand is forecast to outpace supply, but short-term uncertainty and and marketing channels, including additional viewing opportunities
liquidity constraints within the diamond sector may negatively impact rough
diamond pricing. • Ability to enter into partnership agreements to share in the
upside of polished diamonds
• Maintaining the integrity of the tender process
2. Variability in cash generation Risk: Risk response: Strategic impact:
Marginal cash resources and variability of cash flows could negatively affect • Rigorous cost and capital discipline is in place Extracting maximum value from our operations
the Group's ability to effectively operate, repay debt and fund capital
projects, and impact strategic short and long-term decision-making. The risk • Funding facilities are in place to manage variability in the short Preparing for our future
is directly impacted by other principal risks such as rough diamond demand and to medium term
prices, performance of the resource and the economic viability of reserves.
• Focus on cost discipline to achieve greater operational
efficiencies
• Ongoing drive for continuous improvement to deliver operational
efficiencies
3. Successful refinancing of facilities Risk: Risk response: Strategic impact:
The Group-wide debt facilities that were concluded in December 2021 will • Constructive ongoing and early engagement with lenders Extracting maximum value from our operations
expire on 21 December 2026. Refinancing of these facilities is an important
consideration for the Group's going concern assessment to ensure that it will • No covenant breaches on current facility agreements in place Preparing for our future
have adequate financial resources to continue operations for the foreseeable
future. • Long-standing relationships and previous successful refinancing
and/or renewals
• Engagement with lenders on facility renewal scheduled to commence
in Q2 2026
4. Diamond resource and reserve performance Risk: Risk response: Strategic impact:
Letšeng's low-grade orebodies make the operation sensitive to resource • Gathering geological evidence on variations within the resource Extracting maximum value from our operations
variability. Unexpected variability in key resource/reserve criteria, such as (lithology, density, volume/tonnage, grade, diamond population size and value
volume, tonnage, grade and price, could significantly impact mine planning, distribution) and applying industry best practice Preparing for our future
forecasting and financial stability in both the short and medium term, and
could influence decisions regarding future growth. • Continual review of the reserve extraction strategy considering
the prevailing technical and economic environment
• Ongoing pit mapping, petrography, drilling and 3D modelling
• Grade control, bulk sampling, density and moisture content
measurements (on-site and independent lab verification), dilution control,
stockpile management, data management, quality control and internal auditing
of production data (including geological, processing, recovery and sales data)
• Managing the Diamond Accounting System and Mineral Resource
Management (MRM) database, and monitoring recovery data on a daily and monthly
basis, as well as per export period, to follow trends in diamond
distributions, large stone recovery frequencies and average diamond prices per
kimberlite domain
5. Growth and access to capital Risk: Risk response: Strategic impact:
The volatility of the Group's share price and lack of growth opportunities The Group's strategic objectives are to drive share price growth through: Extracting maximum value from our operations
negatively impact the Group's market capitalisation. Constrained cash flows
add pressure on returns to shareholders. The Group currently relies on a • Assessing mergers and acquisitions Working responsibly and maintaining our social licence
single mine with a finite life for its revenues, profits and cash flows.
• Focusing on existing operations to unlock further value through Preparing for our future
rationalisation and efficiency improvements
6. Workforce Risk: Risk response: Strategic impact:
Achieving the Group's objectives and sustainable growth depend on our ability • Human resource practices are designed to identify skills shortages Extracting maximum value from our operations
to attract and retain suitably qualified, experienced and ethical employees. and implement development programmes and succession planning for employees
Gem Diamonds operates in an environment and industry where shortages in
Working responsibly and maintaining our social licence
experience and skills are prevalent. • Remuneration practices and incentives are in place to
appropriately remunerate and retain skills Preparing for our future
• Training and coaching plans are in place to address skills and
experience shortages
7. Information technology (IT) and operational technology (OT) systems, and Risk: Risk response: Strategic impact:
cybersecurity
The Group's operations rely on secure OT and IT systems to process financial • Application of technical and process IT controls and policies in Extracting maximum value from our operations
and operating data in its information management systems. If these systems are line with industry-accepted standards
compromised, there could be a material adverse impact on the Group through a
Preparing for our future
lack of production and/or compromised recovery parameters. Integration of • Appropriate back-up procedures, firewalls and other appropriate
operating systems due to insourcing of the processing activities increases the security applications are in place
risk exposure in the short term.
• Vulnerability assessments to identify gaps and devise corrective
actions
8. Production interruption Risk: Risk response: Strategic impact:
Material mine and/or plant shutdowns, pit closures or periods of decreased • Robust business continuity plans are in place to ensure limited Extracting maximum value from our operations
production could arise due to various events. These events could lead to delays due to disruptions
personal injury or death, environmental impacts, damage to infrastructure and
Working responsibly and maintaining our social licence
delays in mining and processing activities, and could result in financial • Appropriate levels of critical resources (fuel, ore stockpiles,
losses and possible legal liability. etc) are maintained to mitigate the impact of any production interruptions
• Appropriate insurance is maintained
9. Health, safety and wellness Risk: Risk response: Strategic impact:
The probability of a major health or safety incident occurring is inherent to • Appropriate health and safety policies, practices, training, and Extracting maximum value from our operations
mining operations. Such incidents could impact the well-being of employees, awareness campaigns are in place
PACs, our licence to operate, the Group's reputation, and compliance with our
Working responsibly and maintaining our social licence
mining lease agreement. The health and safety of our people is critical to the • A dam safety management framework has been implemented in
business. alignment with the ICMM's GISTM
• ISO 45001 (occupational health and safety management)
accreditation is maintained
• A safety management and leadership programme, visible felt
leadership, and detection and prevention strategies have been developed and
implemented
• We continually assess our organisational safety culture maturity
to address current and emerging issues
• Pit safety management, including pit monitoring and emergency
response systems
10. Security of product Risk: Risk response: Strategic impact:
Theft is an inherent risk in the diamond industry. The high-value nature of • Zero tolerance of non-conformance to diamond security policies and Extracting maximum value from our operations
the product at Letšeng makes it susceptible to theft and could result in regulations
significant losses that would negatively affect revenue, cash flows and
Working responsibly and maintaining our social licence
strategic short and long-term mine plan decision-making. • Advanced security access control and surveillance systems are in
place Preparing for our future
• Monitoring of security process effectiveness is performed by the
Executive Committee and the Board
• Appropriate diamond specie insurance cover is in place
• Vulnerability assessments and assurance audits are conducted by
internal and independent third parties
11. Social licence to operate Risk: Risk response: Strategic impact:
The Group's operations are subject to country risk, being the economic, • Implementation of an appropriate CSI strategy, based on a Working responsibly and maintaining our social licence
political and social risks inherent in doing business in certain areas of community needs analysis, that provides infrastructure and access to education
Africa, Europe and the United Kingdom. These risks include matters arising and healthcare and supports local economic development Preparing for our future
from government policies, economic conditions, imposition of or changes to
taxes and regulations, foreign exchange rate fluctuations and the • Adoption of relevant standards, best practices and strategies
enforceability of contract rights.
• Appropriate governance structures across all levels of the Group,
The Group's social licence to operate is underpinned by the support of its including an established Employee Engagement Committee
stakeholders, particularly employees, regulators, PACs and society. This
support is an outcome of the way the Group manages issues such as ethics, • Regular engagement with all stakeholders, including government,
labour practices and sustainability in our wider environment, as well as our regulators, community leadership and PACs
risk management and engagement activities with stakeholders.
12. Climate change Risk: Risk response: Strategic impact:
Climate change-related risks (transitional and physical risks) are recognised • TCFD recommendations adopted and climate change strategy developed Working responsibly and maintaining our social licence
as top global risks, and investors are increasingly focused on the management
of these risks. The uncertainty of potential carbon taxes and the impact of • Adoption of a Group decarbonisation strategy and 2030 target Preparing for our future
climate change present significant current and future risks to the Group
which, if not identified and managed responsibly, could negatively impact the • Governance and management practices implemented to oversee the
Group's long-term operational and financial resilience. implementation of the adopted strategy and 2030 target
• New reporting standards adopted
• Adoption of UN SDG framework
• Energy footprint and carbon emissions monitoring and reporting
13. Environmental Risk: Risk response: Strategic impact:
Failure to manage vital natural resources, environmental regulations, and • Appropriate sustainability and environmental policies are in place Extracting maximum value from our operations
pressure from neighbouring communities could affect the Group's ability to and regularly reviewed
operate sustainably. Furthermore, investors and stakeholders are increasingly
Working responsibly and maintaining our social licence
focused on environmental practices. • The current behaviour-based care programme embeds environmental
stewardship Preparing for our future
• A dam safety management framework has been implemented
• Annual social and environmental management plan (SEMP) audit
programme implemented
• ISO 14001 (environmental management) accreditation maintained
• Adopted the UN SDG framework
• Rehabilitation and closure management strategy adopted and updated
annually
• Implementation of an integrated water management framework
• Water footprint monitoring and reporting
• Concurrent rehabilitation strategy implemented
14. Availability of sustainable and reliable power supply Risk: Risk response: Strategic impact:
Regular power interruptions (load shedding by the South African power utility, • Exploring solutions with the Lesotho Electricity Company (LEC) for Extracting maximum value from our operations
Eskom) compound the need for and cost of self-generated power in the context grid and/or renewable power
of escalated diesel prices. Unscheduled power interruptions and poor quality
Working responsibly and maintaining our social licence
of power supply reduce the available processing time and negatively influence • Assessing the potential to generate renewable energy for own use
the reliability and stability of plant equipment.
Preparing for our future
• Prioritisation of load and allocation of power
• Identification and implementation of consumption-reduction
initiatives
EMERGING RISKS
The Group risk framework includes an assessment of emerging risks. These are
defined as risks that:
· are likely to materialise or impact over a longer timeframe than
existing risks;
· are new risks that have not previously been experienced; and
· are likely to be assessed and monitored against vulnerability,
velocity and preparedness when determining likelihood and impact.
The current emerging risks that are being monitored by the Group are:
· generational shifts in consumer preferences; and
· future workforce (automation, skills for the future and
artificial intelligence).
BUSINESS RESILIENCE PROGRAMME
The diamond industry operated in a highly challenging environment in 2025.
Prolonged downward pressure on diamond prices since late 2022 forced many
producers to streamline operations, reduce activity or suspend production.
While the Group had previously navigated these conditions through capital
discipline, cost reductions and improved operational efficiencies, the absence
of a sustained diamond price recovery and continued macro-economic and
geopolitical volatility necessitated a step change to safeguard the Group's
financial viability and long-term sustainability.
As announced in the Group's H1 2025 Trading update released on 23 July 2025
and further reported in the Half-year Report 2025, the Group launched a
Business Resilience (BR) Programme to implement immediate and decisive
measures to conserve cash and protect shareholder value. These measures
included:
· accessing additional higher-value Satellite Pipe ore for
processing during H2 2025 and H1 2026;
· reducing waste mining volumes to a minimum without compromising
the long-term mine plan, while ensuring continued ore availability;
· rationalising the workforce in line with reduced operating
activities;
· introducing salary sacrifices for Board members and the corporate
office senior management team;
· right-sizing the Board to fit the structure of the business while
remaining aligned with independence requirements;
· reducing international travel and associated costs for Board
meetings;
· reviewing the Group structure and reducing the number of
companies where possible;
· limiting capital expenditure to absolute minimum requirements
without compromising operating activities; and
· undertaking a rigorous review of all supplier contracts.
The above initiatives were fully implemented by the end of September 2025 and
delivered immediate results.
Once-off implementation costs included severance payments to retrenched
employees at Letšeng.
Recurring monthly savings from the successful implementation of the BR
Programme amount to approximately US$1.5 million.
The Group remains committed to its long-term strategy of producing exceptional
quality diamonds and is confident that the actions taken will position the
Group well for recovery when market conditions improve. Market developments
are closely monitored and operational adjustments are made as necessary.
CHIEF EXECUTIVE OFFICER'S REVIEW
OPERATING ENVIRONMENT
The global economic landscape in 2025 remained uncertain, with ongoing
geopolitical tensions, the imposition of US tariffs and the weakened US dollar
adding further strain to the diamond market. Demand and prices remained under
pressure despite efforts by major producers to moderate supply.
The lower end of the diamond market continues to be affected by the
availability and attractive price points of synthetic diamonds. The
distinction between synthetic diamonds and large, high-quality natural
diamonds has, however, become increasingly evident in pricing trends. Premium
luxury houses such as Richemont (including Cartier and Van Cleef & Arpels)
and LVMH (including Tiffany & Co. and Bulgari) reported strong sales
growth in 2025 and, in some cases, record high sales results for their
high-end jewellery divisions.
Price increases were observed in the latter part of the year for Letšeng's
larger, higher-quality rough diamonds. Overall revenue for the year was,
however, adversely affected because of lower volumes of higher-value Satellite
Pipe ore under the current mine plan.
Numerous initiatives have been implemented over the past 24 months to reduce
costs and enhance operational efficiencies because of the continued weakness
in response to the sustained weakness in the diamond market. These challenging
market conditions necessitated decisive and proactive measures to safeguard
the financial sustainability of Letšeng and the broader Group. Accordingly,
the BR Programme was launched to support these objectives (refer to page 26).
Measures implemented under the BR Programme unfortunately resulted in a
reduction of our workforce at Letšeng. We are acutely aware of the human
impact of these decisions and conducted the process with care, transparency
and support for affected employees. These measures were essential to ensure
that Letšeng remains a sustainable operation, at lower prices, capable of
supporting employment, communities and stakeholders over the longer term.
We are grateful for the support provided by the Lesotho Government, who
suspended royalty payments for a period of six months.
Following the application for relinquishment, the Ghaghoo mining licence was
officially cancelled by the Botswana Ministry of Minerals and Energy and the
mine site was handed over to the Department of Mines, effective from 1 June
2025. The Group has no further obligations or commitments related to the
Ghaghoo mining licence or the mine site.
EXTRACTING MAXIMUM VALUE FROM OUR OPERATIONS
We operated safely, responsibly and efficiently during the year. The BR
Programme was fully implemented by September 2025 and led to an immediate
saving of approximately US$1.5 million per month.
Production volumes were in accordance with the latest mine plan. However,
being primarily reliant on lower-grade Main Pipe material with reduced ore
availability from the Satellite Pipe, overall carats recovered decreased by
14% compared to 2024.
Waste volumes were significantly decreased as part of the BR Programme and
other mine optimisation initiatives. The mine plan remains under continuous
review and provides the flexibility to react quickly to a change in market
conditions.
We have an effective, transparent and competitive tender sales process in
Antwerp. Selected rough diamonds were also sold pursuant to the limited supply
agreement established in 2022 with key diamond manufacturing clients who
supply polished diamonds to some of the world's most premium luxury brands.
Letšeng receives additional revenue on the sale of the resultant polished
diamonds.
The average price achieved decreased to US$1 105 per carat in 2025, mainly
due to the weak diamond market coupled with the change in ore mix, which
resulted in a decrease in the number and quality of large high-value diamonds
sold during the year. The lower prices achieved and decrease in carats sold
resulted in total revenue of US$98.4 million, a 36% decrease compared to 2024.
Full details of the Group's financial performance are included in the CFO
Review on page 29 and details of the operational performance are included in
the COO Review on page 36.
WORKING RESPONSIBLY AND MAINTAINING OUR SOCIAL LICENCE
We maintained an excellent safety performance in 2025, achieving our lowest
overall AIFR on record. Our workplace safety is founded on individual
responsibility, mutual care and collaboration.
We adhere to the highest environmental management standards and had no major
or significant environmental incidents during the year.
Our residue storage facility management process aligns with the ICMM's GISTM.
Our residue storage and freshwater facilities are subject to regular
inspections by internal as well as independent external experts. These
professional external reviews, together with the internal governance,
monitoring and reporting processes, provide assurance that our freshwater dam
and residue storage facilities are being managed in a safe and responsible
manner.
Our CSI activities are built around the eight selected UN SDGs and are focused
on supporting infrastructure development, education and health while assisting
and stimulating small businesses. From 2016 to 2025, the Group invested
US$5.4 million in sustainable CSI initiatives.
In 2025, Letšeng contributed a total of US$25.4 million (LSL453.8 million)
to the Lesotho fiscus in the form of taxes, royalties and mining lease
payments. We remain proud of our role in supporting the country's developing
economy and of our position as a significant employer and contributor to the
national fiscus.
PREPARING FOR THE FUTURE
Our primary focus in 2026 is the safe and efficient operation of our Letšeng
mine, building on the measures implemented in 2025 to ensure the long-term
financial viability of the operation. While all opportunities are being
explored for earlier extraction of Satellite Pipe ore, under the current mine
plan we are reliant on lower-value Main Pipe ore until the end of 2030. No
higher-value Satellite Pipe ore will be accessible while the waste stripping
of the final cutback of the Satellite pit is being implemented (refer to the
current mine plan on page 38).
We are well prepared to navigate this difficult period, largely assisted by
the change in our cost base. We continuously engage with our lenders and the
formal process of renewing our loan facilities, which expire in December 2026,
is scheduled to commence in Q2 2026.
Our capital plans prioritise funding for projects that will sustain growth and
create value. The planned capital projects for 2026 are detailed in the COO
Review.
OUTLOOK
The streamlining of the cost base of the Group has positioned it well to
navigate the prevailing diamond market conditions, and we are confident that
the implemented measures have better equipped the Group for recovery as market
conditions improve.
In the medium to long term, rough diamond prices should be supported by
favourable demand and supply fundamentals, with a projected further decrease
in natural rough diamond supply. Over the longer term, this dynamic of rising
demand and constrained supply is expected to benefit high-quality rough
diamonds in particular. The fundamentals that underpin our business are sound
and position Gem Diamonds for success.
Clifford Elphick
Chief Executive Officer
17 March 2026
CHIEF FINANCIAL OFFICER'S REVIEW
The financial performance of the Gem Diamonds Group reflects prolonged
pressure on the diamond market arising from a range of macro-economic and
geopolitical factors. The Group responded decisively through the launch of the
BR Programme (refer to page 26) in 2025.
The Group generated revenue of US$97.7 million from the sale of rough
diamonds, achieving an average price of US$1 105 per carat for the year. In
addition, US$0.7 million was generated from alternative sales activities,
bringing the total revenue for the year to US$98.4 million. Underlying EBITDA
decreased to US$3.9 million from US$29.7 million in 2025, mainly due to the
US$55.8 million decrease in revenue, offset by a reduction in costs. The Group
ended the year with a cash balance of US$3.8 million and drawn down facilities
of US$23.9 million, resulting in a net debt position of US$20.1 million and
available undrawn facilities of US$68.3 million.
Summary of financial performance
US$ million 2025 2025 2025 2024 2024 Re-presented(3) 2024
Before exceptional items Exceptional items After exceptional items Before exceptional items Exceptional items After exceptional items
Revenue from contracts with customers 98.4 - 98.4 154.2 - 154.2
Royalties and selling costs (5.9 ) - (5.9 ) (16.5 ) - (16.5 )
Cost of sales(1) (83.0 ) - (83.0 ) (100.3 ) - (100.3 )
Corporate expenses (excluding depreciation) (5.6 ) - (5.6 ) (7.7 ) - (7.7 )
Underlying EBITDA(2) 3.9 - 3.9 29.7 - 29.7
Depreciation and mining asset amortisation (12.0 ) - (12.0 ) (11.3 ) - (11.3 )
Share-based payments (0.3 ) - (0.3 ) (0.5 ) - (0.5 )
Other operating income/(expenses) 0.7 - 0.7 (0.2 ) - (0.2 )
Impairment of non-financial assets - (77.5 ) (77.5 ) - - -
Write-down of inventories to net realisable value - (3.5 ) (3.5 ) - -
Foreign exchange gain 1.3 - 1.3 1.1 - 1.1
Net finance costs (4.7 ) - (4.7 ) (6.4 ) - (6.4 )
(Loss)/profit before tax for the year (11.1 ) (81.0 ) (92.1 ) 12.4 - 12.4
Income tax benefit/(charge) 1.9 17.6 19.5 (3.4 ) - (3.4 )
(Loss)/profit after tax for the year (9.2 ) (63.4 ) (72.6 ) 9.0 - 9.0
Non-controlling interests 0.6 19.0 19.6 (5.2 ) - (5.2 )
Attributable (loss)/profit from continuing operations (8.6 ) (44.4 ) (53.0 ) 3.8 - 3.8
Profit/(loss) from discontinued operation(3) - (51.0 ) (51.0 ) - (0.9 ) (0.9 )
Attributable net (loss)/profit (8.6 ) (95.4 ) (104.0 ) 3.8 (0.9 ) 2.9
Basic (loss)/earnings per share (US cents) (6.1 ) (68.3 ) (74.4 ) 2.8 (0.7) 2.1
(1) Including waste stripping amortisation but excluding depreciation and
mining asset amortisation.
(2) Underlying EBITDA as defined in Note 4, Operating (loss)/profit of the
notes to the consolidated financial statements.
(3) Gem Diamonds Botswana (Proprietary) Limited (Ghaghoo Diamond Mine) is
classified as a discontinued operation in the current year (refer to Note 16,
Discontinued operation) and the comparative period has been re-presented to
adjust for this.
Revenue
Rough diamond revenue of US$97.7 million (2024: US$152.8 million) was
generated at Letšeng, achieving an average price of US$1 105 per carat
(2024: US$1 390 per carat).
Revenue decreased by US$55.8 million, representing a 36% decrease when
compared to 2024, due to a combination of (i) a 20% decrease in carats sold of
88 381 carats compared to 109 967 in 2024, (ii) the ore mix, which consisted
mainly of lower-value and lower-grade Main Pipe material (74% contribution
compared to 56% in 2024), (iii) downward market pressure on rough diamond
prices, and (iv) fewer and lower-quality diamonds of greater than 100 carats
were sold during the year. Nine greater than 100 carat diamonds were sold for
a combined value of US$6.2 million, while in 2024, 13 greater than 100 carat
diamonds were sold for a value of US$41.9 million.
Additional revenue of US$0.7 million was generated from partnership margin
uplift (US$0.4 million (2024: US$1.4 million)), polished diamond sales and
additional rough diamond proceeds, bringing the total revenue for the year to
US$98.4 million.
US$ million 2025 2024
Group revenue summary
Rough diamond sales 97.7 152.8
Additional revenue 0.7 1.4
Group revenue 98.4 154.2
Expenditure
Royalties and marketing costs
In terms of Letšeng's mining lease, royalties are paid to the Government of
the Kingdom of Lesotho on the value of rough diamonds sold. At the end of
August 2025, the Lesotho Government agreed to suspend Letšeng's royalties for
a period of six months, as part of their support to the Lesotho mining
industry during the challenging market conditions. The Group's sales and
marketing operation in Belgium incurs costs relating to diamond selling and
marketing. Royalties and selling costs decreased by 64% to US$5.9 million
(2024: US$16.5 million), in line with the decrease in rough diamond revenue
and the royalty relief.
Energy costs
The decrease in waste mining volumes led to a significant decrease in diesel
consumption during the year of 2.1 million litres. Overall diesel costs
decreased by 25%, aided by a 9% decrease in the average cost per litre
compared to 2024. In local currency, the costs decreased to LSL167.1 million
(US$9.3 million) from LSL222.6 million (US$12.1 million) in 2024.
Grid electricity usage decreased by 5% due to energy efficiency initiatives on
site, and maximum demand utilisation decreased by 12% due to the effective
management of these thresholds. Overall electricity costs increased by 7% to
LSL64.8 million (US$3.6 million) notwithstanding a 9.6% tariff increase.
Overall energy costs, including diesel and electricity, amounted to
LSL231.9 million (US$13.0 million) in 2025 (2024: LSL283.0 million,
US$15.4 million), an 18% decrease in local currency.
Letšeng unit cost analysis
Unit cost per tonne treated Direct cash Non-cash Total Waste cash
costs(1)
accounting charges operating costs per
and working capital movement(2)
cost
waste tonne
mined
2025 (LSL) 223.75 62.43 286.18 71.90
2024 (LSL) 252.39 113.95 366.34 61.87
% change (11 ) (45 ) (22 ) 16
2025 (US$) 12.51 3.49 16.00 4.02
2024 (US$) 13.77 6.21 19.98 3.37
% change (9 ) (44 ) (20 ) 19
(1) Direct cash costs represent all operating costs, excluding royalties and
selling costs.
(2) Non-cash accounting charges and working capital movement include waste
stripping amortised, inventory and ore stockpile adjustments, and finance
lease costs, and exclude depreciation and mining asset amortisation.
Operating expenditure
Group cost of sales (excluding depreciation) decreased by 15% to US$83.0
million in 2025 from US$100.3 million in 2024.
• Direct cash costs (excluding waste) decreased by 8% to
LSL1 161.0 million (US$64.9 million) compared to LSL1 266.7 million
(US$69.1 million) in 2024. The decrease is mainly due to the initiatives
implemented and also includes once-off severance payments related to the
retrenchment of employees at Letšeng as part of the implementation of the BR
Programme. Direct cash costs per tonne treated decreased by 11% to LSL223.75
(US$12.51) from LSL252.39 (US$13.77) in 2024, in line with the overall cost
decrease and a 3% increase in ore tonnes treated (5.2 million tonnes compared
to 5.0 million tonnes in 2024).
• Non-cash accounting charges and working capital movement refer to
waste amortisation, stockpile and diamond inventory movements and interest and
depreciation on IFRS 16 leases. These charges decreased by 43% to LSL324.0
million (US$18.1 million) (2024: LSL571.9 million, US$31.2 million). The
decrease was mainly due to an increase in the value of stockpile and inventory
on hand at the end of 2025 compared to 2024.
• Total operating costs in local currency decreased to
LSL1 485.0 million (US$83.1 million) from LSL1 838.5 million (US$100.3
million) in 2024, which includes the impact of direct cash costs, non-cash
accounting charges and working capital movements detailed above. The unit cost
per tonne treated decreased by 22% to LSL286.18 (US$16.00) per tonne treated
(2024: LSL366.34, US$19.98 per tonne treated), mainly due to the impact of
benefits achieved following the launch of the BR Programme and the impact of
the reduction in non-cash accounting charges.
• Waste cash costs decreased by 58% to LSL140.3 million (US$7.8
million) from LSL335.4 million (US$18.3 million) in 2024, mainly due to the
64% reduction in waste tonnes mined (2.0 million tonnes compared to 5.4
million tonnes in 2024) following the decision to minimise waste mining
activities and defer the commencement of the next Satellite Pipe cutback,
being one of the key initiatives of the BR Programme. Waste cash cost per
waste tonne, however, increased by 16% to LSL71.90 (US$4.02) from LSL61.87
(US$3.37) in 2024, due to the significantly lower waste tonnes mined and the
impact of fixed costs within the cost base.
US dollar-reported costs
Gem Diamonds' revenue is generated in US dollars, while the majority of
operational expenses are incurred in the relevant local currency in the
operational jurisdictions. Local currency rates for the Lesotho loti (LSL)
(pegged to the South African rand) were stronger against the US dollar on
average compared to 2024. This increased the Group's US dollar-reported costs
and decreased local currency cash flow generation. The average and year end
exchange rates are set out in the table below:
Exchange rates 2025 2024 % change
LSL per US$1.00
Average exchange rate 17.88 18.34 (3 )
Year end exchange rate 16.57 18.87 (12 )
BWP per US$1.00
Average exchange rate 13.59 13.56 -
Year end exchange rate 13.57 13.93 (3 )
GBP per US$1.00
Average exchange rate 0.76 0.78 (3 )
Year end exchange rate 0.74 0.80 (8 )
Corporate costs
The technical and administrative office in South Africa and the head office in
the UK provide expertise in all areas of the business to realise maximum value
from the Group's assets. Central costs are incurred in South African rand and
British pounds, respectively.
Corporate costs (excluding depreciation) decreased by 27% compared to 2024 at
US$5.6 million. The savings were due to the implementation of the BR
Programme, which included salary sacrifices by management and the Board,
elimination of travel and other cost containment initiatives. Project costs of
US$0.3 million were incurred to finalise the handing over of Ghaghoo and to
investigate external growth opportunities (2024: US$0.3 million).
Underlying EBITDA(1) and attributable loss
Group underlying EBITDA(1) decreased by 87% to US$3.9 million (2024: US$29.7
million) mainly due to the US$55.8 million decrease in revenue, set off by
cost savings achieved following the launch of the BR Programme and the royalty
relief from the Lesotho Government in Q3 2025. The Group reported a negative
underlying EBITDA(1) at 30 June 2025 of US$2.6 million. The benefit derived
from the BR Programme is evident in the turnaround in H2 2025 of a US$6.5
million underlying EBITDA(1)(.)
The loss attributable to shareholders was US$104.0 million after recording
impairments of US$81.0 million (refer to paragraph below) and the recycling of
the foreign currency translation of the discontinued operation of US$52.8
million. The loss before exceptional items was US$8.6 million, compared to an
attributable profit of US$2.9 million in 2024. This translates to a loss after
exceptional items of 74.4 US cents per share and 6.1 US cents per share
before exceptional items (2024: earnings per share of 2.1 US cents), based on
a weighted average number of shares in issue of 139.8 million (2024: 139.7
million shares).
(1) Underlying EBITDA as defined in Note 4, Operating profit of the notes to
the consolidated financial statements.
Impairment of non-financial assets and write-down of inventory
An impairment review for Letšeng is performed annually. The impairment review
for 2025 was largely influenced by the prolonged downward pressure on the
rough diamond market and the weakened US dollar against the Lesotho loti.
The recoverable amount (value in use) of Letšeng was assessed and an
impairment of US$77.5 million was recorded in the consolidated statement of
profit or loss to bring the carrying value in line with the recoverable
amount. The impairment was allocated firstly to the goodwill, which is now
fully impaired, then to the mining asset, which is now fully impaired, and the
balance to the stripping activity asset.
Ore stockpiles were written down by US$3.5 million to net realisable value in
2025 mainly due to lower diamond prices and the weakened US dollar at 31
December 2025.
Statement of financial position - selected indicators
US$ million 2025 2024
Property, plant and equipment 211.3 269.9
Non-current: receivables and other assets 0.9 7.3
Current: receivables and other assets 12.0 6.6
Inventory 43.3 34.1
Cash and short-term deposits 3.8 12.9
Net income tax (payable)/receivable 1.7 (6.8 )
Non-current: interest-bearing loans and borrowings (6.2 ) (16.6 )
Current: interest-bearing loans and borrowings (18.6 ) (4.4 )
Net deferred tax liabilities (49.5 ) (65.0 )
Non-current: rehabilitation provisions (14.0 ) (12.6 )
Capital expenditure
Total capital expenditure (excluding waste stripping) was US$4.4 million
during the year (2024: US$5.8 million). The capital spend in the current year
related to:
· the purchase of earthmoving machinery to improve ore feed into
the plants, and a new drill (US$2.3 million);
· the purchase of a mobile dry rotary trommel that was used to sort
heavily basalt-diluted Satellite Pipe stockpile ore for treatment (US$0.6
million);
· expansion of the Patising residue storage facility to build
necessary capacity (US$0.4 million); and
· geotechnical monitoring equipment and licences (US$0.4 million).
The balance of the capital was spent on enhancements to the recovery areas for
improved workflow and security, minor capital requirements following the
insourcing of treatment activities, improvements to the bioremediation plant,
and pit slope lateral support studies.
Capital allocation, in the current challenging market, is focused on
sustaining operations and the need to conserve cash resources. In a more
favourable market, excess cash generated would be allocated to shareholder
returns or growth projects that would generate positive returns. In
considering investments in growth opportunities, these would be assessed in
terms of financial and non-financial metrics, including the alignment to the
Group's ESG strategy and objectives.
Cash on hand
The Group ended the year with cash on hand of US$3.8 million (2024:
US$12.9 million) and net debt of US$20.1 million (2024: US$7.3 million).
Group cash generated by operations was US$35.1 million before capital and
waste investment of US$13.9 million. Following the launch of the BR
Programme, which delivered recurring monthly cost savings of US$1.5 million,
the Group's net debt position reduced by US$8.1 million from US$28.2 million
at 30 June 2025.
Loans and borrowings
The Group-wide debt facilities for Letšeng (LSL450.0 million
(US$27.2 million) and ZAR300.0 million (US$18.1 million)) and Gem Diamonds
(US$30.0 million), will expire on 21 December 2026. In line with normal
processes, the Group will commence the formal renewal of its facilities in Q2
2026. The Board has a reasonable expectation that the refinancing will be
successfully concluded. The successful refinancing of these facilities remains
a key assumption in the Group's going concern assessment and, until it is
concluded, represents a material uncertainty that may cast significant doubt
on the Group's ability to continue as a going concern.
The funding partners for the above facilities are Nedbank, Standard Bank and
Firstrand Bank (through their respective operations). Nedbank's portion of the
funding, totalling US$31.6 million, is a sustainability-linked loan (SLL), an
innovative structure that links the margin and resultant interest rate on the
SLL to the Group's ESG performance. The margin on the SLL decreases subject to
the Group meeting certain carbon reduction and water conservation KPIs that
are aligned with the Group's sustainability strategy. These KPIs are assessed
at the end of every financial year. The two KPIs included for the SLLs both
need to be met at each measurement date before the margin reduction on these
loans becomes effective. At 31 December 2025, both the carbon emission and
water conservation KPIs were met, and therefore the margin reduction will
apply to outstanding balances in 2026.
Letšeng has a ZAR100.0 million (US$6.0 million) general banking facility
with Nedbank Limited (acting through its Nedbank Corporate and Investment
Banking division), which is reviewed annually. The facility was utilised from
time to time during the year and was fully repaid by year end.
In 2022, Letšeng implemented a four-and-a-half-year project facility
agreement with Nedbank for the replacement of the PCA for an amount of
ZAR132.0 million (US$7.0 million). The facility is underwritten by the Export
Credit Insurance Corporation of South Africa (ECIC). Quarterly repayments of
this facility commenced in Q1 2024, and at the end of 2025 an amount of
LSL56.6 million (US$3.4 million) was outstanding. The facility expires in
May 2027.
On 15 May 2024, Letšeng entered into a secured five-year term loan facility
of LSL200.0 million (US$12.1 million) jointly with Standard Lesotho Bank and
Nedbank Lesotho. The loan is secured by a special notarial bond over the
mining fleet and equipment acquired as part of the insourcing of the mining
activities at the end of 2023. The loan is repayable in equal monthly
instalments that commenced in May 2024, and expires on 28 February 2029
(previously 30 April 2029) following an additional capital repayment from
proceeds from the sale of mining equipment.
At year end, the Group had utilised facilities of US$23.9 million, resulting
in a net debt position of US$20.1 million and available undrawn facilities of
US$68.3 million. Gem Diamonds, the Company, ended the year with
US$10.0 million of its facility utilised (2024: US$6.0 million) and
US$20.0 million available. Letšeng ended the year with US$3.0 million of
its revolving facility utilised (2024: nil) and US$42.3 million remains
available.
Summary of loan facilities as at 31 December 2025
Company Term/description/expiry Lender Interest rate Amount US$ Drawn down/ Balance due US$ million Available US$ million
Gem Diamonds Limited Extended two-year revolving credit facility Nedbank Facility A (US$30 million): 30.0 10.0 20.0
Expires 21 December 2026 Standard Bank Term SOFR (4.33%) + 5.21%
Firstrand Bank
Letšeng Diamonds Extended two-year revolving credit facility Standard Facility B (LSL450 million): Central Bank of Lesotho rate (7.75%) + 3.25% 27.2 1.8 25.4
Expires 21 December 2026 Lesotho Bank
Nedbank Lesotho
First National Bank of Lesotho
Firstrand Bank
Nedbank Facility C (ZAR300 million): South African JIBAR (8.35%) + 3.00% 18.1 1.2 16.9
Letšeng Diamonds Four-and-a-half-year project facility Nedbank ZAR132 million 8.0 3.4 -
Expires 31 May 2027 Export Credit Insurance Corporation South African JIBAR (8.35%) + 2.50%
Letšeng Diamonds Five-year term loan facility Standard Lesotho Bank LSL200 million 12.1 7.5 -
Expires 28 February 2029 Nedbank Lesotho Lesotho prime rate (11.25%) minus 1.5%
Letšeng Diamonds General banking facility Nedbank ZAR100 million South African Prime Lending Rate (11.25%) minus 0.70% 6.0 - 6.0
Reviewed annually
Total 101.4 23.9 68.3
Ghaghoo
The Ghaghoo mining licence was relinquished and the mine site was formally
handed back to the Botswana Ministry of Minerals and Energy effective from 1
June 2025. The Group has no further obligations or commitments related to the
Ghaghoo mining licence or the mine site.
In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations, the Ghaghoo operation is classified as a discontinued operation
which was abandoned, following the relinquishment (for no consideration) of
the underlying mining licence which represented the subsidiary's principal
business activity. All impacted prior year figures in the consolidated
statement of profit or loss and relevant notes have been re-presented to
reflect Gem Diamonds Botswana as part of a discontinued operation. Refer to
Note 16, Discontinued operation on page 137.
Insurance
The perception of risk in the mining industry has improved, with insurers
offering more competitive rates for mining companies. In 2025, insurance
premiums for the Group decreased significantly (24% lower than 2024), driven
by the reassessment of insurance values and optimising the structure of the
multi-aggregate insurance policy. The Group is in the final year of this
five-year multi-aggregate insurance policy, which was implemented to mitigate
the risk of higher deductibles in the unlikely event of a loss. At year end,
the balance of the fund was US$9.0 million. The policy matures in July 2026
and the decision to renew, extend or exit will be taken prior to the maturity
date.
Letšeng's business interruption claim for insured losses arising from the
COVID-19-related shutdown in 2020, when the mine was required to be placed on
care and maintenance, is ongoing.
Share-based payments
The share-based payment charge for the year was US$0.3 million (2024: US$0.5
million). In line with the approved 2021 Remuneration Policy, on 10 April
2025, 2 602 899 nil-cost options were granted to certain key employees and
Executive Directors under the GDIP. Refer to Note 28, Share-based payments on
page 150 for more detail.
TAXATION
The Group applies all relevant principles in accordance with prevailing
legislation when assessing its tax obligations. The Group's effective tax rate
was 21.2%. Most of the Group's taxes are incurred in Lesotho, which has a
corporate tax rate of 25%. The effective tax rate is below the Lesotho
statutory tax rate of 25% primarily due to the incurred net loss before tax.
Refer to Note 7, Income tax (benefit)/charge on page 130 for more detail.
The Group continues to pursue a long-standing legal matter relating to an
amended tax assessment that was issued to Letšeng by the Revenue Services
Lesotho in December 2019, contradicting the application of certain tax
treatments in the current Lesotho Income Tax Act, 1993. We expect to pursue
this matter in the courts in 2026. We have sought senior legal counsel, and
their advice indicates good prospects for success. Refer to the accounting
treatment for this matter, Note 1.2.27, Critical accounting estimates and
judgements, for further detail.
OUTLOOK
There is no certainty around the recovery of the diamond market in the short
term, and the focus will remain on ensuring that the benefits from the BR
Programme continue to deliver. Letšeng's current mine plan presents material
challenges for the business, with no availability of Satellite Pipe ore until
the end of 2030.
The availability of our revolving credit facilities is critical for the
business, and lenders will be engaged in Q2 2026 to commence the refinancing
process before the expiry of these facilities in December 2026.
Michael Michael
Chief Financial Officer
17 March 2026
CHIEF OPERATING OFFICER'S REVIEW
Letšeng delivered a solid operational performance despite the challenging
diamond market and continued pressure on prices. Significant structural and
operational changes implemented since 2023, together with the launch of the BR
Programme in mid-2025, supported operational delivery and reinforced the
mine's ongoing viability amid adverse industry conditions.
Our top priority remains the safety and well-being of our workforce, and we
are proud to report that we maintained an exceptional safety performance in
2025. The positive results reflect our unwavering commitment to and the
maturity of our safety culture, founded on individual responsibility, mutual
care and collaboration.
We are pleased to report that we reached our decarbonisation target of a 30%
reduction in Scope 1 and 2 emissions by 2030, compared to our 2021 baseline,
in the current year. We are fully committed to maintaining this achievement
despite a scheduled increase in waste mining volumes from 2027 in accordance
with the current mine plan. For a comprehensive overview of our 2025
performance, refer to the Climate Change Report on page 41.
Letšeng's long-term mine plan remains under continuous review taking into
consideration prevailing market conditions. The latest change to the mine plan
significantly reduced long-term waste mining volumes and deferred certain
short-term waste stripping activities as part of the BR Programme. These
changes were communicated in the Half-year Report 2025.
GROUP SAFETY PERFORMANCE
Safety performance Unit 2025 2024 % change
Fatalities Number 0 0 -
LTIs Number 2 3 (33 )
LTIFR 200 000 man-hours 0.14 0.18 (23 )
AIFR 200 000 man-hours 0.41 0.61 (32 )
Gem Diamonds' safety culture is deeply rooted in a pursuit of zero harm. In
2025, the Group maintained exceptional safety standards with zero fatalities
(2024: zero) and two LTIs (2024: three). A record-low AIFR of 0.41 (2024:
0.61) was achieved, and an LTIFR of 0.14 was a further improvement on the 0.18
achieved in 2024. This excellent safety performance was achieved in the face
of recent significant changes to our operations, including the necessary
change management related to the insourcing of material functions and the
implementation of the BR Programme, and despite an 11% reduction in man-hours
compared to 2024.
OPERATIONAL PERFORMANCE
KPI Unit 2025 2024 % change
Waste mined tonnes 1 951 717 5 420 567 (64 )
Ore mined tonnes 5 161 352 5 052 263 2
Ore treated tonnes 5 188 776 5 018 739 3
Carats recovered carats 90 354 105 012 (14 )
Grade cpht 1.74 2.09 (17 )
Carats sold carats 88 381 109 967 (20 )
Average price per carat US$/carat 1 105 1 390 (21 )
All operational metrics were achieved in accordance with Letšeng's short-term
mine plan. The positive outcomes of operational efficiencies implemented since
2023 are clearly reflected in Letšeng's overall operational performance in
2025.
Waste tonnes mined
Through further short-term optimisation of the mine plan and the
implementation of the BR Programme, total waste tonnes mined in 2025 decreased
by 64% to 2.0 million tonnes from 5.4 million tonnes in 2024. As reported in
the Half-year Report 2025, the reduction in waste mining was achieved through
the redesign of Main Pipe Cut 4 West (MC4W) and the deferral of waste mining
in the Main Pipe cutbacks (MC4E & W) and the final Satellite Pipe cutback
(SC6W). Notwithstanding the necessary deferral of waste mining in both pits to
weather current economic conditions, ore availability remains consistent at
the current treatment rate of c.5.0 million tonnes per annum until 2034.
Ore mined
Total ore tonnes mined in 2025 increased by 2% to 5.2 million tonnes from 5.1
million tonnes in 2024. The increase in ore mined was aligned with the higher
production target for 2025. In addition, ore was mined to establish stockpile
platforms in support of the new plant feed strategy. Under this strategy, haul
trucks discharge ore onto newly established active stockpiles, eliminating
truck queuing at the plant tipping points. The ore is reclaimed from the
active stockpiles using a front-end loader and fed to the plants in a
controlled and consistent manner. As a result, ore mining operations were no
longer constrained by plant feed requirements and were effectively decoupled
from plant operations, leading to improved mining productivity.
Ore treated
Letšeng's two plants treated 5.2 million tonnes of ore in 2025 (2024: 5.0
million tonnes). Besides the higher treatment target in 2025, the increase in
treatment volumes was driven by effective plant management focusing on
stability and increased operating time at a consistent run rate. The
introduction of a front-end loader assisted plant performance by delivering a
controlled and consistent feed rate. In addition, a dry rotary trommel was
introduced to sort an historic basalt-diluted Satellite Pipe ore stockpile for
treatment. The concentrate ore from this stockpile was heavily weathered and
easily treated through the plants. Ore contribution from the Main Pipe
totalled 3.9 million tonnes, while the Satellite Pipe contributed
1.3 million tonnes.
Total carats recovered
Total carats recovered in 2025 decreased by 14% to 90 354 carats (2024:
105 012 carats) due mainly to the higher ore contribution from the
lower-grade Main Pipe.
The overall grade for 2025 was 1.74 cpht, representing a 17% decrease from
2.09 cpht in 2024. The lower grade achieved in 2025 was in line with
expectations for the ore treated and was primarily attributable to the
increased contribution from the lower-grade Main Pipe, which accounted for 74%
of total ore treated compared to 56% in 2024.
Capital projects
Capital expenditure in 2025 was subject to rigorous review to ensure strict
alignment with operational requirements and prudent cash management.
Expenditure was prioritised based on necessity, operational continuity and
short-term value enhancement, with a disciplined focus on preserving liquidity
while sustaining core operations and short-term value-add. Material capital
projects at Letšeng in 2025 included:
• the acquisition of essential mining fleet equipment to optimise
mining and processing in line with the mine plan; and
• the purchase of a dry rotary trommel unit for sorting heavily
diluted high-value Satellite Pipe stockpile material for treatment.
Details of overall costs and capital expenditure incurred at Letšeng are
included in the CFO Review on page 29.
The planned capital spend at Letšeng for 2026 mainly relates to the lateral
support and potential rockfall mitigation measures to be implemented in
preparation for the commencement of the next Satellite pit cutback (SC6W).
Large diamond recoveries
In 2025, Letšeng recovered nine diamonds greater than 100 carats (2024: 13)
and 15 diamonds in the 60 to 100 carat size category (2024: eight). Primarily
as a result of the increased contribution of ore from the lower-value Main
Pipe, the diamonds recovered from this material were of comparatively lower
quality, negatively impacting overall revenue generated from their sale.
From 2006 to the end of 2025, a total of 153 diamonds exceeding 100 carats
have been recovered. Additionally, two notable diamonds have been recovered to
date in 2026 - a 192 carat diamond and a 105 carat diamond - underscoring
Letšeng's continued ability to produce exceptional large diamonds. The total
number of diamonds greater than 10 carats decreased by 14% year on year, again
due to the negative impact on overall ore mix resulting from the increase in
Main Pipe ore contribution in 2025. 14 diamonds sold for more than US$1.0
million each in 2025, generating US$20.8 million in revenue.
Number of large diamond recoveries 2025 2024 FY average
2008 - 2025
>100 carats 9 13 8
60 - 100 carats 15 8 17
30 - 60 carats 53 90 75
20 - 30 carats 103 100 112
10 - 20 carats 405 466 447
Total diamonds >10 carats 585 677 659
Diamond sales
Six large and four small rough diamond tenders were held in Antwerp during the
year.
A total of 88 381 carats were sold in 2025 (2024: 109 967), and Letšeng
generated rough diamond revenue of US$97.7 million (2024: US$152.8 million)
at an average price of US$1 105 per carat (2024: US$1 390). The lower dollar
per carat achieved and the reduction in revenue in 2025 were driven by a
combination of continued weakness in the diamond market and a decline in both
the volume and quality of carats sold. This was directly attributable to the
increased contribution of lower-grade, lower-value Main Pipe ore, as discussed
above, which adversely impacted overall ore mix and realised prices.
Long-term mine plan
Letšeng's long-term mine plan remains under continuous review to identify
optimisation opportunities and to ensure the viability of each cutback,
considering current and foreseeable diamond market and economic conditions, as
well as the respective impact that each cutback has on the overall value of
the mine. The short-term deferral of waste stripping activities has not
compromised ore availability, and the mine will continue ore treatment at
c.5.0 million tonnes per annum to 2034.
OUR PLANS FOR 2026
We have a number of important operational objectives for 2026. These include:
· the safe and responsible implementation of the updated mine plan;
· maintaining the 30% decarbonisation target of Scope 1 and 2
carbon emissions despite a scheduled increase in waste mining volumes from
2027; and
· a continued rigorous focus on operational efficiencies while
closely managing operating costs and capital expenditure.
DIRECTORS' REPORT
The Directors are pleased to submit the financial statements of the Group for
the year ended 31 December 2025.
As a British Virgin Islands-registered company, Gem Diamonds Limited (company
registration number: 669758) is not required to conform with the Companies
Act, 2006. The Directors have elected to conform with certain of the Act's
requirements.
Accordingly, Directors must present a Strategic Report and a Directors' Report
to inform shareholders of the Group's performance and prospects and help them
evaluate whether the Directors performed their fiduciary duty. The Annual
Report and Accounts 2025 discloses how the Directors have performed their duty
to ensure the Group's continued success and sustainability, in line with the
Companies Act, 2006.
In line with Disclosure Guidance and Transparency Rules (DTR 4.1.5R(3) and DTR
4.1.8R), the required content of the Annual Financial Report and Management
Report can be found in the Strategic Report (page 2), the Performance Review
(page 26), the Governance section (page 47), the Directors' Report and other
sections of the Annual Report and Accounts 2025 as indicated by reference.
The Strategic Report can be found on pages 2 to 46. This will provide
shareholders with a balanced assessment of the Group's business, including a
description of its principal risks and uncertainties. It may not be relied
upon by anyone, including the Company's shareholders, for any other purpose.
Forward-looking statements
The Strategic Report and other sections of this report contain forward-looking
statements. Forward-looking statements, by their nature, involve several
risks, uncertainties and future assumptions because they relate to events
and/or depend on circumstances that may or may not occur in the future. The
actual results and outcomes may differ materially from those expressed or
implied by the forward-looking statements. No assurance can be given that the
forward-looking statements in the Strategic Report will be realised.
Statements about the Directors' expectations, beliefs, hopes, plans,
intentions and strategies are subject to change and are based on expectations
and assumptions about future events, circumstances and other factors which
are, in many instances, outside the Company's control.
The information in the Strategic Report was prepared based on the knowledge
and information available to the Directors at the time of its preparation. The
Company is under no obligation to update or revise the Strategic Report during
2026. The expectations set out in the forward-looking statements are
reasonable but may be influenced by several variables which could cause actual
results or trends to differ materially. Forward-looking statements need to be
read in context with actual historic information provided. The Company's
shareholders are cautioned not to place undue reliance on the forward-looking
statements. Shareholders should note that the Strategic Report has not been
audited.
CORPORATE GOVERNANCE
DTR 7.2 requires certain information to be included in a corporate governance
statement set out in the Directors' Report. The Group has an existing practice
of issuing a separate Corporate Governance Code Compliance Report as part of
its Annual Report and Accounts. The information required by the Disclosure
Guidance and Transparency Rules and the UK Financial Conduct Authority's
Listing Rules (UKLR 6.6) is located on pages 47 to 94.
DIRECTORS
The Directors, as at the date of this report, are listed on pages 161 to 163
together with their biographical details. M Lynch-Bell held office until his
retirement on 31 March 2025 and M Maharasoa held office until her resignation
on 31 December 2025. Details of the Directors' interests in shares and share
options of the Company can be found on page 92.
Directors who held office during the year and date of appointment
Appointment Resignation
Executive Directors
C Elphick 20 January 2006
M Michael 22 April 2013
Non-Executive Directors
H Kenyon-Slaney 6 June 2017
M Lynch-Bell 15 December 2015 31 March 2025
M Brown 1 January 2018
M Maharasoa 1 July 2019 31 December 2025
R Kainyah 1 May 2021
J Blas 1 April 2025
Appointment and re-election of Directors
The Board's formal Selection and Appointment Policy ensures that the procedure
for appointing new Directors is formal, rigorous and transparent, and
appointments are made on merit, against objective criteria. The Nominations
Committee makes appointments based on merit while considering diversity (of
gender, social and ethnic background), cognitive and personal strengths and
specialist skill sets.
Michael Lynch-Bell, the Senior Independent Director (SID) and Chair of the
Audit and Remuneration Committees, retired on 31 March 2025. The Board
appointed Janet Blas as the new non-Executive Director effective 1 April 2025.
Janet took up the position of Chair of the Audit Committee, while Rosalind
Kainyah succeeded Michael as SID and Chair of the Remuneration Committee.
Mazvi Maharasoa resigned from the Board with effect from 31 December 2025.
The Articles of Association (82) provide that a third of Directors retire
annually by rotation and, if eligible, offer themselves for re-election.
However, in accordance with the Code, all the Directors retire at the AGM and,
subject to being eligible, offer themselves for election or re-election. Harry
Kenyon-Slaney will not be offering himself up for re-election at the 2026 AGM
as his nine-year tenure comes to an end.
Payments for loss of office due to change of control
The basis for payments for loss of office to Executive Directors due to a
change in control can be found on page 81.
PROTECTION AVAILABLE TO DIRECTORS
By law, the Directors are ultimately responsible for most aspects of the
Group's business dealings. This means they face potentially significant
personal liability under criminal or civil law, or the UK Listing, Prospectus
and Disclosure and Transparency Rules, and face a range of penalties including
private or public censure, fines and/or imprisonment. In line with normal
market practice, the Group understands that it is in its best interests to
protect its Board members from the consequences of innocent error or omission.
This allows the Group to attract prudent individuals to act as Directors.
The Group maintains, at its expense, a Director and Officer's liability
insurance policy to provide indemnity, in certain circumstances, for the
benefit of Directors and other Group employees.
Refer to the Corporate Governance statement on page 53 for further details.
DIRECTORS' INTERESTS
No Director had, at any time during the year, a material interest in any
contract of significance in relation to the Company's business. The interests
of Directors in the shares of the Company are included on page 92.
SUPPLIERS AND CUSTOMERS
The Group engages extensively with suppliers and contractors to ensure
alignment, mutual understanding and the sustainability of all parties.
The Group maintains sound relationships with its customers by interacting
regularly in the normal course of business and at tenders. The Group continues
to hold regular diamond tender viewings in Antwerp and is able to rely on its
loyal customer base for support while the diamond market remains under
significant pressure. The agreement entered into in 2022 with two diamond
manufacturing customers to supply polished diamonds to some of the world's
most premium luxury brands remained in effect in 2025.
Refer to the stakeholder relationships section on pages 11 to 14 for more
details on the Group's engagement with suppliers, contractors and customers.
EMPLOYEE POLICIES AND PRACTICES
Equal opportunity is a fundamental principle of Gem Diamonds and the Group is
committed to achieving equality irrespective of gender, religion, race,
marital status or abilities. Refer to page 53 for more details on the Group's
employee policies and practices, specifically with regard to the employment of
persons with disabilities.
RESULTS AND DIVIDENDS
The Group's attributable loss after taxation amounted to US$104.0 million
(US$8.6 million before exceptional items) (2024: profit of US$2.9 million).
The Group's detailed financial results are set out in the financial statements
on pages 99 to 156.
The Board is not proposing a dividend based on the 2025 financial results due
to the volatility in the current macro-economic outlook, the impact thereof on
the diamond market, the Group's available cash resources, and the medium-term
operational outlook, which will result in higher-value Satellite Pipe ore only
being accessible from 2031.
The Group's dividend policy considers:
· The Group's cash resources.
· The level of free cash flow and earnings generated during the
year.
· Expected funding commitments for future capital projects.
· Revolving credit facility covenant adherence.
The Board will consider special dividends in the event of significant diamond
recoveries and share buyback programmes if appropriate.
GOING CONCERN
The Group's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the Strategic
Report on pages 2 to 46. The financial position of the Group, its cash flows
and liquidity position are described in the Strategic Report on pages 29 to
35. In addition, Note 1.2.2, Going concern, Note 27, Financial risk management
and Note 29, Financial instruments to the financial statements include the
Group's going concern policy and assessment; its objectives, policies and
processes for managing its capital; its financial risk management objectives;
details of its financial instruments; and its exposures to credit and
liquidity risk.
The going concern assumption is dependent on the successful refinancing of the
Group's RCFs, expiring in December 2026, which falls within the going concern
period. The Board acknowledges that the refinancing of the facilities remains
an important consideration of its going concern assessment and has engaged
with the lenders on the process and timing to renew the facilities prior to
expiry. If the renewal is not successful, it may indicate a material
uncertainty and cast significant doubt on the Group's ability to continue as a
going concern in the absence of other mitigating actions. The Directors have a
reasonable expectation that these RCFs will be refinanced and that the Group
will have adequate financial resources to continue operations for the
foreseeable future. This, in conjunction with a review of forecasts, budgets,
timing of cash flows, current cost structures, sensitivity analyses and the
uncertainties disclosed in this report, supports the Directors' adoption of
the going concern basis in preparing the Annual Report and Accounts of the
Group.
VIABILITY STATEMENT
In accordance with Provision 30 of the UK Corporate Governance Code 2024, the
Directors have assessed the prospects of the Group over a period longer than
the 12 months required by the "going concern" provision. The viability
statement, aligned with Provision 31 of the UK Corporate Governance Code 2024,
is included in the Strategic Report on page 24.
SUBSEQUENT EVENTS
Refer to Note 30 of the financial statements for details of events subsequent
to the reporting date.
SHARE CAPITAL AND VOTING RIGHTS
Details of the authorised and issued share capital of the Company, including
the rights pertaining to each share class, are set out in Note 17, Issued
share capital and reserves, to the financial statements.
As at 17 March 2026, there were 139.9 million fully paid ordinary shares of
US$0.01 each in issue and listed on the official list maintained by the
Financial Conduct Authority in its capacity as the UK Listing Authority. In
addition, the Company holds 1.5 million shares as treasury shares acquired
during the share buyback programme that was launched in 2022. These treasury
shares are not entitled to dividends and have no voting rights.
The Company has one class of ordinary shares. Shareholders have the right to
receive notice of and attend, speak and vote at any general meeting of the
Company. Shareholders may be present in person (or, being a corporation, by
representative) or by proxy at a general meeting. Every shareholder present in
person (or, being a corporation, by representative) or by proxy will have one
vote in respect of every ordinary share they hold. The appointment of a proxy
to vote at a general meeting must be received no less than 48 hours before
the meeting's appointed time.
Shareholders have the right to participate in dividends and other
distributions according to their respective rights and interests in the profit
of the Company.
No shareholders have any special rights with regard to the control of the
Company. The Company is not aware of any agreements between shareholders which
may result in restrictions on transfers or voting rights, save as mentioned
below.
There are no restrictions on the transfer of ordinary shares other than:
· As set out in the Company's Articles of Association.
· Certain restrictions may from time to time be imposed by laws and
regulations.
· Pursuant to the Company's share dealing code, whereby the
Directors and employees of the Company require approval to deal in the
Company's ordinary shares.
At the AGM held in June 2025, shareholders authorised the Company to make
on-market purchases of up to 13 973 250 of its ordinary shares, representing
approximately 10% of the Company's issued share capital at that time. In 2022,
the Company purchased 1 520 170 of its ordinary shares, which are being held
as treasury shares and may be used to settle ESOP and GDIP awards.
At the 2026 AGM, shareholders will be requested to renew this authority. The
Directors continue to consider various options and keep the authorisation
under regular review. The 2026 Notice of AGM will set out the details
regarding exercising voting rights and proxy appointments.
MAJOR INTERESTS IN SHARES
Details of the major interests (at or above 3%) in the issued ordinary shares
of the Company are set out in the Strategic Report on page 11.
ARTICLES OF ASSOCIATION
Any proposed amendments to the Articles of Association of the Company need to
be approved by shareholders by special resolution.
RESOURCE DEVELOPMENT
The most recent NI 43-101 Technical Report containing Letšeng's 2024 Resource
and Reserve Statement was published in March 2024 and is available on the
Group's website at www.gemdiamonds.com.
CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY
Read more about the Group's 2025 sustainability performance, including CSI
investment, community participation and environmental management, in the
Sustainability Report 2025, which is available at www.gemdiamonds.com.
POLITICAL DONATIONS
The Group made no political donations or incurred any political expenditure
during 2025.
TCFD, CARBON EMISSIONS AND ENERGY CONSUMPTION SUMMARY
Information on the Group's decarbonisation strategy, adoption of the TCFD
recommendations, carbon footprint and energy consumption can be found in the
Sustainability Report 2025, which is available at www.gemdiamonds.com, and
Climate Change Report on page 41.
DISCLOSURE OF INFORMATION TO AUDITOR
Each of the persons who are Directors at the time when this Directors' Report
is approved confirms that, so far as they are aware, there is no relevant
audit information of which the Company's auditor is unaware and that they have
taken all the steps that they ought to have taken as a Director to make
themselves aware of any relevant audit information and to establish that the
Company's auditor is aware of that information.
By order of the Board
Harry Kenyon-Slaney
Non-Executive Chairperson
17 March 2026
FINANCIAL STATEMENTS
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE ANNUAL REPORT AND
FINANCIAL STATEMENTS
The Directors are responsible for preparing the Strategic Report and the
Directors' Report, the Directors' Remuneration Report, the Separate Corporate
Governance Statement and the Group financial statements in accordance with
applicable law and regulations.
The Directors are permitted under the Listing Rules of the Financial Conduct
Authority to prepare the Group financial statements in accordance with
International Financial Reporting Standards issued by the International
Accounting Standards Board.
The Group financial statements are required by International Financial
Reporting Standards issued by the International Accounting Standards Board to
present fairly the financial position of the Group and the financial
performance of the Group.
The Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the
Group and of the profit or loss of the Group for the financial period.
In preparing each of the Group financial statements, the Directors have:
· selected suitable accounting policies and then applied them
consistently;
· made judgements and accounting estimates that are reasonable and
prudent;
· stated whether they have been prepared in accordance with
International Financial Reporting Standards issued by the International
Accounting Standards Board; and
· prepared the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose, with
reasonable accuracy at any time, the financial position of the Group and
enable them to ensure that the financial statements comply with the BVI
Business Companies Act and that the Directors' Remuneration Report complies
with the Companies Act, 2006. They are also responsible for safeguarding the
assets of the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Directors' statement pursuant to the Disclosure and Transparency Rules
Each of the Directors, whose names and functions are listed in the Directors'
Report, confirms that, to the best of each person's knowledge:
a. the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and loss of the Group and the undertakings
included in the consolidation taken as a whole; and
b. the Strategic Report contained in the Annual Report includes a fair
review of the development and performance of the business and the position of
the Company and the undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and uncertainties
that they face.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Gem Diamonds Limited
website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Group's position, performance, business model
and strategy.
The Directors of the Company have elected to comply with the Companies Act,
2006, in particular the requirements of Schedule 8 to The Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2013 of
the United Kingdom pertaining to Directors' remuneration, which would
otherwise only apply to companies incorporated in the UK.
Michael Michael
Chief Financial Officer
17 March 2026
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2025
Notes 2025 2025 2025 2024 2024 Re-presented(1) 2024
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Before exceptional items Exceptional items (2) Total Before exceptional items Exceptional items(2) Total
CONTINUING OPERATIONS
Revenue from contracts with customers 2 98 414 - 98 414 154 212 - 154 212
Cost of sales (94 736 ) - (94 736 ) (111 400 ) - (111 400 )
Gross profit 3 678 - 3 678 42 812 - 42 812
Other operating income/(expense) 3 721 - 721 (203 ) - (203 )
Royalties and selling costs (5 945 ) - (5 945 ) (16 477 ) - (16 477 )
Corporate expenses (5 802 ) - (5 802 ) (7 914 ) - (7 914 )
Share-based payments 28 (266 ) - (266 ) (516 ) - (516 )
Foreign exchange gain 4 1 263 - 1 263 1 087 - 1 087
Impairment of non-financial assets 5 - (77 467 ) (77 467 ) - - -
Write-down of inventories to net realisable value 5 - (3 534 ) (3 534 ) - - -
Operating (loss)/profit 4 (6 351 ) (81 001 ) (87 352 ) 18 789 - 18 789
Net finance costs 6 (4 701 ) - (4 701 ) (6 371 ) - (6 371 )
- Finance income 1 080 - 1 080 875 - 875
- Finance costs (5 781 ) - (5 781 ) (7 246 ) - (7 246 )
(Loss)/profit before tax for the year (11 052 ) (81 001 ) (92 053 ) 12 418 - 12 418
Income tax benefit/(charge) 7 1 931 17 565 19 496 (3 375 ) - (3 375 )
(Loss)/profit after tax for the year (9 121 ) (63 436 ) (72 557 ) 9 043 - 9 043
DISCONTINUED OPERATION
Loss after tax for the year from discontinued operation - (50 997 ) (50 997 ) - (957 ) (957 )
Profit/(loss) after tax 16 - 1 793 1 793 - (957 ) (957 )
Recycling of foreign currency translation reserve on discontinued operation - (52 790 ) (52 790 ) - - -
Total (loss)/profit for the year (9 121 ) (114 433 ) (123 554 ) 9 043 (957 ) 8 086
Attributable to:
Equity holders of parent (8 578 ) (95 402 ) (103 980 ) 3 851 (957 ) 2 894
Non-controlling interests (543 ) (19 031 ) (19 574 ) 5 192 - 5 192
(Loss)/earnings per share attributable to ordinary equity holders of the 8
parent (cents)
- Basic (loss)/earnings per share (6.1 ) (68.3 ) (74.4 ) 2.8 (0.7 ) 2.1
- Diluted (loss)/earnings per share (6.1 ) (68.3 ) (74.4 ) 2.7 (0.7 ) 2.0
(Loss)/earnings per share for continuing operations attributable to ordinary
equity holders of the parent (cents)
- Basic (loss)/earnings per share (6.1 ) (31.8 ) (37.9 ) 2.8 - 2.8
- Diluted (loss)/earnings per share (6.1 ) (31.8 ) (37.9 ) 2.7 - 2.7
(1) The comparative period has been re-presented to adjust for the
discontinued operation. Refer to Note 16, Discontinued operation.
(2) Exceptional items have been disclosed separately due to their material
nature and infrequent occurrence.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER
2025
2025 2024
US$'000 US$'000
(Loss)/profit for the year (123 554 ) 8 086
Items that will be reclassified to the statement of profit or loss in
subsequent periods:
Exchange differences on translation of foreign operations, net of tax 26 151 (7 187 )
Exchange differences on translation of abandoned subsidiary recycled to profit 52 790 -
and loss
Other comprehensive income for the year, net of tax 78 941 (7 187 )
Total comprehensive income for the year (44 613 ) 899
Attributable to:
Equity holders of parent (32 945 ) (2 159 )
Non-controlling interests (11 668 ) 3 058
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2025
2025 2024
Notes US$'000 US$'000
ASSETS
Non-current assets
Property, plant and equipment 9 211 258 269 859
Right-of-use assets 10 2 497 3 871
Intangible assets 11 - 10 118
Receivables and other assets 13 908 7 341
Deferred tax assets 23 4 294 4 313
218 957 295 502
Current assets
Inventories 14 43 341 34 064
Receivables and other assets 13 11 997 6 633
Income tax receivable 21 1 736 24
Cash and short-term deposits 15 3 773 12 878
60 847 53 599
Total assets 279 804 349 101
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Issued capital 17 1 415 1 413
Treasury shares 17 (1 157 ) (1 157 )
Share premium 885 648 885 648
Other reserves 17 (189 255 ) (255 334 )
Accumulated losses (586 750 ) (487 990 )
109 901 142 580
Non-controlling interests 68 652 80 320
Total equity 178 553 222 900
Non-current liabilities
Interest-bearing loans and borrowings 18 6 228 16 633
Lease liabilities 19 1 256 2 246
Provisions 22 14 022 12 614
Deferred tax liabilities 23 53 767 69 281
75 273 100 774
Current liabilities
Interest-bearing loans and borrowings 18 18 648 4 397
Lease liabilities 19 1 640 2 517
Trade and other payables 20 5 690 11 665
Income tax payable 21 - 6 848
25 978 25 427
Total liabilities 101 251 126 201
Total equity and liabilities 279 804 349 101
Approved by the Board of Directors on 17 March 2026 and signed on its behalf
by:
M Brown
M
Michael
Director
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER
2025
Attributable to the equity holders of the parent
Issued capital Share premium Treasury shares Other reserves(1) Accumulated (losses)/retained earnings Total Non-controlling interests Total equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January 2025 1 413 885 648 (1 157 ) (255 334 ) (487 990 ) 142 580 80 320 222 900
Total comprehensive income - - - 71 035 (103 980 ) (32 945 ) (11 668 ) (44 613 )
Loss for the year - - - - (103 980 ) (103 980 ) (19 574 ) (123 554 )
Other comprehensive income - - - 71 035 - 71 035 7 906 78 941
Share capital issued (Note 17) 2 - - (2 ) - - - -
Share-based payments (Note 28) - - - 266 - 266 - 266
Transfer between reserves (2) - - - (5 220 ) 5 220 - - -
As at 31 December 2025 1 415 885 648 (1 157 ) (189 255 ) (586 750 ) 109 901 68 652 178 553
As at 1 January 2024 1 413 885 648 (1 157 ) (250 797 ) (490 884 ) 144 223 81 550 225 773
Total comprehensive income - - - (5 053 ) 2 894 (2 159 ) 3 058 899
Profit for the year - - - - 2 894 2 894 5 192 8 086
Other comprehensive income - - - (5 053 ) - (5 053 ) (2 134 ) (7 187 )
Share-based payments (Note 28) - - - 516 - 516 - 516
Dividends paid - - - - - - (4 288 ) (4 288 )
As at 31 December 2024 1 413 885 648 (1 157 ) (255 334 ) (487 990 ) 142 580 80 320 222 900
Attributable to discontinued operation (Note 16) - - - (52 893 ) (196 006 ) (248 899 ) - (248 899 )
(1) Other reserves relate to Foreign currency translation reserves and
Share-based equity reserves. Refer to Note 17, Issued share capital and
reserves for further detail.
(2) The Company elected to release share-based equity reserve relating to
lapsed and exercised options to accumulated (losses)/retained earnings.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2025
2025 Re-presented 2024
Notes US$'000 US$'000
Cash flows from operating activities 6 296 51 195
Cash generated by operations 24.1 35 136 68 306
Working capital adjustments 24.2 (11 856 ) (16 337 )
Interest received 262 392
Interest paid (4 835 ) (5 447 )
Income tax paid 21 (12 428 ) (339 )
Income tax received 21 17 4 620
Cash flows used in investing activities (13 860 ) (27 644 )
Purchase of property, plant and equipment 9 (4 433 ) (5 758 )
Waste stripping costs capitalised 9 (10 049 ) (22 302 )
Proceeds from sale of property, plant and equipment 622 416
Cash flows used in financing activities (2 261 ) (26 733 )
Lease liability capital repayment 19 (1 837 ) (2 690 )
Net financial liabilities repaid 24.3 (424 ) (19 755 )
Financial liabilities repaid (29 596 ) (42 117 )
Financial liabilities raised 29 172 22 362
Dividends paid to non-controlling interests - (4 288 )
Net decrease in cash and cash equivalents (9 825 ) (3 182 )
Cash and cash equivalents at beginning of year 12 878 16 503
Foreign exchange differences 720 (443 )
Cash and cash equivalents at end of year 15 3 773 12 878
Cash and cash equivalents at end of year - continuing operations 3 773 12 816
Cash and cash equivalents at end of year - discontinued operation - 63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2025
1. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.1 Corporate information
1.1.1 Incorporation
The holding company, Gem Diamonds Limited (the Company), was incorporated on
29 July 2005 in the British Virgin Islands (BVI) and is domiciled in the
United Kingdom (UK). The Company's registration number is 669758.
These financial statements were authorised for issue by the Board on 17 March
2026.
The Group is principally engaged in operating diamond mines.
1.1.2 Operational information
The Company has the following investments directly and indirectly in
subsidiaries at 31 December 2025.
Name and registered address of company Share- Country of incorporation and functional currency Nature of business
holding
Subsidiaries
Gem Diamond Technical Services (Proprietary) Limited(1) 100% RSA Technical, financial and management consulting services.
Illovo Corner
24 Fricker Road South African rand (ZAR)
Illovo Boulevard
Johannesburg
South Africa
Letšeng Diamonds (Proprietary) Limited(1) 70% Lesotho Diamond mining and holder of mining rights.
Du Preez Building
397 Hilton Road Lesotho loti (LSL)
Maseru
Lesotho
Gem Diamonds Investments Limited(1) 100% UK Investment holding company holding 100% in each of Gem Diamonds Innovation
Solutions CY Limited, a company in Cyprus holding intellectual property
2 Eaton Gate relating to development of technology to innovate mining processes; and Gem
Diamonds Marketing Services BV, a marketing company in Belgium that performs
London United States dollar (US$) and diamond analysis and valuations, and sells the Group's diamonds on tender.
SW1W 9BJ Euro (€)
United Kingdom
(1) No change in the shareholding since the prior year.
1.1.3 Segment information
For management purposes, the Group is organised into geographical units as its
risks and required rates of return are affected predominantly by differences
in the geographical regions of the mines and areas in which the Group
operates, or areas in which operations are managed. The below measures of
profit or loss, assets and liabilities are reviewed by the Chief Operating
Decision-Maker, i.e. the Board of Directors. The main geographical regions,
and the type of products and services from which each reporting segment
derives its revenue, are:
· Lesotho (diamond mining activities);
· Belgium (sales, marketing and analysis of diamonds);
· BVI, RSA, UK and Cyprus (technical and administrative services);
and
· Botswana, classified as a discontinued operation and abandoned by
year end.
During the period, the Ghaghoo mine, which formed part of the Botswana
operating segment which had previously been placed on care and maintenance,
was reclassified from continuing to a discontinued operation and was
abandoned. This follows the relinquishment of the associated mining licence
and the formal handover of the mine site to the Botswana Ministry of Minerals
and Energy, through the Department of Mines. As of 1 June 2025, the Department
of Mines has assumed full responsibility for the mine, and the Company has no
further obligations or commitments related to the licence or the mine.
Management monitors the operating results of the geographical units separately
for the purpose of making decisions about resource allocation and performance
assessment.
Segment performance is evaluated based on operating profit or loss.
Inter-segment transactions are entered into under normal arm's length terms in
a manner similar to transactions with third parties. Segment revenue, segment
expenses and segment results include transactions between segments. Those
transactions are eliminated on consolidation.
Segment revenue is derived from mining activities, polished manufacturing
margins and diamond analysis.
The following tables present revenue from contracts with customers,
profit/(loss) for the year, underlying EBITDA and asset and liability
information from operations regarding the Group's geographical segments:
Lesotho Belgium BVI, RSA, UK and Cyprus(1) Total Continuing operations Botswana (Discontinued operation) Total
Year ended 31 December 2025 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenue from contracts with customers
Total revenue 96 944 98 606 4 990 200 540 - 200 540
Intersegment (96 583 ) (553 ) (4 990 ) (102 126 ) - (102 126 )
External customers 361 98 053 - 98 414 - 98 414
Depreciation and amortisation (40 821 ) (272 ) (285 ) (41 378 ) (30 ) (41 408 )
- Depreciation and mining asset amortisation (11 455 ) (272 ) (285 ) (12 012 ) (30 ) (12 042 )
- Waste stripping cost amortisation (29 366 ) - - (29 366 ) - (29 366 )
Cost of sales (excluding depreciation and amortisation) (53 699 ) 99 242 (53 358 ) - (53 358 )
Corporate expenses - - (5 802 ) (5 802 ) - (5 802 )
Royalties and selling costs (4 624 ) (1 321 ) - (5 945 ) - (5 945 )
Impairment of non-financial assets (77 467 ) - - (77 467 ) (224 ) (77 691 )
Write-down of inventories to net realisable value (3 534 ) - - (3 534 ) - (3 534 )
Rehabilitation provision released - - - - 2 309 2 309
Other non-material income/(costs) 1 938 3 (223 ) 1 718 (205 ) 1 513
Segment operating (loss)/profit (81 262 ) (22 ) (6 068 ) (87 352 ) 1 850 (85 502 )
Net finance costs(2) (3 549 ) (31 ) (1 121 ) (4 701 ) (57 ) (4 758 )
(Loss)/profit before tax (84 811 ) (53 ) (7 189 ) (92 053 ) 1 793 (90 260 )
Income tax benefit/(charge) 19 594 44 (142 ) 19 496 - 19 496
Recycling of foreign currency reserve - - - - (52 790 ) (52 790 )
(Loss)/profit for the year (65 217 ) (9 ) (7 331 ) (72 557 ) (50 997 ) (123 554 )
Underlying EBITDA(3) 9 255 310 (5 622 ) 3 943 - 3 943
Segment non-current assets 211 279 965 1 511 213 755 - 213 755
Segment assets 269 356 1 710 4 444 275 510 - 275 510
Segment liabilities 35 453 1 178 10 853 47 484 - 47 484
Other segment information
Net (debt)/cash and short-term deposits(4) (11 754 ) 612 (9 013 ) (20 155 ) - (20 155 )
Capital expenditure
- Property, plant and equipment 4 416 1 16 4 433 - 4 433
- Net movement in rehabilitation asset(5) 899 - - 899 - 899
- Waste cost capitalised 10 049 - - 10 049 - 10 049
Total capital expenditure 15 364 1 16 15 381 - 15 381
Average number of employees employed under contracts of service 821 6 16 843 12 855
(1) No revenue was generated in BVI and Cyprus.
(2) Finance income and costs are reflected on a net basis as this is the
measure used by the primary decision-makers.
(3) Underlying EBITDA as defined in Note 4, Operating (loss)/profit.
(4) Calculated as cash and short-term deposits less drawn down bank facilities
(excluding insurance premium financing and credit underwriting fees). Refer to
Note 18, Interest-bearing loans and borrowings.
(5) Non-cash movements in rehabilitation assets relating to changes in
rehabilitation estimates for the Lesotho segment.
Included in revenue for the current year is revenue from five customers who
individually contributed 10% or more to total revenue. This revenue amounted
to US$57.3 million in total arising from sales reported in the Belgium
segment.
Segment non-current assets do not include deferred tax assets of US$4.3
million and financial instruments of US$0.9 million. Included in the
non-current assets BVI, RSA, UK and Cyprus segment disclosure are non-current
assets located in the Company's country of domicile, the UK, of US$2.4
million.
Segment assets and liabilities do not include deferred tax assets and
liabilities of US$4.3 million and US$53.8 million, respectively. Deferred tax
amounts are excluded because they are not operational in nature, do not
directly impact segment performance, and are not part of the asset base used
by management to make business decisions.
Revenue decreased 36% compared to 2024 mainly due to a decrease of 20% in
carats sold (88 381 carats compared to 109 967 in 2024). An average sales
price of US$1 105 per carat (2024: US$1 390 per carat) was achieved. The
lower prices achieved were due to a combination of sustained pressure on
diamond prices during the year and the 74% ore contribution from the
lower-value Main Pipe.
Lesotho Belgium BVI, RSA, UK and Cyprus(1) Total continuing operations Botswana (Discontinued operation) Total
Year ended 31 December 2024 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenue from contracts with customers
Total revenue 149 195 153 518 6 595 309 308 - 309 308
Intersegment (147 822 ) (679 ) (6 595 ) (155 096 ) - (155 096 )
External customers 1 373 152 839 - 154 212 - 154 212
Depreciation and amortisation (46 376 ) (195 ) (356 ) (46 927 ) (67 ) (46 994 )
- Depreciation and mining asset amortisation (10 749 ) (195 ) (356 ) (11 300 ) (67 ) (11 367 )
- Waste stripping cost amortisation (35 627 ) - - (35 627 ) - (35 627 )
Cost of sales (excluding depreciation and amortisation) (64 644 ) 1 170 (64 473 ) - (64 473 )
Corporate expenses - - (7 914 ) (7 914 ) - (7 914 )
Royalties and selling costs (15 269 ) (1 208 ) - (16 477 ) - (16 477 )
Other non-material income/(costs) 636 (34 ) (235 ) 367 (729 ) (362 )
Segment operating profit/(loss) 26 266 857 (8 335 ) 18 788 (796 ) 17 992
Net finance costs(2) (4 710 ) (20 ) (1 641 ) (6 371 ) (160 ) (6 531 )
Profit/(loss) before tax 21 556 837 (9 976 ) 12 417 (956 ) 11 461
Income tax (charge)/benefit (4 250 ) (46 ) 921 (3 375 ) - (3 375 )
Profit/(loss) for the year 17 306 791 (9 055 ) 9 042 (956 ) 8 086
Underlying EBITDA(3) 36 378 1 085 (7 744 ) 29 719 - 29 719
Segment non-current assets 280 793 1 200 1 606 283 599 249 283 848
Segment assets 335 667 2 074 6 509 344 250 538 344 788
Segment liabilities 45 129 1 311 8 000 54 440 2 480 56 920
Other segment information -
Net cash/(debt) and short-term deposits(4) (4 869 ) 692 (3 191 ) (7 368 ) 63 (7 305 )
Capital expenditure - -
- Property, plant and equipment 4 379 49 1 330 5 758 - 5 758
- Net movement in rehabilitation asset(5) (3 698 ) - - (3 698 ) - (3 698 )
- Waste cost capitalised 22 302 - - 22 302 - 22 302
Total capital expenditure 22 983 49 1 330 24 362 - 24 362
Average number of employees employed under contracts of service 663 6 20 689 27 716
(1) No revenue was generated in BVI and Cyprus.
(2) Finance income and costs are reflected on a net basis as this is the
measure used by the primary decision-makers.
(3) Underlying EBITDA as defined in Note 4, Operating (loss)/profit.
(4) Calculated as cash and short-term deposits less drawn down bank facilities
(excluding the asset-based finance facility, insurance premium financing and
credit underwriting fees). Refer to Note 17, Issued share capital and
reserves.
(5) Non-cash movements in rehabilitation assets relating to changes in
rehabilitation estimates for the Lesotho segment.
Included in revenue for the 2024 year is revenue from four customers who
individually contributed 10% or more to total revenue. This revenue amounted
to US$101.4 million in total arising from sales reported in the Belgium
segment.
Segment non-current assets do not include deferred tax assets of US$4.3
million and financial instruments of US$7.3 million. Included in the
non-current assets BVI, RSA, UK and Cyprus segment disclosure are non-current
assets located in the Company's country of domicile, the UK, of US$2.5
million.
Segment assets and liabilities do not include deferred tax assets and
liabilities of US$4.3 million and US$69.3 million, respectively.
1.2 Summary of material accounting policies
1.2.1 Basis of preparation
The preliminary announcement does not constitute financial statements for the
years ended 31 December 2025 and 31 December 2024.
The financial information for the year ended 31 December 2025 has been
extracted from the Group's audited financial statements which were approved by
the Board of Directors on 17 March 2026. The report of the auditor on the 31
December 2025 financial statements was unqualified but contained a material
uncertainty paragraph relating to going concern.
The financial statements of the Group have been prepared in accordance with
International Financial Reporting Standards (IFRS), as issued by the
International Accounting Standards Board (IASB). These financial statements
have been prepared under the historical cost basis except for assets and
liabilities measured at fair value. The accounting policies have been
consistently applied except for the adoption of the new standards and
interpretations detailed on the following pages.
The functional currency of the Company and certain of its subsidiaries is US
dollar, which is the currency of the primary economic environment in which the
entities operate. All amounts are presented in US dollar and rounded to the
nearest thousand. The financial results of subsidiaries whose functional and
reporting currency is in currencies other than US dollar have been converted
into US dollar on the basis as set out in Note 1.2.15, Foreign currency
translations. Refer to Note 1.1.2, Operational information for details of the
subsidiaries and their functional currencies.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements, are disclosed in Note 1.2.27, Critical accounting estimates and
judgements.
Changes in accounting policies and disclosures
New and amended standards and interpretations
The new amendments to IAS 21 did not have an impact on the consolidated
financial statements of the Group nor the accounting policies, methods of
computation or presentation applied by the Group. All other accounting
policies are consistent with those of the previous financial year.
Amendments and improvements Description
Amendments to IAS 21 Lack of exchangeability
Standards issued but not yet effective
The standards, amendments and improvements that are issued, but not yet
effective, up to the date of issuance of the Group's consolidated financial
statements are listed in the table below. These standards, amendments and
improvements have not been early adopted and it is expected that, where
applicable, these standards, amendments and improvements will be adopted on
each respective effective date. The impact of the adoption of these standards
has not been reasonably assessed at this stage.
New standards, amendments, and improvements Description Effective date*
Amendments to IFRS 9 and IFRS 7 Classification and measurement of financial instruments 1 January 2026
IFRS 18 Presentation and disclosure in financial statements 1 January 2027
* Annual periods beginning on or after.
1.2.2 Going concern
The financial statements have been prepared on a going concern basis, which
envisages continuity of normal business activities and the realisation of
assets and discharge of liabilities in the normal course of business.
The diamond industry experienced significant pressure during 2025 due to
geopolitical instability, uncertainty surrounding US tariffs, and increased
competition from synthetic diamonds. In response, the Group implemented the
Business Resilience (BR) Programme (refer to page 26) in July 2025 to reduce
cash outflows and strengthen its financial position. This initiative lowered
monthly cash costs by approximately US$1.5 million, and, together with a
modest recovery in diamond prices in Q4 2025, enabled the Group to meet all
covenant requirements.
As at 31 December 2025, the Group reported net debt of US$20.1 million (31
December 2024: US$7.3 million). Undrawn facilities totalled US$68.3 million
(31 December 2024: US$69.0 million), resulting in liquidity (defined as net
debt/cash and available undrawn facilities) of US$48.1 million (31 December
2024: US$61.7 million). Gross liquidity (defined as gross cash and available
undrawn facilities) amounted to US$72.1 million (31 December 2024: US$81.9
million). The Group also retains access to a US$6.0 million general banking
facility with no fixed expiry. Following the launch of the BR Programme, net
debt decreased by US$8.1 million in the second half of 2025 and is expected to
continue declining through 2026. The Group's revolving credit facilities of
US$75.3 million expire on 21 December 2026, within the going concern
assessment period.
The Directors have assessed the Group's ability to continue as a going concern
for at least twelve months from the date of this report. Their assessment
considered the Group's financial position, current and projected operational
performance, ongoing benefits of the BR Programme, market conditions, exchange
rate volatility, working capital and capital expenditure requirements, mine
plan flexibility, debt service obligations, and the likelihood of renewing
debt facilities by December 2026. They also considered access to the Group's
insurance asset of US$9.0 million (refer to Note 13, Receivables and other
assets), maturing in June 2026. Based on these factors and available
mitigating actions, the Directors believe the Group has sufficient financial
resources to remain operational for the foreseeable future and expects to
achieve a net cash position by December 2026.
The Board notes that the forecast net cash position is sensitive to potential
cost increases (specifically diesel costs) related to the conflict in Iran,
and to further reductions in diamond prices and exchange rate volatility. The
Board has reviewed forecasts which show that in downside scenarios with a
reduction in diamond price of approximately 8% or cost increases of
approximately 10%, the Group will be required to renew the Group's revolving
credit facilities, or make alternative arrangements. Successful refinancing of
the Group's facilities remains a key assumption in the going concern
assessment. Until this is confirmed, this creates a material uncertainty that
may cast significant doubt on the Group's ability to continue as a going
concern. However, the Board has a reasonable expectation that the refinancing
will be achieved, based on:
· the mine plan reflecting positive cash flows after the waste
stripping investment to access Satellite ore in the next cutback;
· constructive ongoing and early engagement with lenders; and
· long-standing relationships and previous successful refinancing
and/or renewals.
Further details on the Group's financial position, cash flows, liquidity, and
financial risk management policies are provided in the Annual Report and
Accounts, including Note 27, Financial risk management
1.2.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company as at 31 December 2025.
Subsidiaries
Subsidiaries are consolidated from the date of their acquisition, being the
date on which the Group obtains control, and continue to be consolidated until
the date that such control ceases. An investor controls an investee when it is
exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over
the investee. To meet the definition of control in IFRS 10, all three of the
following criteria must be met: (a) an investor has power over an investee;
(b) the investor has exposure, or rights, to variable returns from its
involvement with the investee; and (c) the investor has the ability to use its
power over the investee to affect the amount of the investor's returns. The
financial statements of subsidiaries used in the preparation of the
consolidated financial statements are prepared for the same reporting year as
the parent company and are based on consistent accounting policies. All
intra-group balances and transactions, including unrealised gains and losses
arising from them, are eliminated in full.
Non-controlling interests
Non-controlling interests represent the equity in a subsidiary not
attributable, directly or indirectly, to the parent company and is presented
separately within equity in the consolidated statement of financial position,
separately from equity attributable to owners of the parent. Losses within a
subsidiary are attributed to the non-controlling interest even if that results
in a deficit balance.
1.2.4 Exploration and evaluation expenditure
Exploration and evaluation activity involves the search for mineral resources,
the determination of technical feasibility and the assessment of commercial
viability of an identified resource. Exploration and evaluation activity
includes:
· acquisition of rights to explore;
· researching and analysing historical exploration data;
· gathering exploration data through topographical, geochemical and
geophysical studies;
· exploratory drilling, trenching and sampling;
· determining and examining the volume and grade of the resource;
· surveying transportation and infrastructure requirements; and
· conducting market and finance studies.
Administration costs that are not directly attributable to a specific
exploration area are charged to the statement of profit or loss. Licence costs
paid in connection with a right to explore in an existing exploration area are
capitalised as intangible assets and thereafter reclassified as mining assets
within property, plant and equipment, and amortised over the term of the
permit once the mining asset is brought into the development phase.
Exploration and evaluation expenditure is capitalised as incurred. Capitalised
exploration expenditure is recorded as a component of property, plant and
equipment, as an exploration and development asset, at cost less accumulated
impairment charges. As the asset is not available for use, it is not
depreciated.
All capitalised exploration and evaluation expenditure is monitored for
indications of impairment. Where a potential impairment is indicated,
assessments are performed for each area of interest in conjunction with the
group of operating assets (representing a cash-generating unit (CGU)) to which
the exploration is attributed. To the extent that exploration expenditure is
not expected to be recovered, it is charged to the statement of profit or
loss. Exploration areas where reserves have been discovered, but require major
capital expenditure before production can begin, are continually evaluated to
ensure that commercial quantities of reserves exist or to ensure that
additional exploration work is under way as planned.
Management is required to make certain estimates and judgements when
determining whether the commercial viability of an identified resource has
been met and when determining whether indicators of impairment exist. There
were no exploration and evaluation activities during the year and therefore no
costs were capitalised.
1.2.5 Development expenditure
When proven and probable reserves are determined and development is
sanctioned, capitalised exploration and evaluation expenditure is reclassified
from exploration phase to development phase. As the asset is not available for
use during the development phase, it is not depreciated. On completion of the
development phase, any capitalised exploration and evaluation expenditure
already capitalised to a development asset, together with the subsequent
development expenditure, is reclassified within property, plant and equipment
to mining assets and depreciated on the basis as laid out in Note 1.2.6,
Property, plant and equipment.
All development expenditure is monitored for indicators of impairment
annually. Management is required to make certain estimates and judgements when
determining whether indicators of impairment exist.
1.2.6 Property, plant and equipment
Property, plant and equipment is recorded at cost less accumulated
depreciation and accumulated impairment losses. Cost includes expenditure that
is directly attributable to the acquisition and construction of the items, to
get the asset in its condition and location for its intended use and among
others, includes professional fees and, for qualifying assets, borrowing costs
capitalised in accordance with the Group's accounting policies.
Subsequent costs to replace a component of an item of property, plant and
equipment that is accounted for separately, is capitalised when the cost of
the item can be measured reliably, with the carrying amount of the original
component being written off. All repairs and maintenance are charged to the
statement of profit or loss during the financial period in which they are
incurred.
Depreciation commences when an asset is available for use. Depreciation is
charged so as to write off the depreciable amount of the asset to its residual
value over its estimated useful life, using a method that reflects the pattern
in which the asset's future economic benefits are expected to be consumed by
the Group.
Item Method Useful life
Mining assets Straight line Lesser of life of mine or period of mining lease
Decommissioning assets Straight line Lesser of life of mine or period of mining lease
Leasehold improvements Straight line Three years or lesser of life of mine or period of mining lease
Plant and equipment Straight line; units of production Three to ten years; machine hours
Other assets Straight line Two to eight years
An item of property, plant and equipment and any significant part initially
recognised is derecognised upon disposal (i.e. at the date the recipient
obtains control) or when no future economic benefits are expected from its use
or disposal. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement of profit or loss
when the asset is derecognised.
The asset's residual values, useful lives and methods of depreciation are
reviewed annually. Changes in the expected residual values, expected useful
life or the expected pattern of consumption of future economic benefits
embodied in the asset are considered to modify the depreciation period or
method, as appropriate, and are treated as changes in accounting estimates,
and adjusted for prospectively, if appropriate.
Pre-production and in-production stripping costs
Costs associated with removal of waste overburden are classified as stripping
costs.
Stripping activities that are undertaken during the production phase of a
surface mine may create two benefits, being either the production of inventory
or improved access to the ore to be mined in the future. Where the benefits
are realised in the form of inventory produced in the period, the production
stripping costs are accounted for as part of the cost of producing those
inventories. Where production stripping costs are incurred and the benefit is
the creation of mining flexibility and improved access to ore to be mined in
the future, the costs are recognised as a non-current asset if:
(a) future economic benefits (being improved access to the orebody) are
probable;
(b) the component of the orebody for which access will be improved can be
accurately identified; and
(c) the costs associated with the improved access can be reliably measured.
The non-current asset recognised is referred to as a "stripping activity
asset" and is separately disclosed in Note 9, Property, plant and equipment.
If all the criteria are not met, the production stripping costs are charged to
the statement of profit or loss as operating costs. The stripping activity
asset is initially measured at cost, which is the accumulation of costs
directly incurred to perform the stripping activity that improves access to
the identified component of ore, plus an allocation of directly attributable
overhead costs.
If incidental operations are occurring at the same time as the production
stripping activity, but are not necessary for the production stripping
activity to continue as planned, these costs are not included in the cost of
the stripping activity asset. Given the deep vertical nature of the pit, all
stripping costs are capitalised on a cut/component basis for each cut in the
mine planning process.
The stripping activity asset is subsequently amortised over the expected
useful life of the identified component of the orebody that became more
accessible as a result of the stripping activity. The net book value of the
stripping asset and future expected stripping costs to be incurred for that
component is depreciated using the units of production over the proven and
probable reserves, in order to match the total stripping costs of the cut to
the economic benefits created by the cut. As a result, the stripping activity
asset is carried at cost less amortisation and any impairment losses. The
future stripping costs of the cut/component and the expected ore to be mined
from that cut/component are recalculated annually in light of additional
knowledge and changes in estimates. Changes in the stripping ratio are
accounted for prospectively as a change in estimate.
Management applies judgement to calculate and allocate the production
stripping costs to inventory and/or the stripping activity asset(s) as
referred under Note 1.2.27, Critical accounting estimates and judgements.
1.2.7 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset that necessarily takes a substantial period
of time to get ready for its intended use or sale, are capitalised as part of
the cost of the asset. All other borrowing costs are expensed in the period in
which they occur. Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds.
1.2.8 Discontinued operations
A component of the Group should be classified as a discontinued operation when
it has been disposed of, or abandoned, and:
(a) represents a separate major line of business or geographical area of
operations;
(b) is part of a single co-ordinated plan to dispose of a separate major line
of business or geographical area of operations; or
(c) is a subsidiary acquired exclusively with a view to re-sale.
The results of discontinued operations are presented separately in the
statement of profit or loss and reclassifies the results of the operation in
the comparative period from continuing to discontinued operations. This
classification as a discontinued operation was applied to the Ghaghoo mine
following the relinquishment of its mining licence. Unrealised foreign
exchange gains and losses on historical retranslation of the subsidiaries'
results into US dollars are recycled to the statement of profit and loss upon
completion of the disposal or abandonment. Additional disclosures are provided
in Note 16, Discontinued operation. All other notes to the financial
statements include amounts for continuing operations, unless indicated
otherwise.
1.2.9 Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of
the acquisition date fair value of the consideration transferred and the
amount recognised for the non-controlling interest (and where the business
combination is achieved in stages, the acquisition date fair value of the
acquirer's previously held equity interest in the acquiree) over the fair
value of the net identifiable amounts of the assets acquired and the
liabilities assumed in the business combination.
Assets acquired and liabilities assumed in transactions separate to the
business combinations, such as the settlement of pre-existing relationships or
post-acquisition remuneration arrangements, are accounted for separately from
the business combination in accordance with their nature and applicable IFRS.
Identifiable intangible assets, meeting either the contractual legal or
separability criterion, are recognised separately from goodwill. Contingent
liabilities representing a present obligation are recognised if the
acquisition date fair value can be measured reliably.
If the aggregate of the acquisition date fair value of the consideration
transferred and the amount recognised for the non-controlling interest (and
where the business combination is achieved in stages, the acquisition date
fair value of the acquirer's previously held equity interest in the acquiree)
is lower than the fair value of the net identifiable amounts of the assets
acquired and the liabilities assumed in the business combination, the
difference is recognised in profit and loss.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purpose of impairment testing, goodwill acquired in
a business combination is, from the acquisition date, allocated to each of the
Group's CGUs (or groups of CGUs) that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the
acquiree are assigned to those units. Each unit or group of units to which
goodwill is allocated shall represent the lowest level within the entity at
which the goodwill is monitored for internal management purposes, and shall
not be larger than an operating segment before aggregation.
Where goodwill forms part of a CGU and part of the operation within that unit
is disposed of, the goodwill associated with the operation disposed of is
included in the carrying amount of the operation when determining the gain or
loss on disposal of the operation. Goodwill disposed of in this circumstance
is measured based on the relative values of the operation disposed of and the
portion of the CGU retained.
1.2.10 Financial instruments
The Group shall only recognise a financial instrument when the Group becomes a
party to the contractual provisions of the instrument. A financial instrument
is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity.
Financial assets
Management determines the classification of its financial assets at initial
recognition and re-evaluates this designation at every reporting date based on
the business model for managing these financial assets and the contractual
cash flow characteristics. Currently, the Group only has financial assets at
amortised cost which consist of receivables and other assets, and cash and
short-term deposits which is held within a business model to collect
contractual cash flows and for which the contractual cash flow characteristics
are solely payments of principal and interest. When financial assets are
recognised initially, they are measured at fair value plus (in the case of
financial assets not at fair value through profit or loss) directly
attributable transaction costs.
Financial assets at amortised cost
Financial assets at amortised cost are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active market. They
are included in current assets, except those with maturities greater than 12
months after the reporting date. These are classified as non-current assets.
Such assets are carried at amortised cost using the effective interest rate
method, if the time value of money is significant, less any allowance for
impairment. Gains and losses are recognised in the statement of profit or loss
when the financial assets at amortised cost are derecognised or impaired, as
well as through the amortisation process.
Derecognition
A financial asset is primarily derecognised when the rights to receive cash
flows from the asset have expired or the Group has transferred its rights to
receive cash flows from the asset. Gains or losses from derecognition of
financial assets are recognised in the statement of profit or loss.
Financial liabilities
Financial liabilities are initially measured at fair value net of (in the case
of financial liabilities not at fair value through profit or loss) directly
attributable transaction costs. The Group's interest-bearing loans and
borrowings and trade and other payables financial liabilities are subsequently
stated at amortised cost using the effective interest rate method, with any
difference between proceeds (net of transaction costs) and the redemption
value being recognised in the statement of profit or loss, unless capitalised
in accordance with Note 1.2.7, Borrowing costs, over the contractual period of
the financial liability.
Derecognition
A financial liability is derecognised when the obligation under the liability
is discharged, cancelled or expires. Gains or losses from derecognition of
financial liabilities are recognised in the statement of profit or loss.
1.2.11 Impairments
Non-financial assets
The Group assesses, at each reporting date, whether there is an indication
that an asset (or CGU) may be impaired in accordance with IAS 36. Goodwill is
assessed for impairment on an annual basis and when circumstances indicate
that the carrying value may be impaired. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
Non-financial assets that were previously impaired are reviewed for possible
reversal of the impairment at each reporting date. A previously recognised
impairment loss is reversed only if there has been a change in the estimates
used to determine the asset's recoverable amount since the last impairment
loss was recognised. If that is the case, the carrying amount of the asset is
increased to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. Such a reversal
is recognised in the statement of profit or loss. After such a reversal, the
depreciation charge is adjusted in future periods to allocate the asset's
revised carrying amount, less any residual value, on a systematic basis over
its remaining useful life. Impairment losses relating to goodwill cannot be
reversed in future periods.
Financial assets
Financial assets carried at amortised cost
The Group recognises an allowance for expected credit losses (ECLs) in the
statement of profit or loss for all financial assets at amortised cost. ECLs
are based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the Group expects to
receive, discounted at the original effective interest rate. The expected cost
will include cash flows from the sale of collateral held, or other credit
enhancements that are integral to the contractual terms. For credit exposures
for which there has not been a significant increase in credit risk since
initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the next 12 months (a 12-month ECL).
For those credit exposures for which there has been a significant increase in
credit risk since initial recognition, a loss allowance is required for credit
losses expected over the remaining life of the exposure, irrespective of the
timing of the default (a lifetime ECL).
1.2.12 Inventories
Inventories, which include rough diamonds, ore stockpiles and consumables, are
measured at the lower of cost of production on a weighted average basis or
estimated net realisable value. Cost of production includes directly
attributable costs and an allocation of fixed and variable production
overheads to bring the inventory to its present location and condition.
Borrowing costs are excluded from the cost of inventories.
Net realisable value is determined using the estimated selling price in the
ordinary course of business, less the estimated costs of completion into its
final product and the costs to be incurred in marketing, selling and
distribution. The amount of any write-down of inventories to net realisable
value is recognised in the period the write-down or loss occurs. Management is
required to make judgements when determining the net realisable value of
diamond inventory and ore stockpiles as referred under Note 1.2.27, Critical
accounting estimates and judgements.
Diamond inventory consists of run of mine production, which is made up of a
mix of diamond sizes. The diamond inventory therefore consists of varying size
and quality. Costs are allocated to diamond inventory on a carat produced
basis irrespective of quality and value and cannot be costed separately. The
net realisable value of diamond inventory is determined on a holistic basis.
Ore stockpiles consist of various strategic stockpiles. Separately
identifiable costs are allocated to ore sourced from the Main and Satellite
Pipes. Net realisable value of ore stockpile is determined separately for the
Main and Satellite Pipes on a holistic basis.
1.2.13 Cash and cash equivalents
Cash and cash equivalents are carried in the statement of financial position
at amortised cost. Cash and cash equivalents comprise cash on hand, deposits
held on call with banks, and other short-term, highly liquid investments with
original maturities of three months or less that are held to meet the Group's
short-term cash commitments.
For the purpose of the consolidated statement of cash flows, cash and cash
equivalents consist of cash and cash equivalents as defined above, net of
outstanding bank overdrafts which are repayable on demand and form an integral
part of the Group's cash management.
1.2.14 Issued share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction from the proceeds.
Treasury shares
Own equity instruments that are reacquired are recognised at cost, including
transaction costs, and deducted from equity. These are disclosed as treasury
shares. No gain or loss is recognised in profit or loss in the purchase, sale,
issue or cancellation of the Group's own equity instruments. Any difference
between the carrying amount and the consideration, if reissued, is recognised
in equity.
1.2.15 Foreign currency translations
Presentation currency
The results and financial position of the Group's subsidiaries which have a
functional currency different from the Group's presentation currency are
translated into the Group's presentation currency as follows:
· statement of financial position items are translated at the
closing rate at the reporting date;
· income and expenses for each statement of profit or loss are
translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the
dates of the transactions); and
· resulting exchange differences are recognised as a separate
component of equity.
Details of the rates applied at the respective reporting dates and for the
statement of profit or loss transactions are detailed in Note 17, Issued share
capital and reserves.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains or losses resulting from the settlement of such transactions,
and from the translation at the period-end exchange rates of monetary assets
and liabilities denominated in foreign currencies, are recognised in the
statement of profit or loss. Non-monetary items that are measured in terms of
cost in a foreign currency are translated using the exchange rates as at the
dates of the initial transactions. Non-monetary items measured at fair value
in a foreign currency are translated using the exchange rates at the date when
the fair value was determined. Monetary items for each statement of financial
position presented are translated at the closing rate at the reporting date.
1.2.16 Share-based payments
Employees (including senior executives) of the Group receive remuneration in
the form of share-based payment transactions, whereby employees render
services as consideration for equity instruments (equity-settled
transactions).
Equity-settled transactions
The cost of equity-settled transactions with employees is measured by
reference to the fair value of the equity instruments at the date at which
they are granted and is recognised as an expense over the vesting period,
which ends on the date on which the relevant employees become fully entitled
to the award. Fair value is determined using an appropriate pricing model. In
valuing equity-settled transactions, no account is taken of any vesting
conditions, other than conditions linked to the price of the shares of the
Company (market conditions).
On a cumulative basis, over the vesting period of an award, no expense is
recognised for awards that do not ultimately vest, except for awards where
vesting is conditional upon a market condition, which are treated as vesting
irrespective of whether or not the market condition is satisfied, provided
that all other performance conditions are satisfied.
At each reporting date before vesting, the cumulative expense is calculated,
representing the extent to which the vesting period has expired, and
management's best estimate of the achievement of the vesting conditions or
otherwise of the non-market vesting conditions and of the number of equity
instruments that is expected to ultimately vest or, in the case of an
instrument subject to a market condition, be treated as vesting as described
above. The movement in cumulative expense since the previous reporting date is
recognised in the statement of profit or loss, with a corresponding entry in
equity.
Management applies judgement when determining whether share options relating
to employees who resigned before the end of the service condition period are
cancelled or forfeited.
The Group periodically releases the share-based equity reserve to retained
earnings in relation to lapsed and forfeited options subsequent to vesting
dates.
1.2.17 Provisions
Provisions are recognised when:
· the Group has a present legal or constructive obligation as a
result of a past event; and
· a reliable estimate can be made of the obligation.
Provisions are measured at the present value of the expenditures expected to
be required to settle the obligation, using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the obligation. The increase in the provision due to the passage
of time is recognised as a finance cost.
1.2.18 Restoration and rehabilitation provision
The mining, extraction and processing activities of the Group normally give
rise to obligations for site restoration and rehabilitation. Rehabilitation
works can include facility decommissioning and dismantling, removal and
treatment of waste materials, land rehabilitation and site restoration. The
extent of the work required and the estimated cost of final rehabilitation,
comprising liabilities for decommissioning and restoration, are based on
current legal requirements, existing technology and the Group's environmental
policies, and are reassessed annually. Cost estimates are not reduced by the
potential proceeds from the sale of property, plant and equipment.
Provisions for the cost of each restoration and rehabilitation programme are
recognised at the time the environmental disturbance occurs. When the extent
of the disturbance increases over the life of the operation, the provision and
associated asset is increased accordingly. Costs included in the provision
encompass all restoration and rehabilitation activity expected to occur. The
restoration and rehabilitation provisions are measured at the expected value
of future cash flows, discounted to their present value, using a pre-tax
discount rate. Discount rates used are specific to the country in which the
operation is located or reasonable alternatives if in-country information is
not available. The value of the provision is progressively increased over time
as the effect of the discounting unwinds, which is recognised in finance
charges. Restoration and rehabilitation provisions are also adjusted for
changes in estimates.
When provisions for restoration and rehabilitation are initially recognised,
the corresponding cost is capitalised as a decommissioning asset where it
gives rise to a future benefit and depreciated over future production from the
operation to which it relates. Changes in the measurement of an existing
decommissioning, restoration and similar liability that result from changes in
the estimated timing or amount of the outflow of resources embodying economic
benefits required to settle the obligation, or a change in the discount rate,
are added to, or deducted from, the cost of the related asset in the current
period in line with the principles of IFRIC 1, Changes in Existing
Decommissioning, Restoration and Similar Liabilities. Where the related asset
has been fully depreciated, any future reduction in the corresponding
provision is reflected as an adjustment to the statement of profit or loss.
Management is required to make significant estimates and assumptions when
determining the amount of the restoration and rehabilitation provisions as
referred under Note 1.2.27, Critical accounting estimates and judgements.
1.2.19 Taxation
Income tax for the period comprises current and deferred tax. Income tax is
recognised in the statement of profit or loss except to the extent that it
relates to items charged or credited directly to equity or to other
comprehensive income, in which case the tax consequences are recognised
directly in equity and other comprehensive income, respectively. Current tax
expense is the expected tax payable on the taxable income for the period,
using tax rates enacted or substantively enacted at the reporting date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the statement of financial position liability
method, providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realised or the liability is
settled based on the tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
The Group offsets deferred income tax assets and deferred income tax
liabilities if, and only if, it has a legally enforceable right to set off
current tax assets and current tax liabilities and the deferred income tax
assets and deferred income tax liabilities relate to income taxes levied by
the same taxation authority on either the same taxable entity or different
taxable entities which intend either to settle current tax liabilities and
assets on a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred
tax liabilities or assets are expected to be settled or recovered.
In respect of taxable temporary differences associated with investments in
subsidiaries, associates and jointly controlled entities, deferred tax is
provided except where the timing of the reversal of the temporary differences
can be controlled by the Group and it is probable that the temporary
differences will not reverse in the foreseeable future.
In respect of deductible temporary differences associated with investments in
subsidiaries, associates and jointly controlled entities, deferred tax assets
are only recognised to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be
available against which the temporary differences can be utilised.
Withholding tax is recognised as part of the income tax expense in the
statement of profit or loss. Withholding tax is deducted at the source on
dividends or other services which give rise to that withholding tax in
accordance with applicable tax laws and treaties. Deferred tax is recognised
in respect of future withholding taxes on unremitted earnings based on the
expected timing and extent of future dividends from the Group subsidiaries.
Refer to Note 23, Deferred taxation.
Uncertain tax positions
Uncertain tax positions are accounted for under IFRIC 23. In assessing
uncertain tax positions, the Group evaluates whether it is probable that a tax
authority will accept a particular tax treatment. A tax position is only
recognised when the likelihood of the tax authority accepting the treatment is
probable. If it is probable that the tax treatment will be accepted, the Group
measures the tax position based on the expected manner of settlement. If it is
determined that a tax position is not probable (i.e. uncertain), the Group
recognises the tax position based on the most likely outcome or expected value
of the outcome. Uncertain tax positions are re-evaluated at each reporting
date.
Royalties
Royalties incurred by the Group comprise mineral extraction costs based on a
percentage of sales paid to the local revenue authorities. These obligations
arising from royalty arrangements are recognised as current payables and
disclosed as part of royalty and selling costs in the statement of profit or
loss.
1.2.20 Employee benefits
Provision is made in the financial statements for all short-term employee
benefits. Liabilities for wages and salaries, including non-monetary benefits,
benefits required by legislation, annual leave, retirement benefits and
accumulating sick leave obliged to be settled within 12 months of the
reporting date, are recognised in trade and other payables and are measured at
the amounts expected to be paid when the liabilities are settled. Benefits
falling due more than 12 months after the reporting date are measured at the
amount the obligation is expected to be settled at, or discounted to present
value using a pre-tax discount rate where relevant or where time value of
money is expected to be significant. The Group recognises an expense for
contributions to the defined contribution pension fund in the period in which
the employees render the related service.
Bonus plans
The Group recognises a liability and an expense for bonuses. The Group
recognises a liability where contractually obliged or where there is a past
practice that has created a constructive obligation. These liabilities are
recognised in trade and other payables and are measured at the amounts
expected to be paid when the liabilities are settled.
1.2.21 Leases
At inception, the Group assesses whether a contract is or contains a lease.
This assessment involves the exercise of judgement whether it depends on a
specified asset, whether the Group obtains substantially all the economic
benefits from the use of that asset and whether the Group has the right to
direct the use of the asset. For leases that contain one lease component and
one or more additional lease or non-lease components, the Group allocates the
consideration in the contract to each lease and non-lease component on the
basis of the individual relative stand-alone price of all lease and non-lease
components and the aggregate stand-alone price of all lease and non-lease
components. The lease component is accounted for under the requirements of
IFRS 16 and the non-lease component is accounted for using the relevant IFRS
standard based on the nature of the non-lease component.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease
(i.e. the date the underlying asset is available for use). Right-of-use assets
are measured at cost, less any accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, costs to dismantle, restore and remove the
right-of-use asset, and lease payments made at or before the commencement date
less any lease incentives received. After the commencement date, the
right-of-use assets are measured using a cost model. Right-of-use assets are
depreciated on a straight-line basis over the shorter of the lease term and
the estimated useful lives of the assets. If ownership of the leased asset
transfers to the Group at the end of the lease term or the cost reflects the
exercise of a purchase option, depreciation is calculated using the estimated
useful life of the asset. Right-of-use assets are subject to impairment. Refer
to Note 1.2.11, Impairments.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including in-substance fixed
payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group, and payments
of penalties for terminating a lease if the lease term reflects the Group
exercising the option to terminate. The variable lease payments that do not
depend on an index or a rate are recognised as an expense in the period in
which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the
incremental borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification to the
terms and conditions of the lease or if there is a lease reassessment.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term
leases (i.e. those leases that have a lease term of 12 months or less from
the commencement date and do not contain a purchase option). It also applies
the lease of low-value assets recognition exemption to leases of office
equipment that are considered to be qualitatively and quantitatively of low
value. Lease payments on short-term leases and leases of low-value assets are
recognised as expenses on a straight-line basis over the lease term.
Group as a lessor
Where the Group is a lessor, it determines at inception whether the lease is a
finance or operating lease. When a lease transfers substantially all the risks
and rewards of ownership of the underlying asset, then the lease is a finance
lease; otherwise the lease is an operating lease.
Where the Group is an intermediate lessor, the interest in the head lease and
the sub-lease is accounted for separately and the lease classification of a
sub-lease is determined by reference to the right-of-use-asset arising from
the head lease. Income from operating leases is recognised on a straight-line
basis over the lease term.
1.2.22 Revenue from contracts with customers
Revenue comprises net invoiced diamond sales to customers excluding VAT.
Diamond sales are made through a competitive tender process and other sales
channels, and recognised when the Group's performance obligations have been
satisfied at the time the buyer obtains control of the diamond(s), at an
amount that the Group expects to be entitled to in exchange for the
diamond(s). Control of the diamond(s) is obtained by the buyer once funds have
been received by the Group, at which point the diamond(s) are shipped to or
collected by the buyer. Where the Group makes rough diamond sales to customers
and retains a right to an interest in their future sale as polished diamonds,
the Group records the sale of the rough diamonds, but such contingent revenue
on the onward sale is only recognised at the date when the polished diamonds
are sold or when polished sales prices are mutually agreed between the
customer and the Group.
The following revenue streams are recognised:
· rough diamonds which are sold through a competitive tender
process, other sales channels, cooperation and partnership agreements;
· polished diamonds which are sold through direct sales channels;
and
· additional uplift (on the value from rough to polished) on
partnership and cooperation arrangements.
The sale of rough diamonds is the core business of the Group, with other
revenue streams contributing marginally to total revenue.
Revenue through cooperation and partnership arrangements is recognised on the
sale of the rough diamond, with an additional uplift based on the polished
prices or polished margin achieved. The Group recognises the revenue on the
sale of the rough diamond when it is sold to a third party, as there is no
continuing involvement by management in the cutting and polishing process and
control has passed to the third party. Revenue from additional uplift is
considered to be a variable consideration.
The variable consideration on partnership agreements is significantly
constrained as it is subject to a range of variables that are highly
susceptible to factors outside the Group's influence, such as market
volatility and third-party decisions. The Group recognises revenue on the
additional uplift when the polished diamond is sold by the third party or the
polished sales prices are mutually agreed between the third party and the
Group, and the additional uplift is guaranteed, as this is the point in time
at which the significant constraints are lifted or resolved from the polished
margin revenue.
The variable consideration on cooperation agreements is recognised at the time
of the sale of the rough diamond. The measurement of variable consideration is
subject to a constraining principle whereby revenue will only be recognised to
the extent that it is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable
consideration is subsequently resolved. Such estimates are determined using
either the 'expected value' or 'most likely amount' method and are recognised
as a receivable.
1.2.23 Interest income
Interest income is recognised on a time proportion basis using the effective
interest rate method.
1.2.24 Dividend income
Dividend income is recognised when the amount of the dividend can be reliably
measured and the Group's right to receive payment is established.
1.2.25 Finance costs
Finance costs are recognised on a time proportion basis using the effective
interest rate method.
1.2.26 Dividend distribution
Dividend distributions to the Group's shareholders are recognised as a
liability in the Group's financial statements in the period in which the
dividends are approved by the Group's shareholders.
1.2.27 Critical accounting estimates and judgements
The preparation of the consolidated financial statements requires management
to make estimates and judgements and form assumptions that affect the reported
amounts of the assets and liabilities, the reported income and expenses during
the periods presented therein, and the disclosure of contingent liabilities at
the date of the financial statements. Estimates and judgements are continually
evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future, and the
resulting accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the financial results or the financial
position reported in future periods are discussed below.
Business environment and country risk
The Group's operations are subject to country risk, being the economic,
political and social risks inherent in doing business in certain areas of
Africa, Europe and the United Kingdom. These risks include matters arising out
of the policies of the government, economic conditions, imposition of or
changes to taxes and regulations, foreign exchange rate fluctuations and the
enforceability of contract rights.
The consolidated financial information reflects management's assessment of the
impact of these business environments and country risks on the operations and
the financial position of the Group. The future business environment may
differ from management's assessment.
Estimates
Ore reserves and associated life of mine (LoM)
There are numerous uncertainties inherent in estimating ore reserves and the
associated LoM. Therefore, the Group must make a number of assumptions in
making those estimations, including assumptions as to the prices of diamonds,
exchange rates, production costs and recovery rates. Assumptions that are
valid at the time of estimation may change significantly when new information
becomes available. Changes in the forecast prices of diamonds, exchange rates,
production costs or recovery rates may change the economic status of ore
reserves and may, ultimately, result in the ore reserves being restated. Where
assumptions change the LoM estimates, the associated depreciation rates,
residual values, waste stripping and amortisation ratios, and environmental
provisions are reassessed to take into account the revised LoM estimate. Refer
to Note 9, Property, plant and equipment, Note 12, Impairments of
non-financial assets and Note 22, Provisions.
Provision for restoration and rehabilitation
Significant estimates and assumptions are made in determining the amount of
the restoration and rehabilitation provisions. These deal with uncertainties
such as changes to the legal and regulatory framework, magnitude of possible
contamination, and the timing, extent and costs of required restoration and
rehabilitation activity. Refer to Note 22, Provisions, for further detail.
Judgement
Ore stockpile and diamond inventory
Management exercises judgement when making assumptions about the valuation of
ore stockpiles and diamond inventory. Key considerations include conversion
factors, diamond prices, production grades, and costs to completion, which
collectively inform the Group's valuation approach. In forming these
assumptions, the Group relies on empirical data on prices achieved, grade and
expenditure. Ore stockpiles are surveyed regularly to determine the quantum of
ore in cubic metres at that time. A conversion factor called the Load Density
Factor (LDF) is applied to the cubic metres to determine the ore in tonnes.
The LDF varies depending on ore type, moisture content and compaction. Refer
to Note 5, Exceptional items.
Impairment reviews
The Group determines if goodwill is impaired on at least an annual basis,
while all other significant operations are tested for impairment when there
are potential indicators which may require an impairment review. This requires
an estimation of the recoverable amount of the relevant CGU under review. The
recoverable amount is the higher of fair value less costs to sell and value in
use. While conducting an impairment review of its assets using value-in-use
impairment models, the Group exercises judgement in making assumptions about
future rough diamond prices, volumes of production, ore reserves and resources
included in the current LoM plans, production costs and macro-economic factors
such as inflation and discount rates. Changes in estimates used can result in
significant changes to the consolidated statement of profit or loss and
consolidated statement of financial position. Where the Group's asset carrying
values exceed market capitalisation, it may serve as an indicator of
impairment. The Group, however, does not believe that market capitalisation is
a reasonable indicator for impairment due to the volatility in its share
price, which is unrelated to the performance of the Group's operating
activities.
Refer to Note 12, Impairments of non-financial assets, for further estimates
and judgements applied.
The key assumptions used in the recoverable amount calculations, determined on
a value-in-use basis, are listed below:
Valuation basis
Discounted present value of future cash flows.
LoM and recoverable value of reserves and resources
Economically recoverable reserves and resources, carats recoverable and grades
achievable are based on management's expectations of the availability of
reserves and resources at Letšeng and technical studies undertaken by
in-house and third-party specialists. Reserves remaining after the current LoM
plan have not been included in determining the value in use of the operations.
The LoM of Letšeng is currently up to 2035 (2024: 2039).
Cost and inflation rate
Operating costs for Letšeng are determined using 2025 actual costs, the
majority of which have been insourced and are easily determinable. In the
longer term, management has applied local inflation rates of 5.0% (2024: 5.0%)
for operating costs beyond 2028. Up to 2028, inflation rates applied ranged
between 5.0% - 9.6% (2024: 5.2% - 9.6%).
Capital costs have been based on management's specific capital programme for
the first five years, the capital investment required for the slope support
for the duration of the new Satellite cut, and a fixed percentage of
processing costs (after the first five years) to determine the capital costs
necessary to maintain current levels of operations.
Exchange rates
Exchange rates are applied in line with IAS 36, Impairment of Assets. The US
dollar/Lesotho loti (LSL) exchange rate used was determined with reference to
the closing rate at 31 December 2025 of LSL16.57 (31 December 2024: LSL18.87).
Diamond prices
The short and medium-term diamond prices used in the impairment test have been
set with reference to historical and recent prices achieved, recent market
trends and anticipated market supply, and the Group's medium-term forecast.
Long-term diamond price escalation reflects the Group's assessment, taking
into account independent diamond analyst views of market supply/demand
fundamentals. The Group has assumed an appropriate price increase for its
diamonds following the significant pressure experienced in the diamond market
during the year.
Royalty rate
Royalty payments have been applied at the rate of 0% for the 2026 period,
reflecting the expectation that the Government of Lesotho will extend the
remission from the standard 10% rate until the end of the year, following its
initial extension granted to February 2026. Starting in 2027 and continuing
throughout the LoM, the royalty tax rate applied, reverts back to 10%.
Discount rate
The discount rate of 12.7% for revenue (2024: 12.9%) and 16.1% for costs
(2024: 16.1%) used for Letšeng represents the before-tax risk-free rate
adjusted for market risk, volatility and risks specific to the asset and its
operating jurisdiction. Management considers the use of two different discount
rates appropriate, as the region in which the revenue is earned has a lower
risk profile than the region in which the costs are incurred.
Sensitivity
The value in use for Letšeng indicated that the recoverable value was greater
than the carrying value of the Letšeng cash generating unit, and an
impairment charge was recognised as disclosed in Note 12, Impairments of
non-financial assets.
Provision for restoration and rehabilitation and deferred tax thereon
Judgement is applied when calculating the closure costs associated with the
restoration of the Letšeng mine site. These include the following:
• there are no costs associated with the backfill of the open pits
due to no in-country legislation requirements; and
• there are no costs associated with dismantling permanent
buildings, as these will be handed over to various parties in consultation
with the Lesotho Government when the end of life is reached.
At Letšeng, deferred tax assets are recognised on provisions for
rehabilitation, as management will implement appropriate tax planning
strategies to ensure sufficient taxable income is available to utilise all
deductions in the future.
Capitalised stripping costs (deferred waste)
Waste removal costs (stripping costs) are incurred during the development and
production phases at surface mining operations. The orebody needs to be
identified in its various separately identifiable components. An identifiable
component is a specific volume of the orebody that is made more accessible by
the stripping activity. Judgement is required to identify and define these
components (referred to as "cuts"), and also to determine the expected volumes
(tonnes) of waste to be stripped and ore to be mined in each of these
components. These assessments are based on a combination of information
available in the mine plans, specific characteristics of the orebody and the
milestones relating to major capital investment decisions.
Judgements and estimates are also used to apply the amortisation rate, future
stripping costs of the cut/component and the expected ore to be mined from
that cut/component. Refer to Note 9, Property, plant and equipment.
Identifying uncertainties over tax treatments
As previously disclosed, an amended tax assessment was issued to Letšeng by
the Revenue Services Lesotho (RSL), in December 2019, contradicting the
application of certain tax treatments in the current Lesotho Income Tax Act,
1993. An objection to the amended tax assessment was lodged with the RSL in
March 2020, which was supported by the opinion of senior counsel. The RSL
subsequently lodged a court application to the Lesotho High Court for the
review and setting aside of the applicable regulations pertaining to this
matter, which Letšeng is opposing. The amended court application process is
ongoing and will continue during 2026, with support from senior legal counsel.
Management does not believe a liability relating to an uncertain tax position
exists, as:
· there is no ambiguity in the application of the published Lesotho
Income Tax Act;
· there has been no change in the application of the Income Tax Act
and resulting tax; and
· senior counsel advice, which is legally privileged, has been
obtained for the new circumstances. This advice still reflects good prospects
of success.
No provision has been raised or contingent liability disclosed in the 2025
Financial Statements relating to:
· the amended tax assessment in question; or
· any potential legal costs that could be incurred, should the
matter be found in favour of the RSL.
Offsetting of deferred tax assets and deferred tax liabilities of the Group's
subsidiary, Letšeng Diamonds
The Group's subsidiary, Letšeng Diamonds, is subject to the tax laws and
regulations enacted within Lesotho. The corporate tax laws and regulations
currently enacted by the RSL require a taxpayer to file a claim for offsetting
current tax assets and current tax liabilities, and offsetting deferred tax
assets and deferred tax liabilities with the Commissioner within four years
after service of the notice of assessment for the year of assessment to which
the claim relates.
The Group, after applying significant judgement, is of the view that Letšeng
Diamonds does not have a legally enforceable right to offset current tax
assets against current tax liabilities, and deferred tax assets against
deferred tax liabilities within the Lesotho corporate tax jurisdiction, as it
is subject to the Commissioner's approval of the claim submitted, for which
the outcome is highly uncertain as the approval is subject purely to the
discretion of the Commissioner. On this basis, the Group does not offset
Letšeng Diamonds' deferred tax assets and deferred tax liabilities, but
rather presents them on a gross basis in the consolidated statement of
financial position. Refer to Note 1.2.19, Taxation.
Deferred tax on unremitted earnings
Management applies judgement when assessing whether it has the intention and
ability to control the timing of profit distribution from its subsidiaries.
Deferred tax liabilities are recognised according to the Group's expected
distributions in the annual business plan, which is based on a three-year
period. Management believes the annual business plan reflects the best
estimate of the Group's distributions and that these are probable. Refer to
Note 23, Deferred taxation.
Determination of variable consideration in terms of revenue recognition
Judgement is exercised by estimating variable consideration on the polished
sales price of diamonds sold into cooperation agreements. The variable
consideration is determined having regard to past experience with respect to
the uplift earned on the sale of the polished diamonds. Revenue is only
recognised to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue recognised will not occur when
the uncertainty associated with the variable consideration is subsequently
resolved. Variable consideration revenue is included in Trade receivables in
Note 13, Receivables and other assets.
No variable consideration is recognised on the future uplift of the margin on
partnership arrangements as the future amounts are highly susceptible to
factors outside of the Group's control, as described in IFRS 15 par 57; being
market volatility, decisions and actions of third parties, and that the
uncertainty is not expected to be resolved for a relatively long period. These
factors result in a significant estimation uncertainty and management
exercised judgement in not recognising the variable consideration until the
uncertainty associated with the variable consideration is subsequently
resolved.
Exceptional items
The Group presents as exceptional items on the face of the consolidated
statement of profit or loss, those material items of income and expenses that
are not expected to recur and that, because of the nature and expected
infrequency of the events giving rise to them, merit separate presentation to
allow shareholders to understand better the elements of financial performance
in the year, so as to facilitate comparison with prior periods and to better
assess trends in financial performance. Refer to Note 5, Exceptional items.
2025 2024
US$'000 US$'000
2. REVENUE FROM CONTRACTS WITH CUSTOMERS
Sale of goods 98 053 152 839
Partnership arrangements 361 1 373
98 414 154 212
The revenue from the sale of goods mainly represents the sale of rough
diamonds, for which revenue is recognised at the point in time at which
control transfers.
The revenue from partnership arrangements of US$0.4 million (2024:
US$1.4 million) represents the additional uplift from partnership agreements,
for which revenue is recognised when the significant constraints are lifted or
resolved and the amount of revenue is guaranteed; and variable consideration
of rough diamonds sold into cooperation agreements. The variable consideration
is recognised at the time of the sale and adjusted based on the actual uplift
received.
At year end, 1 236 carats (2024: 1 236 carats) have significant constraints in
recognising revenue relating to the additional uplift.
2025 Re-presented
2024
US$'000 US$'000
3. OTHER OPERATING INCOME/(EXPENSE)
Other operating income/(expense) is categorised separately as it relates to
income or expenses which are minor or irregular and are incurred or sourced
outside of normal operations.
Sundry income/(expense) 535 (203 )
Profit on disposal of property, plant and equipment 186 -
721 (203 )
2025 Re-presented
2024
US$'000 US$'000
4. OPERATING (LOSS)/PROFIT
Operating (loss)/profit includes operating costs and income as listed below:
Depreciation and amortisation
Depreciation and mining asset amortisation excluding waste stripping cost (10 251 ) (9 181 )
Depreciation of right-of-use assets (1 761 ) (2 118 )
Waste stripping costs amortised (29 366 ) (35 627 )
(41 378 ) (46 926 )
Inventories
Cost of inventories recognised as an expense (including the relevant portion (83 255 ) (100 497 )
of waste stripping costs amortised)
Foreign exchange
Foreign exchange gain 1 263 1 087
Lease expenses not included in lease liability
Mine site property (184 ) (180 )
Equipment and service lease (1 ) (1 )
(185 ) (181 )
Auditor's remuneration - RSM
Group financial statements (349 ) (280 )
Statutory (175 ) (153 )
(524 ) (433 )
Auditor's remuneration - other audit firms
Statutory (47 ) (41 )
Other non-audit fees - other audit firms
Tax services advisory and consultancy (10 ) (17 )
Employee benefits expense
Salaries and wages(1) (23 862 ) (19 961 )
Underlying earnings before interest, tax, depreciation and mining asset
amortisation (underlying EBITDA) before discontinued operation
Underlying EBITDA is shown, as the Directors consider this measure to be a
relevant guide to the operational performance of the Group and excludes such
non-operating costs and income as listed below. The reconciliation from
operating profit to underlying EBITDA is as follows:
Operating (loss)/profit (87 352 ) 18 789
Other operating (income) / expenses (721) 203
Impairment of goodwill and non-current assets 77 467 -
Write-down of inventories to net realisable value 3 534 -
Foreign exchange differences (1 263 ) (1 087 )
Share-based payments 266 516
Depreciation and amortisation (excluding waste stripping cost amortised) 12 012 11 298
Underlying EBITDA 3 943 29 719
(1) Includes contributions to defined contribution plan of US$1.0 million (31
December 2024: US$0.8 million). An average of 855 employees excluding
contractors were employed during the period (2024: 716). The increased number
of employees was as a result of the insourcing of the processing activities.
2025 2024
US$'000 US$'000
5. EXCEPTIONAL ITEMS
Recognised in arriving at operating (loss)/profit from continuing operations:
Impairment of goodwill and non-current assets (77 467 ) -
Write-down of inventories to net realisable value (3 534 ) -
(81 001 ) -
Refer to Note 12, Impairments of non-financial assets, for further details on
the impairment of goodwill and non-current assets. As these impairments have
arisen from circumstances other than the write-off of assets at the end of
their usual expected lives, this write-off has been classified as exceptional.
Ore stockpiles at Letšeng were written down by US$3.5 million to net
realisable value. As these write-downs were largely driven by unfavourable
closing exchange rates and not directly related to current operations, they
have been disclosed as exceptional.
2025 Re-presented 2024
US$'000 US$'000
6. NET FINANCE COSTS
Finance income
Bank deposits 262 392
Insurance asset 696 483
Interest income on loan receivable 122 -
Total finance income 1 080 875
Finance costs
Finance costs on borrowings (4 604 ) (5 339 )
Finance costs on lease liabilities (303 ) (371 )
Finance costs on unwinding of rehabilitation and decommissioning provision (874 ) (1 305 )
Fair value adjustment on loan receivable - (231 )
Total finance costs (5 781 ) (7 246 )
(4 701 ) (6 371 )
Finance income relates to interest earned on cash, short-term deposits and
insurance assets.
Finance costs include interest incurred on borrowings and associated unwinding
of facility credit underwriting fees, finance lease liabilities and the
unwinding of rehabilitation provisions.
2025 Re-presented 2024
US$'000 US$'000
7. INCOME TAX (BENEFIT)/CHARGE
Current
- Foreign (3 599 ) (6 443 )
Withholding tax
- Foreign (7 ) (508 )
Deferred
- Foreign 23 102 3 576
Income tax expense 19 496 (3 375 )
(Loss)/profit before taxation from continuing operations (92 053 ) 12 418
Loss before taxation from discontinued operations (50 997 ) (957 )
(Loss)/profit before taxation (143 050 ) 11 461
% %
Reconciliation of tax rate
Applicable income tax rate 25.0 25.0
Non-deductible expenses(1) (2.3 ) 3.1
Unrecognised deferred tax assets (1.6 ) 1.8
Effect of foreign tax at different rates 0.1 0.4
Unremitted earnings - (5.3
Withholding tax - 4.4
Effective income tax rate 21.2 29.4
The tax rate reconciles to the statutory Lesotho corporation tax rate of 25%,
as this is the jurisdiction in which the majority of the Group's taxes are
incurred.
(1) Non-deductible expenses mainly comprise the goodwill impairment in the
current year and corporate social investment, legal fees of a capital nature
and share-based payments in both the current and prior year.
The effective tax rate is below the Lesotho statutory tax rate of 25%
primarily due to the incurred net loss before tax.
2025 Re-presented 2024
US$'000 US$'000
8. (LOSS)/EARNINGS PER SHARE
The following reflects the income and share data used in the basic and diluted
earnings per share computations:
(Loss)/profit for the year (72 557) 9 043
Profit/(loss) for the year from discontinued operation 1 793 (957)
Recycling of foreign currency translation reserve on discontinued operation (52 790) -
Less: Non-controlling interests 19 574 (5 192)
Net (loss)/profit attributable to ordinary equity holders of the parent for (103 980) 2 894
basic and diluted earnings
Number of ordinary shares outstanding at end of year ('000) 141 443 141 236
Weighted number of share options exercised during the year ('000) (78) (9)
Effect of share buyback - Treasury shares ('000) (1 520) (1 520)
Weighted average number of ordinary shares outstanding during the year ('000) 139 845 139 707
Basic (loss)/earnings per share attributable to ordinary equity holders of the (74.4) 2.1
parent (cents)
Earnings/(loss) per share is calculated by dividing the net profit/(loss)
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year.
Diluted earnings/(loss) per share is calculated by dividing the net
profit/(loss) attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year after
taking into account future potential conversion and issue rights associated
with the ordinary shares. Options in issue are not considered diluting to the
loss per share, as the Group was loss-making in the current year. Diluted loss
per share is therefore the same as basic loss per share.
2025 2024
Number of Number of
shares shares
000's 000's
Weighted average number of ordinary shares outstanding during the year 139 845 139 707
Effect of dilution:
- Future share awards under the Employee Share Option Plan - 4 262
Weighted average number of ordinary shares outstanding during the year 139 845 143 969
adjusted for the effect of dilution
Diluted (loss)/earnings per share attributable to ordinary equity holders of (74.4) 2.0
the parent (cents)
There have been no other transactions involving ordinary shares or potential
ordinary shares between the reporting date and the date of completion of these
financial statements.
9. PROPERTY, PLANT AND EQUIPMENT
Stripping activity asset Mining asset De- Lease- Plant and equip- ment(1) Other assets(2) Total
commis- hold
sioning assets improve-
ment
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 31 December 2025
Cost
As at 1 January 2025 606 858 101 660 2 974 49 966 102 903 10 323 874 684
Additions 10 049 - - 124 3 998 311 14 482
Net movement in rehabilitation provision 542 - (434 ) - 792 - 900
Disposals - - - (433 ) (2 404 ) (450 ) (3 287 )
Foreign exchange differences 86 143 9 767 508 6 794 16 048 1 022 120 282
As at 31 December 2025 703 592 111 427 3 048 56 451 121 337 11 206 1 007 061
Accumulated depreciation/amortisation/impairment
As at 1 January 2025 459 049 38 235 2 974 33 109 65 342 6 115 604 824
Charge for the year 29 366 1 395 (434 ) 1 593 6 601 1 126 39 647
Impairment(3) 2 201 63 741 - - 223 - 66 165
Disposals - - - (410 ) (2 041 ) (447 ) (2 898 )
Foreign exchange differences 65 902 8 056 508 4 080 8 800 719 88 065
As at 31 December 2025 556 518 111 427 3 048 38 372 78 925 7 513 795 803
Net book value at 31 December 2025 147 074 - - 18 079 42 412 3 693 211 258
(1) Included in plant and equipment are capital projects in progress of
US$0.7 million (31 December 2024: US$0.9 million).
(2) Other assets comprise motor vehicles, computer equipment, furniture and
fittings, and office equipment.
(3) Refer to Note 12, Impairments of non-financial assets for information on
the Stripping activity and mining assets. The impairment of plant and
equipment relates to the remaining solar plant at Ghaghoo, which was
relinquished together with the mining licence.
Stripping activity asset Mining asset De- Lease- Plant and equip- ment(1) Other assets(2) Total
commis- hold
sioning assets improve-
ment
As at 31 December 2024
Cost
Balance at 1 January 2024 604 372 100 827 3 255 50 892 112 812 9 336 881 494
Additions 22 302 - - 498 3 367 1 893 28 060
Net movement in rehabilitation provision (528) - (177) - (2 993) - (3 698)
Disposals - - - - (3 191) (643) (3 834)
Reclassifications(3) - 3 222 - 189 (3 416) 5 -
Foreign exchange differences (19 288) (2 389) (104) (1 613) (3 676) (268) (27 338)
As at 31 December 2024 606 858 101 660 2 974 49 966 102 903 10 323 874 684
Accumulated depreciation/ amortisation/impairment
As at 1 January 2024 437 154 39 026 3 255 32 544 64 503 6 418 582 900
Charge for the year 35 627 864 (177) 1 467 6 556 528 44 865
Disposals - - - - (3 190) (638) (3 828)
Reclassifications(3) - - - 171 (171) - -
Foreign exchange differences (13 732) (1 655) (104) (1 073) (2 356) (193) (19 113)
As at 31 December 2024 459 049 38 235 2 974 33 109 65 342 6 115 604 824
Net book value at 31 December 2024 147 809 63 425 - 16 857 37 561 4 208 269 860
(1) Included in plant and equipment are capital projects in progress of US$0.9
million (31 December 2023: US$4.1 million).
(2) Other assets comprise motor vehicles, computer equipment, furniture and
fittings, and office equipment.
(3) The reclassifications in the prior year related to capital projects in
progress in previous periods, included in plant and equipment, which were
being depreciated in the year as mining assets.
Plant and equipment Motor vehicles Buildings Total
US$'000 US$'000 US$'000 US$'000
10. RIGHT-OF-USE ASSETS
As at 31 December 2025
Cost
As at 1 January 2025 3 586 537 5 800 9 923
Additions - 48 715 763
Derecognition of lease - - (4 517 ) (4 517 )
Foreign exchange differences 498 78 266 842
As at 31 December 2025 4 084 663 2 264 7 011
Accumulated depreciation
As at 1 January 2025 1 925 169 3 958 6 052
Charge for the year 924 224 613 1 761
Derecognition of lease - - (3 875 ) (3 875 )
Foreign exchange differences 337 42 197 576
As at 31 December 2025 3 186 435 893 4 514
Net book value at 31 December 2025 898 228 1 371 2 497
As at 31 December 2024
Cost
As at 1 January 2024 3 379 363 6 008 9 750
Additions 1 058 434 271 1 763
Derecognition of lease (738 ) (243 ) (349 ) (1 330 )
Foreign exchange differences (113 ) (17 ) (130 ) (260 )
As at 31 December 2024 3 586 537 5 800 9 923
Accumulated depreciation
As at 1 January 2024 1 450 103 3 451 5 004
Charge for the year 979 188 962 2 129
Derecognition of lease (444 ) (117 ) (349 ) (910 )
Foreign exchange differences (60 ) (5 ) (106 ) (171 )
As at 31 December 2024 1 925 169 3 958 6 052
Net book value at 31 December 2024 1 661 368 1 842 3 871
Plant and equipment mainly comprise pit dewatering and back-up power
generating equipment utilised at Letšeng. Motor vehicles mainly comprise
vehicles utilised by contractors at Letšeng. Buildings comprise office
buildings in Maseru, Antwerp, London, Gaborone and Johannesburg.
Right-of-use assets are depreciated on a straight-line basis over the shorter
of their estimated useful life and the lease term.
During the year, Letšeng and Baobab cancelled their existing leases for the
majority of the office buildings in Maseru and Belgium, respectively. Letšeng
entered into a new lease for smaller premises and Baobab was absorbed within
the existing sales and marketing office as part of the BR Programme. A new
lease contract was also entered into for office space rental in London for Gem
Diamonds Limited. The office lease in Gaborone was cancelled during the year.
The original contracts were cancelled and all associated assets and
liabilities were derecognised. Refer to Note 19, Lease liabilities.
During the prior year, new lease contracts were entered into for office space
rental in London and Johannesburg for Gem Diamonds Limited and Gem Diamond
Technical Services (Pty) Ltd, respectively. At Letšeng, lease contracts for
dewatering equipment and vehicles were entered into or renegotiated, resulting
in the recognition of right-of-use assets and lease liabilities associated
with the new lease.
Total gains of US$0.5 million (2024: losses of US$0.3 million) have been
recognised in the consolidated statement of profit or loss relating to the
derecognition of leases in the Group during the year. Refer to Note 19, Lease
liabilities and Note 24.1, Cash generated by operations. During the year, the
Group recognised income of US$0.1 million (2024: US$0.3 million) from the
sub-leasing of office buildings in Maseru prior to cancelling the lease.
Goodwill
US$'000
11. INTANGIBLE ASSETS
As at 31 December 2025
Cost
Balance at 1 January 2025 10 118
Foreign exchange translation difference 625
Balance at 31 December 2025 10 743
Accumulated amortisation/impairment
Balance at 1 January 2025 -
Amortisation -
Impairment (10 743 )
Balance at 31 December 2025 (10 743 )
Net book value at 31 December 2025 -
As at 31 December 2024
Cost
Balance at 1 January 2024 10 440
Foreign exchange translation difference (322 )
Balance at 31 December 2024 10 118
Accumulated amortisation
Balance at 1 January 2024 -
Amortisation -
Balance at 31 December 2024 -
Net book value at 31 December 2024 10 118
Goodwill is allocated to the Letšeng Diamonds cash-generating unit. Movement
in goodwill relates to foreign exchange translation from functional to
presentation currency.
Goodwill impairment testing is undertaken on Letšeng Diamonds annually and
when there are indications of impairment. The most recent test was undertaken
at 31 December 2025. In assessing whether goodwill has been impaired, the
carrying amount of Letšeng Diamonds is compared with its recoverable amount.
For the purpose of goodwill impairment testing, the recoverable amount for
Letšeng Diamonds has been determined based on a value-in-use model, similar
to that adopted in the past.
The recoverable amount (value in use) of Letšeng was assessed, and of the
total impairment charge of US$77.5 million, US$10.7 million was allocated to
goodwill, which is now fully impaired.
Impairments of goodwill are not eligible for reversal in future periods. Refer
to Note 12, Impairments of non-financial assets, for further details.
2025 2024
US$'000 US$'000
12. IMPAIRMENTS OF NON-FINANCIAL ASSETS
Letšeng Diamonds
Goodwill (10 743 ) -
Property, plant and equipment (66 724 ) -
As at 31 December 2025 (77 467) -
In line with the requirements of IAS 36 Impairment of Assets, the Group
carried out impairment testing for its main cash-generating unit (CGU), being
Letšeng Diamonds.
The impairment test was largely influenced by the weakness in the rough
diamond market during the year and the weakening of the US dollar against the
Lesotho loti.
The recoverable amount (value in use) of Letšeng was assessed and an
impairment of US$77.5 million was recorded in the consolidated statement of
profit or loss to bring the carrying value in line with the recoverable
amount. The impairment was allocated firstly to the goodwill, which is now
fully impaired, then to the mining asset, which is now fully impaired, and the
balance to the stripping activity asset.
Refer to Note 1.2.27, Critical accounting estimates and judgements for details
of the key estimates used in determining the recoverable amount.
The discount rates are outlined below and represent the nominal pre-tax rates.
These rates are based on the weighted average cost of capital (WACC) of the
Group and adjusted accordingly at a risk premium for Letšeng Diamonds, taking
into account risks associated therein.
2025 2024
% %
Discount rate - Letšeng Diamonds
Applied to revenue 12.7 12.9
Applied to costs 16.1 16.1
Value in use
The mining lease period at Letšeng extends to 2029 with an exclusive option
to renew for a further 10 years to 2039. The updated open pit mine plan, which
has been used to project the cash flows, reflects that the open pit mining
(including inferred resources) is expected to cease in 2035 (31 December 2024:
2039). In terms of IAS 36, cash flows are projected for a period up to the
date of the LoM plan period, i.e. 2035, which is within the mining lease
period of 2039. The mine plan takes into account the available reserves and
other relevant inputs such as diamond pricing, costs and geotechnical
parameters. It includes the next open pit cutback in the Satellite Pipe (C6W)
using a redesigned steeper slope concept which significantly reduced the
tonnes of waste previously required to be removed.
Sensitivity to changes in assumptions
The valuation is sensitive to input assumptions, particularly in relation to
changes to the discount rates, future price growth for diamonds and the
foreign exchange assumption of the US dollar (US$) to the Lesotho Loti (LSL)
at year end. Each sensitivity was performed in isolation, with all other
valuation assumptions remaining the same. The impairment outcome of applying
sensitivities on the key inputs would have been:
2025
US$'000
Base case (77 467)
Increase in discount rate applied to revenue by 100 basis points (102 824 )
Decrease in discount rate applied to revenue by 100 basis points (50 501 )
Decrease in starting diamond prices by 5% (114 065 )
Increase in starting diamond prices by 5% (39 920 )
LSL stronger by LSL1 throughout LoM period to US$1:LSL15.57 (109 727 )
LSL weaker by LSL1 throughout LoM period to US$1:LSL17.57 (48 877 )
The Group will continue to test its assets for impairment where indications
are identified.
2025 2024
US$'000 US$'000
13. RECEIVABLES AND OTHER ASSETS
Non-current
Deposits 908 776
Insurance asset(1) - 5 596
Other receivables(2) - 969
908 7 341
Current
Insurance asset(1) 8 994 -
Trade receivables 256 592
Prepayments(3) 870 1 484
Deposits 31 29
Other receivables(2) 1 115 498
VAT receivable(4) 731 4 030
11 997 6 633
The carrying amounts above approximate their fair value due to the nature of
the instruments.
Analysis of trade receivables based on their terms and conditions
Neither past due nor impaired 237 573
> 120 days 19 19
256 592
(1) The insurance asset mainly relates to Letšeng's Multi-aggregate
Protection Insurance Policy with The Lesotho National General Insurance
Company (LNGIC) of LSL140.0 million (US$8.4 million) (31 December 2024:
LSL140.0 million (US$7.4 million)) entered into in October 2021. This policy
has a remaining tenure of six months at year end (31 December 2024:
one-and-a-half-years). Premium payments of LSL30.0 million (US$1.7 million)
(31 December 2024: LSL30.0 million (US$1.6 million)) for the policy are
payable annually in advance. Refer to Note 25, Commitments and contingencies.
The policy gives Letšeng the right to claim up to LSL75.0 million (31
December 2024: LSL75.0 million) for each-and-every-loss and LSL150.0 million
(31 December 2024: LSL150.0 million) in the aggregate (subject to terms and
conditions contained in the policy). On expiry of the policy in June 2026, all
unutilised funds within the policy are due and payable to Letšeng. A current
financial asset has been recognised for the unutilised premium paid to date,
net of underwriting service fee of LSL 2.1 million (US$0.1 million) (31
December 2024: LSL2.1 million (U$0.1 million)) as expensed as part of
operating expenses within the statement of profit or loss. The current
financial asset is measured at amortised cost in line with IFRS 9 Financial
Instruments. Interest is earned on the unrealised premium and recognised as
finance income. The fifth and final premium payment of LSL30.0 million (US$1.7
million) (31 December 2024: LSL30.0 million (US$1.6 million)) was financed
through a 10-month loan through Premium Finance Partners (Proprietary)
Limited. This current financial asset is ceded in favour of Premium Finance
Partners (Proprietary) Limited. Refer to Note 18, Interest-bearing loans and
borrowings.
(2) Other current receivables includes a financing arrangement provided to a
third party to assist with the exploration of possible expansion opportunities
which was disclosed as a non-current receivable in the previous year. This
loan is expected to be repaid in December 2026.
(3) Prepayments include insurance premiums prepaid at Letšeng of US$0.4
million (31 December 2024: US$0.4 million) which were also funded through
Premium Finance Partners (Proprietary) Limited. This prepayment is ceded in
favour of Premium Finance Partners (Proprietary) Limited. Refer to Note 18,
Interest-bearing loans and borrowings.
(4) VAT receivable mainly comprises US$0.7 million at Letšeng.
Based on the nature of the Group's customer base and the negligible exposure
to credit risk through its customer base, insurance asset and other financial
assets, the expected credit loss is insignificant and has no impact on the
Group.
2025 2024
US$'000 US$'000
14. INVENTORIES
Diamonds on hand 13 615 9 279
Ore stockpile 19 752 16 560
Consumable stores 9 974 8 225
43 341 34 064
Inventory is carried at the lower of cost or net realisable value.
In the current year, consumable stores were written down by US$0.5 million
(31 December 2024: US$0.1 million), relating mainly to redundant treatment
plant spares at Letšeng, and ore stockpile was written down by
US$3.5 million to net realisable value. There were no ore stockpile
write-downs in the previous year.
2025 2024
US$'000 US$'000
15. CASH AND SHORT-TERM DEPOSITS
Cash on hand 1 3
Bank balances 1 605 6 032
Short-term bank deposits 2 167 6 843
3 773 12 878
The amounts reflected in the financial statements approximate fair value due
to the short-term maturity and nature of cash and short-term deposits.
Cash at banks earns interest at floating rates based on daily bank deposit
rates. Short-term deposits are generally call deposit accounts and earn
interest at the respective short-term deposit rates. The Group's cash
surpluses are deposited with major financial institutions of high-quality
credit standing predominantly within Lesotho and the United Kingdom.
At 31 December 2025, the Group had US$68.3 million (31 December 2024: US$69.0
million) of undrawn facilities, representing LSL420.0 million (US$25.4
million) (31 December 2024: LSL450.0 million (US$23.8 million)) and ZAR280.0
million (US$16.9 million) (31 December 2024: ZAR300.0 million (US$15.9
million)) of the secured revolving credit facility at Letšeng, ZAR100.0
million (US$6.0 million) (31 December 2024: ZAR100.0 million (US$5.3 million))
of the Letšeng general banking facility, and US$20.0 million (31 December
2024: US$24.0 million) of the Company's secured revolving credit facility. For
further details on these facilities, refer to Note 18, Interest-bearing loans
and borrowings.
The general banking facility at Letšeng is held with Nedbank Limited (acting
through its Nedbank Corporate and Investment Banking division). This facility
is reviewed annually. During the year, the facility was utilised from time to
time based on cash flow requirements, but repaid in full by year end.
16. DISCONTINUED OPERATION
The Ghaghoo diamond mine, part of the Group's Botswana operations, was placed
on care and maintenance in 2017 due to operational and market-related
challenges.
Following a strategic review and several unsuccessful attempts to sell the
asset, the Group initiated discussions with the Department of Mines, dating
back to February 2023, to address safety and remediation activities, including
the removal of the processing plant and associated civil infrastructure, with
the objective of surrendering its mining licence.
The mine site was formally handed over to the Botswana Ministry of Minerals
and Energy through the Department of Mines during the current year. Formal
confirmation of the acceptance of the mining licence surrender was received
from the Department of Mines on 28 April 2025. Effective 1 June 2025, the
Department of Mines assumed full responsibility for the site, and the Company
no longer holds any obligations or commitments related to the mine or its
associated licence.
In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations, the subsidiary was classified as a discontinued operation which
was abandoned during the year, following the relinquishment (for no
consideration) of the underlying mining licence which represented the
subsidiary's principal business activity. All impacted prior year figures in
the consolidated statement of profit or loss and relevant notes have been
re-presented to reflect Gem Diamonds Botswana as part of a discontinued
operation. There are no balances in the statement of financial position
relating to the abandoned operation.
The results of Gem Diamonds Botswana (Ghaghoo Diamond Mine) for the year and
the comparative period are presented below:
2025 2024
US$'000 US$'000
Revenue - -
Gross profit - -
Care and maintenance costs (277 ) (1 575 )
Profit on sale of property, plant and equipment 47 152
Rehabilitation provision released 2 309 562
Proceeds from insurance claim - 65
Foreign exchange differences (5 ) (1 )
Impairment of asset (224 ) -
Operating profit/(loss) 1 850 (797 )
Net finance costs (57 ) (160 )
- Finance income 1 -
- Finance costs (58 ) (160 )
Profit/(loss) before tax from discontinued operation 1 793 (957)
Income tax expense - -
The net cash flows attributable to the discontinued operation are as follows:
Operating (165 ) (1 251)
Investing 47 153
Financing (5 ) (11)
Foreign exchange differences 2 -
Net cash outflow (121 ) (1 109 )
The table below represents the prior year re-presentation for all amounts in
the consolidated statement of profit or loss and notes thereto which were
re-presented.
As previously reported Re-presentation adjustment Re-presented figures
2024 2024 2024
US$'000 US$'000 US$'000
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Other operating (expense)/income (999) (796) (203)
Foreign exchange gain 1 086 (1) 1 087
Operating profit 17 992 (797) 18 789
Net finance costs (6 531) (160) (6 371)
- Finance income 875 - 875
- Finance costs (7 406) (160) (7 246)
Profit before tax 11 461 (957) 12 418
Profit for the year 8 086 (957) 9 043
- Basic (loss)/earnings per share 2.1 (0.7) 2.8
- Diluted (loss)/earnings per share 2.0 (0.7) 2.7
3. OTHER OPERATING INCOME/(EXPENSE)
Ghaghoo reduction in rehabilitation provision 562 562 -
Proceeds from insurance claim 65 65 -
Ghaghoo care and maintenance costs (1 572) (1 572) -
Profit/(loss) on disposal and scrapping of property, plant and equipment 152 152 -
4. OPERATING (LOSS)/PROFIT
Depreciation and mining asset amortisation excluding waste stripping cost (9 238) (57) (9 181)
Depreciation right-of-use asset (2 129) (11) (2 118)
Foreign exchange gain 1 086 (1) 1 087
Auditor's remuneration - RSM
Statutory (167) (14) (153)
Other non-audit fees - other audit firms
Tax service advisory and consultancy (18) (1) (17)
Employee benefits expense
Salaries and wages (20 353) (392) (19 961)
Underlying earnings before interest, tax, depreciation and mining asset
amortisation (underlying EBITDA)
Operating profit 17 992 (797) 18 789
Other operating expenses/(income) 930 728 203
Foreign exchange gain/loss (1 087) 1 (1 088)
Depreciation and amortisation (excluding waste stripping cost amortised) 11 366 68 11 298
5. NET FINANCE COSTS
Finance costs
Finance costs on lease liabilities (372) (1) (371)
Finance costs on unwinding of rehabilitation and decommissioning provision (1 464) (159) (1 305)
Total finance costs (7 406) (160) (7 246)
6. INCOME TAX EXPENSE
Profit before tax 11 461 (957) 12 418
7. EARNINGS PER SHARE
Profit for the year 8 086 (957) 9 043
Net profit attributable to ordinary equity holders of the parent for basic and 2 894 (957) 3 851
diluted earnings
Basic earnings per share attributable to ordinary equity holders of the parent 2.1 (0.7) 2.8
(cents)
Diluted earnings per share attributable to ordinary equity holders of the 2.0 (0.7) 2.7
parent (cents)
17. ISSUED SHARE CAPITAL AND RESERVES
Share capital
31 December 2025 31 December 2024
Number US$'000 Number US$'000
of shares of shares
'000 '000
Authorised - ordinary shares of US$0.01 each
As at year end 200 000 2 000 200 000 2 000
Issued and fully paid balance at beginning of year 141 236 1 413 141 210 1 413
Allotments during the year 207 2 26 -
Number of ordinary shares outstanding at end of year 141 443 1 415 141 236 1 413
Treasury shares
31 December 2025 31 December 2024
Number US$'000 Number US$'000
of shares of shares
'000 '000
Number of treasury shares outstanding at end of year (1 520 ) (1 157 ) (1 520 ) (1 157 )
Share premium
Share premium comprises the excess value recognised from the issue of ordinary
shares above their par value.
Other reserves
Foreign Share- Total
currency based
translation equity
reserve reserve
US$'000 US$'000 US$'000
As at 1 January 2025 (262 977 ) 7 643 (255 334 )
Other comprehensive income 71 035 - 71 035
Total comprehensive income 71 035 - 71 035
Share capital issue - (2 ) (2 )
Share-based payment expense - 266 266
Transfer between reserves(1) 408 (5 628 ) (5 220 )
As at 31 December 2025 (191 534 ) 2 279 (189 255 )
As at 1 January 2024 (257 924 ) 7 127 (250 797 )
Other comprehensive loss (5 053 ) - (5 053 )
Total comprehensive loss (5 053 ) - (5 053 )
Share-based payment expense - 516 516
As at 31 December 2024 (262 977 ) 7 643 (255 334 )
(1) The Company elected to release share-based equity reserve relating to
lapsed and exercised options to accumulated (losses)/retained earnings.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange
differences arising from the translation of foreign entities. The South
African, Lesotho and Botswana subsidiaries' functional currencies are
different to the Group's presentation currency of US dollar. The rates used to
convert the operating functional currency into US dollar are as follows:
2025 2024
Currency US$'000 US$'000
Average rate ZAR/LSL to US$1 17.88 18.34
Year end ZAR/LSL to US$1 16.57 18.87
Average rate Pula to US$1 13.59 13.56
Year end Pula to US$1 13.57 13.93
Share-based equity reserves
For details on the share-based equity reserve, refer to Note 28, Share-based
payments.
Capital management
In order to maintain or adjust the capital structure, the Group may adjust the
amounts of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt. The Group is subject to
certain loan covenants, and meeting these is given priority in all capital
risk management decisions. There have been no events of default on the loans
during the financial year. For details on capital management, refer to Note
27, Financial risk management.
Treasury shares
In 2022, the Board of Directors approved a share buyback programme to purchase
up to US$2.0 million of the Company's ordinary shares. The sole purpose of the
programme was to reduce the capital of the Company, and the Company intends to
hold those ordinary shares purchased under the programme in treasury. Such
treasury shares are not entitled to dividends and have no voting rights. The
share buyback programme was initiated on 12 April 2022. At 31 December 2022,
1 520 170 shares had been bought back at the market value on the date of
each buyback, equating to a weighted average price of 60.05 GB pence (78.07 US
cents) per share, totalling US$1.2 million (including transaction costs).
This reduction in shares issued has been taken into account in calculating the
earnings per share. No further share buybacks have taken place since 2022.
18. INTEREST-BEARING LOANS AND BORROWINGS
Gem Diamonds Limited provides security for both the Letšeng Diamonds and Gem
Diamonds Limited revolving credit facilities over its bank accounts domiciled
in the United Kingdom (US$0.7 million) (31 December 2024: US$2.3 million) and
over its 70% shareholding in Letšeng Diamonds, refer to Note 31, Material
partly owned subsidiary.
The transition from the South African JIBAR rates to the South African Rand
Overnight Index Average (ZARONIA) is expected to be completed by 2026. The
interest-bearing loans and borrowings that remain subject to the South African
JIBAR rate include the ZAR132.0 million unsecured project debt facility and
the ZAR300.0 million revolving credit facility.
The Group will continue to assess the impact of the interest rate benchmark
reform on the Group's JIBAR interest-bearing loans and borrowings as the
revised benchmark rates are published or negotiated with the funders.
The Group's revolving credit facilities mature on 21 December 2026, and it is
management's intention to engage with the lenders to renew these facilities
before this date.
The developments on these facilities from 1 January 2025 and their carrying
amounts and maturities as at 31 December 2025 are disclosed in the note below.
Effective interest rate Maturity 2025 2024
US$'000 US$'000
Non-current
LSL450.0 million (US$27.2 million) and ZAR300.0 million (US$18.1 million) bank Central Bank of Lesotho rate (6.50%) + 3.25% and South African JIBAR (7.00%) + - -
loan facility 3.00%
Credit underwriting fees 21 December 2026 - (78)
US$30.0 million bank loan facility Term SOFR (4.00%) + 5.21% 21 December 2026 - 6 000
Credit underwriting fees - (60)
ZAR132.0 million (US$8.0 million) project debt facility South African JIBAR (7.00%) + 2.50% 31 May 2027 1 138 2 999
LSL200.0 million (US$12.1 million) term loan facility Lesotho prime rate (10.00%) minus 1.50% 28 February 2029 5 090 7 772
6 228 16 633
Current
LSL450.0 million (US$27.2 million) and ZAR300.0 million (US$18.1 million) bank Central Bank of Lesotho rate (6.50%) + 3.25% and South African JIBAR (7.00%) + 3 010 -
loan facility 3.00%
Credit underwriting fees 21 December 2026 (36) -
US$30.0 million bank loan facility Term SOFR (4.00%) + 5.21% 10 000 -
Credit underwriting fees 21 December 2026 (30) -
ZAR132.0 million (US$8.0 million) project debt facility South African JIBAR (7.00%) + 2.50% 31 May 2027 2 276 1 999
LSL200.0 million (US$12.1 million) term loan facility Lesotho prime rate (10.00%) minus 1.50% 28 February 2029 2 414 1 413
LSL30.0 million (US$1.8 million) insurance premium finance 3.70 % 1 April 2026 739 -
LSL12.4 million (US$0.7 million) insurance premium finance 3.70 % 1 April 2026 275 -
LSL30.0 million (US$1.6 million) insurance premium finance 4.20 % Repaid 1 April 2025 - 650
ZAR0.9 million (US$48 thousand) insurance premium finance 4.20 % Repaid 1 April 2025 - 20
LSL14.6 million (US$0.8 million) insurance premium finance 4.20 % Repaid 1 April 2025 - 315
18 648 4 397
Total 24 876 21 030
LSL450.0 million and ZAR300.0 million (US$45.3 million) bank loan facility at
Letšeng Diamonds
The Group, through its subsidiary Letšeng Diamonds, has a secured LSL450.0
million and ZAR300.0 million (US$45.3 million) revolving credit facility
(maturing on 21 December 2026) jointly with Nedbank Lesotho Limited, Standard
Lesotho Bank Limited, First National Bank of Lesotho Limited, Firstrand Bank
Limited (acting through its Rand Merchant Bank division) and Nedbank Limited
(acting through its Nedbank Corporate and Investment Banking division).
At the end of the current year, LSL30.0 million (US$1.8 million) and ZAR20.0
million (US$1.2 million) were drawn down on these facilities respectively,
resulting in LSL420.0 million (US$25.4 million) and ZAR280.0 million (US$16.9
million) remaining available. The remaining balance of the credit underwriting
fees capitalised is US$36.0 thousand (31 December 2024: US$78.0 thousand). The
capitalised fees are amortised and accounted for as finance costs within
profit or loss over the term of the facility.
The LSL450.0 million facility is subject to interest of 9.75% (31 December
2024: 11.00%) representing the Central Bank of Lesotho rate plus 3.25%, and
the ZAR300.0 million facility is subject to interest of 10.00% (31 December
2024: 11.35%) comprising South African JIBAR plus 3.00%. Total interest
expense for the year on this interest-bearing RCF was US$1.6 million (31
December 2024: US$1.9 million).
US$30.0 million bank loan facility at Gem Diamonds Limited
This facility is a secured five-year revolving credit facility with Nedbank
Limited (acting through its London branch), Standard Bank of South Africa
Limited (acting through its Isle of Man branch) and Firstrand Bank Limited
(acting through its Rand Merchant Bank division) for US$13.5 million, US$9.0
million and US$7.5 million, respectively. All draw downs are made in these
ratios.
At year end, US$10.0 million (31 December 2024: US$6.0 million) of this
facility had been drawn down, resulting in US$20.0 million (31 December 2024:
US$24.0 million) remaining available. The remaining balance of the credit
underwriting fees capitalised is US$30.0 thousand (31 December 2024: US$60.0
thousand) at year end. The capitalised fees are amortised and accounted for as
finance costs within profit or loss over the period of the facility.
The US$-based interest rate for this facility at 31 December 2025 was 9.21%
(31 December 2024: 9.54%), which comprises term SOFR plus a 0.21% credit
adjustment spread and 5.00% margin. Total interest expense for the year on
this interest-bearing RCF was US$1.2 million (31 December 2024: US$1.3
million).
The facility includes an additional US$20.0 million accordion option, the
utilisation of which is subject to all necessary credit and other approvals
from the lenders. There was no utilisation of this facility in the current or
prior years.
ZAR132.0 million (US$8.0 million) project debt facility at Letšeng Diamonds
This loan is an unsecured project debt facility with Nedbank Limited,
underwritten by the Export Credit Insurance Corporation (ECIC), which was
entered into on 29 November 2022 to fund the replacement of the primary
crushing area (PCA) at Letšeng. The loan is repayable in equal quarterly
payments which commenced in March 2024. The outstanding balance at year end
was ZAR56.6 million (US$3.4 million) (31 December 2024: ZAR94.3 million
(US$5.0 million)). This loan expires on 31 May 2027.
The South African rand-based interest rate for the facility at 31 December
2025 was 9.50% (31 December 2024: 10.85%), which comprises South African JIBAR
plus 2.50%. Total interest for the year on this interest-bearing loan was
US$0.4 million (31 December 2024: US$0.7 million).
LSL200.0 million (US$12.1 million) secured term loan facility at Letšeng
Diamonds
This loan is a five-year secured term loan facility signed jointly with
Standard Lesotho Bank and Nedbank Lesotho on 15 May 2024. The loan is secured
by a special notarial bond over the fleet and equipment acquired as part of
the insourcing of the mining activities at the end of 2023.
The loan is repayable in equal monthly instalments which commenced in May
2024. The outstanding balance at the end of the year was LSL124.3 million
(US$7.5 million). An additional capital repayment of LSL9.0 million (US$0.5
million) was made during the year following the sale of certain fleet and
equipment that has brought the expiry date of the facility forward from
30 April 2029 to 28 February 2029.
The interest rate on the loan was 8.50% at 31 December 2025 (31 December 2024:
9.75%), representing the Central Bank of Lesotho prime rate minus 1.50%. Total
interest for the year on this interest-bearing loan was US$0.8 million (31
December 2024: US$0.6 million).
Loan covenants
The Group's revolving credit facilities, together with Letšeng Diamonds'
ZAR132.0 million (US$8.0 million) project debt facility and LSL200.0 million
(US$12.1 million) secured term loan facility, are subject to certain financial
covenants and these are assessed at the end of each quarter. The loans will be
repayable immediately if these covenants are breached. The Group is not aware
of any facts or circumstances that indicate that it may have difficulty
complying with the covenants within 12 months after the reporting period.
Insurance premium finance for Multi-aggregate and Asset All Risk Insurance
policies
The Group, through its subsidiary Letšeng Diamonds, enters into financing
agreements for insurance premiums for the Multi-aggregate Insurance Policy and
its Asset All Risk Policy. All respective insurance premiums prepaid are ceded
in favour of Premium Finance Partners (Proprietary) Limited. The funding is
payable monthly in advance. Refer to Note 13, Receivables and other assets.
During the year, all prior year outstanding insurance premium finance balances
for the Multi-aggregate Insurance Policy and its Asset All Risk Policy were
fully repaid by 1 April 2025. The total interest paid during the current year
relating to these liabilities was LSL0.3 million (US$19.3 thousand).
In July, the Group, through its subsidiary Letšeng Diamonds, entered into a
LSL30.0 million (US$1.8 million) 10-month funding agreement with Premium
Finance Partners (Proprietary) Limited to finance the fifth and final premium
of LSL30.0 million on the Multi-aggregate Insurance Policy. At year end,
LSL12.2 million (US$0.7 million) remains outstanding. The funding is repayable
in 10 monthly instalments, payable in advance. Total interest on this funding
is LSL1.1 million (US$66.9 thousand), of which LSL0.9 million (US$50.6
million) was paid during the year.
In July, the Group, through its subsidiary Letšeng Diamonds, also entered
into a LSL10.6 million (US$0.6 million) 10-month funding agreement with
Premium Finance Partners (Proprietary) Limited for insurance premium finance
for its annual Asset All Risk insurance premium. At year end, LSL4.6 million
(US$0.3 million) remains outstanding. The funding is repayable in 10 monthly
instalments, payable in advance. Total interest on this funding is LSL0.3
million (US$20.4 thousand), of which LSL0.3 million (US$16.3 thousand) was
paid during the year.
Other facilities
Letšeng Diamonds has a ZAR100.0 million (US$6.0 million) general banking
facility with Nedbank Limited (acting through its Nedbank Corporate and
Investment Banking division) which is reviewed annually. During the year, the
facility was utilised from time to time based on cash flow requirements, but
repaid in full at year end.
2025 2024
US$'000 US$'000
19. LEASE LIABILITIES
Non-current 1 256 2 246
Current 1 640 2 517
Total lease liabilities 2 896 4 763
Reconciliation of movement in lease liabilities
As at 1 January 4 763 5 950
Additions 569 1 935
Interest expense 303 372
Lease payments (2 140 ) (3 062 )
Derecognition of lease (937 ) (318 )
Foreign exchange differences 338 (114 )
As at 31 December 2 896 4 763
Lease payments comprise payments in principle of US$1.8 million (31 December
2024: US$2.7 million) and repayments of interest of US$0.3 million (31
December 2024: US$0.4 million).
Refer to Note 10, Right-of-use assets for details on new leases entered into
and leases derecognised during the year.
2025 2024
US$'000 US$'000
20. TRADE AND OTHER PAYABLES
Current
Trade payables(1) 3 485 3 862
Accrued expenses(1) 1 261 4 864
Leave benefits 786 687
Royalties(1) - 2 000
Withholding taxes(1) 67 76
Other 91 176
5 690 11 665
(1) These amounts are both interest and non-interest bearing and are settled
in accordance with terms agreed between the parties.
Royalties consist of a levy payable to the Government of the Kingdom of
Lesotho on the value of rough diamonds sold by Letšeng. No royalties were
outstanding at year end due to a 6-month royalty suspension which had been
received in August 2025. Withholding taxes mainly consist of taxes payable on
dividends and other services to the Revenue Services Lesotho.
The carrying amounts above approximate fair value.
2025 2024
US$'000 US$'000
21. INCOME TAX (RECEIVABLE)/PAYABLE
Reconciliation of movement in income tax (receivable)/payable
As at 1 January 6 824 (3 713 )
Payments made during the year (12 428 ) (339 )
Refunds received during the year 17 4 620
Current income tax charge 3 599 6 443
Foreign exchange differences 252 (187 )
As at 31 December (1 736 ) 6 824
Split as follows
Income tax receivable (1 736 ) (24 )
Income tax payable - 6 848
2025 2024
US$'000 US$'000
22. PROVISIONS
Severance pay benefits(1) 2 092 1 621
Rehabilitation provisions 11 930 10 993
Total provisions 14 022 12 614
Reconciliation of movement in rehabilitation provisions
As at 1 January 10 993 14 170
Decrease in provision - Ghaghoo (2 309 ) (563 )
Increase/(decrease) in provision - Letšeng 899 (3 698 )
Unwinding of discount rate 931 1 464
Foreign exchange differences 1 416 (380 )
As at 31 December 11 930 10 993
(1) The severance pay benefits arise due to legislation within the Lesotho
jurisdiction, requiring that two weeks of severance pay be provided for every
completed year of service, payable on retirement.
Rehabilitation provisions
During the year, the rehabilitation provision for Ghaghoo was decreased to
zero as a consequence of the mining licence relinquishment, which absolved the
Group from any further environmental rehabilitation obligation with regard to
the Ghaghoo mine. The provision at Letšeng has been recognised, as the Group
has an obligation for rehabilitation of the Letšeng mining area. The
provision has been calculated based on total estimated rehabilitation costs,
discounted back to their present values over the estimated rehabilitation
period at the mine. The pre-tax discount rates are adjusted annually and
reflect current market assessments.
In determining the amount attributable to the rehabilitation provision of
US$11.9 million (31 December 2024: US$8.8 million) at Letšeng, management
used a discount rate of 8.30% (31 December 2024: 9.41%), estimated
rehabilitation timing of 11 years (31 December 2024: 15 years) and an
inflation rate of 3.6% (31 December 2024: 4.5%). The Letšeng rehabilitation
quantum increased from the prior year, mainly driven by the annual
reassessment of the estimated closure costs performed at the operation, the
effect of the revised timing of the rehabilitation, the discount rate and
interest rate used to present-value the provision, and the weakening of the US
dollar against the Lesotho loti.
2025 2024
US$'000 US$'000
23. DEFERRED TAXATION
Deferred tax assets
Lease liabilities 471 850
Accrued leave 190 159
Provisions 3 557 3 304
Tax losses 76 -
4 294 4 313
Deferred tax liabilities
Property, plant and equipment (52 279 ) (67 549 )
Right-of-use assets (532 ) (779 )
Prepayments 16 19
Unremitted earnings (972 ) (972 )
(53 767 ) (69 281 )
Net deferred tax liability (49 473 ) (64 968 )
Reconciliation of net deferred tax liability
As at 1 January (64 968 ) (70 437 )
Movement in current period:
- Accelerated depreciation and impairment for tax purposes 23 367 5 082
- Accrued leave 3 52
- Unremitted earnings - 606
- Prepayments 2 73
- Provisions (190 ) (348 )
- Deferred tax asset raised/(reversed) on tax losses 74 (1 817 )
- Lease liabilities (513 ) (224 )
- Right-of-use assets 358 151
- Foreign exchange differences (7 606 ) 1 894
As at 31 December (49 473 ) (64 968 )
The Group has not recognised a deferred tax liability for all taxable
temporary differences associated with investments in subsidiaries because it
is able to control the timing of dividends and only part of the temporary
difference is expected to reverse in the foreseeable future. The gross
temporary difference in respect of the undistributed reserves of the Group's
subsidiaries for which a deferred tax liability has not been recognised is
US$124.2 million (31 December 2024: US$127.1 million).
The deferred tax asset mainly relates to those recognised on the provision for
rehabilitation at Letšeng, as management will implement appropriate tax
planning strategies to ensure sufficient taxable income is available to
utilise all deductions in the future.
The deferred tax liability on unremitted earnings is based on the timing of
expected dividends from the Group's subsidiaries over the next three years.
There are no income tax consequences attached to the payment of dividends by
Gem Diamonds Limited to its shareholders.
The Group has estimated tax losses of US$63.5 million (excluding US$157.6
million relating to Gem Diamonds Botswana which was abandoned during the year)
of which US$56.4 million relates to Gem Diamonds Limited (31 December 2024:
US$214.7 million of which US$155.7 million related to Gem Diamonds Botswana
and US$50.8 million to Gem Diamonds Limited) for which no deferred tax assets
have been recognised, as management does not foresee any taxable profits or
taxable temporary differences against which to utilise these.
The majority of tax losses are generated in jurisdictions where tax losses do
not expire, except for tax losses incurred by Gem Diamonds Innovation
Solutions CY Limited, within the Cyprus jurisdiction, which has unrecognised
tax losses of US$1.0 million (31 December 2024: US$2.2 million) and if not
utilised, will expire as indicated in the table below:
2025 2024
US$'000 US$'000
Utilisation required within one year 441 317
Utilisation required between one and two years 506 376
Utilisation required between two and five years 90 1 317
2025 2024
Notes US$'000 US$'000
24. CASH FLOW NOTES
24.1 Cash generated by operations
(Loss)/profit before tax for the period - continuing operations (92 053 ) 12 418
Profit/(loss) before tax for the period - discontinued operation 1 793 (957 )
Adjustments for:
Depreciation and amortisation excluding waste stripping 10 281 9 238
Depreciation on right-of-use assets 4, 10 1 761 2 129
Waste stripping cost amortised 4, 9 29 366 35 627
Finance income 6 (1 080 ) (875 )
Finance costs 6 5 839 7 406
Unrealised foreign exchange differences (1 148 ) (946 )
Profit on disposal and scrapping of property, plant and equipment 3 (233 ) (152 )
(Gain)/loss on derecognition of leases 9 (514 ) 286
Environmental rehabilitation adjustment 3 (2 309 ) (562 )
Write-down of inventories to net realisable value 4 415 150
Bonus, leave and severance provisions raised 1 068 4 028
Share-based payments 266 516
Impairment of non-current financial assets 4 77 691 -
Other (7 ) -
35 136 68 306
24.2 Working capital adjustment
(Increase)/decrease in inventory (10 219 ) 3 482
Decrease/(increase) in receivables 4 846 (4 377 )
Decrease in payables (6 483 ) (15 442 )
(11 856 ) (16 337 )
24.3 Cash flows from financing activities (excluding lease liabilities)
As at 1 January 21 030 38 567
Net cash used in financing activities (424 ) (19 755 )
- Financial liabilities repaid (29 596 ) (42 117 )
- Financial liabilities raised 29 172 22 362
Interest paid (4 532 ) (4 934 )
Non-cash movements 8 802 7 152
- Interest accrued 4 532 4 934
- Amortisation of credit underwriting fees 72 264
- Financial liabilities raised(1) 2 270 2 480
- Foreign exchange differences 1 928 (526 )
As at 31 December 18 24 876 21 030
(1) This amount mainly relates to funding obtained for insurance premium
finance. The funding was paid directly by the lender to the third party and is
being repaid by the Group in monthly instalments to the lender. Refer to Note
18, Interest-bearing loans and borrowings.
2025 2024
US$'000 US$'000
25. COMMITMENTS AND CONTINGENCIES
Commitments
Mining leases
Mining lease commitments represent the Group's future obligation arising from
agreements entered into with local authorities in the mining areas that the
Group operates.
The period of these commitments is determined as the lesser of the term of the
agreements, excluding renewable periods, or the LoM. The estimated lease
obligation regarding the future lease period, accepting stable inflation and
exchange rates, is as follows:
- Within one year 282 252
- After one year but not more than five years 715 855
- More than five years - -
997 1 107
Multi-aggregate protection policy
The Group, through its subsidiary Letšeng, entered into a LSL140.0 million
(US$8.5 million) Multi-aggregate Protection Insurance Policy with the Lesotho
National General Insurance Company (LNGIC) in October 2021. The policy has a
tenure of four years and nine months, ending in July 2026, and consists of
five premium payments each payable annually in advance.
The final premium payment was settled during the year and therefore there are
no future cash flow commitments. Refer to Note 13, Receivables and other
assets for further detail on the policy.
- Within one year - 1 590
- After one year but not more than five years - -
- 1 590
Letšeng Diamonds Educational Fund
In terms of the mining agreement entered into between the Group and the
Government of the Kingdom of Lesotho, the Group has an obligation to provide
funding for education and training scholarships. The quantum of such funding
is at the discretion of the Letšeng Diamonds Education Fund Committee.
- Within one year 41 54
- After one year but not more than five years - 77
41 131
Capital expenditure
Approved but not contracted for 1 230 1 621
Approved and contracted for 18 1 924
1 248 3 545
Capital expenditure approved mainly relates to the cost for the commencement
of the lateral support and potential rockfall mitigation measure above the
SC6W cutback in the Satellite pit.
Contingencies
The Group has conducted its operations in the ordinary course of business in
accordance with its understanding and interpretation of commercial
arrangements and applicable legislation in the countries where the Group
operates. In certain specific transactions, however, the relevant third party
or authorities could have a different interpretation of those laws and
regulations that could lead to contingencies or additional liabilities for the
Group. Having consulted professional advisers, the Group has identified
possible costs approximating US$1.0 million (December 2024: US$0.6 million),
mainly relating to disputes on an insurance claim and a contract termination.
The Group monitors possible tax claims within the various jurisdictions in
which the Group operates. It is noted that tax legislation is highly complex
and subject to interpretation of the application of the law. It is common for
tax authorities to review tax returns, and in some instances, disputes may
arise over the interpretation and application of the prevailing tax
legislation. Due to the complexity of the legislation, significant judgement
is required to determine any effects of uncertainties in accounting for and
disclosure of income taxes. When uncertain tax positions have been determined
as being probable, they have been provided for and disclosed. There were no
uncertain tax positions in 2025. Refer to Note 1.2.27, Critical accounting
estimates and judgements. While it is difficult to predict the ultimate
outcome in some cases, the Group does not anticipate that there will be any
material impact on the Group's results, financial position or liquidity.
26. RELATED PARTIES
Related party Relationship
Jemax Management (Proprietary) Limited Common director
Government of the Kingdom of Lesotho Non-controlling interest
Refer to Note 1.1.2, Operational information, for information regarding
shareholding in subsidiaries.
2025 2024
US$'000 US$'000
Compensation to key management personnel (including Directors)
Share-based equity transactions 252 481
Short-term employee benefits 3 868 3 973
Post-employment benefits (including severance pay and pension) 197 157
4 317 4 611
Fees paid to related parties
Jemax Management (Proprietary) Limited (83 ) (75 )
Royalties paid to related parties
Government of the Kingdom of Lesotho (4 545 ) (14 902 )
Lease and licence payments to related parties
Government of the Kingdom of Lesotho (61 ) (61 )
Sales to/(purchases from) related parties
Jemax Management (Proprietary) Limited (4 ) (4 )
Amount included in trade payables owing to related parties
Jemax Management (Proprietary) Limited (7 ) (6 )
Amounts owing to related party
Government of the Kingdom of Lesotho (67 ) (2 076 )
Dividends declared and paid
Government of the Kingdom of Lesotho - (4 289 )
Jemax Management (Proprietary) Limited provided administrative services with
regard to the mining activities undertaken by the Group. A controlling
interest is held by an Executive Director of the Company.
The above transactions were made on terms agreed between the parties. The
amounts included in trade payables are non-interest bearing and have no
repayment terms.
27. FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group's activities expose it to a variety of financial risks:
• market risk (including commodity price risk, foreign exchange risk
and interest rate risk);
• credit risk; and
• liquidity risk.
The Group's overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the
Group's financial performance.
Risk management is carried out under policies approved by the Board of
Directors. The Board provides principles for overall risk management, as well
as policies covering specific areas, such as foreign exchange risk, interest
rate risk, credit risk, use of derivative financial instruments and
non-derivative financial instruments, and investing excess liquidity.
There have been no changes to the financial risk management policy since the
prior year.
Capital management
For the purpose of the Group's capital management, capital includes the issued
share capital, share premium and liabilities on the Group's statement of
financial position. The primary objective of the Group's capital management is
to ensure that it maintains a strong credit rating and healthy capital ratios
in order to support its business and maximise shareholder value. The Group
manages its capital structure, and makes adjustments to it, in light of
changes in economic conditions. To maintain or adjust the capital structure,
the Group may issue new shares, buy back its shares, or restructure its debt
facilities. The management of the Group's capital is performed by the Board.
The Group's capital management, among other things, aims to ensure that it
meets financial covenants attached to its interest-bearing loans and
borrowings. Breaches in meeting the financial covenants would permit the bank
to immediately call loans and borrowings. There have been no breaches of the
financial covenants in the current or any previous years.
At 31 December 2025, the Group had US$68.3 million (31 December 2024: US$69.0
million) of undrawn debt facilities and continues to have the flexibility to
manage the capital structure more efficiently with the use of these debt
facilities, thus ensuring that an appropriate gearing ratio is achieved.
Refer to Note 18, Interest-bearing loans and borrowings for detail on the debt
facilities within the Group.
(a) Market risk
(i) Commodity price risk
The Group is subject to diamond price risk. Diamonds are not homogeneous
products and the price of rough diamonds is not monitored on a public index
system. The fluctuation of prices is related to certain features of diamonds
such as quality and size, together with diamond market fundamentals. Diamond
prices are marketed in US dollar, and long-term US dollar per carat prices are
based on external market consensus forecasts. The Group does not have any
financial instruments that may fluctuate as a result of commodity price
movements.
(ii) Foreign exchange rate risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the Lesotho
loti and South African rand. Foreign exchange risk arises when future
commercial transactions and recognised assets and liabilities are denominated
in a currency that is not the entity's functional currency.
The Group's sales are denominated in US dollar, which is the functional
currency of the Company, but not the functional currency of all its
operations.
The currency sensitivity analysis below is based on the following assumptions:
• Differences resulting from the translation of the financial
statements of the subsidiaries into the Group's presentation currency of US
dollar are not taken into consideration;
• The major currency exposures for the Group relate to the US dollar
and local currencies of subsidiaries. Foreign currency exposures between two
currencies where one is not the US dollar are deemed insignificant to the
Group and have therefore been excluded from the sensitivity analysis; and
• The analysis of the currency risk arises because of financial
instruments which are denominated in a currency that is not the functional
currency of the relevant Group entity. The sensitivity has been based on
financial assets and liabilities at 31 December 2025 and 31 December 2024.
There has been no change in the assumptions or method applied from the prior
year.
Sensitivity analysis
At year end, Letšeng had US$5.4 thousand cash on hand held in US$ (2024: US$
37.8 thousand). If the US dollar had appreciated/(depreciated) by 10% against
the LSL, the Group's profit before tax and equity at 31 December 2025 would
have been US$0.6 thousand higher/(lower) (31 December 2024: US$3.9 thousand).
(iii) Forward exchange contracts
From time to time, the Group enters into forward exchange contracts to hedge
the exposure to changes in foreign currency of future sales of diamonds at
Letšeng Diamonds. The Group performs no hedge accounting. At 31 December
2025, the Group had no forward exchange contracts outstanding (31 December
2024: nil).
(iv) Interest rate risk
The Group's income and operating cash flows are substantially independent of
changes in market interest rates. The Group's cash flow interest rate risk
arises from borrowings. Borrowings issued at variable rates expose the Group
to cash flow interest rate risk. At the time of taking new loans or
borrowings, management uses its judgement to decide whether it believes that a
fixed or variable rate borrowing would be more favourable to the Group over
the expected period until maturity.
Sensitivity analysis
If the interest rates on the interest-bearing loans and borrowings had
(increased)/decreased by 100 basis points (2024: 100 basis points) during the
year, profit before tax and equity would have been US$0.2 million
(lower)/higher (31 December 2024: US$60.0 thousand).
(b) Credit risk
The Group's potential concentration of credit risk consists mainly of cash
deposits with banks, trade receivables, the insurance asset and other
receivables. The Group's short-term cash surpluses are placed with banks that
have investment grade ratings, to minimise the exposure to credit risk to the
lowest level possible from the perspective of the Group's cash and cash
equivalents. The maximum credit risk exposure relating to financial assets is
represented by their carrying values as at the reporting dates.
The Group considers the credit standing of counterparties when making deposits
to manage the credit risk.
Considering the nature of the Group's ultimate customers and the relevant
terms and conditions entered into with such customers, the Group believes that
credit risk is limited as the customers pay and settle their accounts on the
date of receipt of goods.
The Group's insurance premiums are placed with insurers and underwriters that
have high-quality credit standings, to minimise the exposure to credit risk to
the lowest level possible from the perspective of the Group's insurance asset.
An ECL assessment was considered on the current other receivable, refer to
Note 13, Receivables and other assets. This receivable is not considered to be
impaired, neither is it past its due date. The credit risk associated with
this receivable has therefore been assessed as low. If an ECL of 8% had been
applied, profit before tax would have been US$0.1 million lower in the current
year.
No material other financial assets are impaired or past due and accordingly,
no additional ECL or credit risk analysis has been provided. The Group did not
hold any form of collateral or credit enhancements for its credit exposures
during the 31 December 2025 and 31 December 2024 financial reporting periods.
(c) Liquidity risk
Liquidity risk arises from the Group's inability to obtain the funds it
requires to comply with its commitments, including the inability to realise a
financial asset in a short period of time at a price close to its fair value.
Management manages the risk by maintaining sufficient cash and marketable
securities and ensuring access to financial institutions and shareholding
funding. This ensures flexibility in maintaining business operations and
maximises opportunities. The Group has available undrawn debt facilities of
US$68.3 million at year end (2024: US$69.0 million). The Group's facilities
expire in December 2026.
The table below summarises the maturity profile of the Group's financial
liabilities at 31 December based on contractual undiscounted payments.
2025 2024
US$'000 US$'000
Floating interest rates
Interest-bearing loans and borrowings
- Within one year 22 646 5 104
- After one year but not more than three years 6 736 15 985
- After three years but not more than five years - 2 826
Total 29 382 23 915
Lease liabilities
- Within one year 1 761 2 776
- After one year but not more than three years 882 1 750
- After three years but not more than five years 416 384
- After five years 67 256
Total 3 126 5 166
Trade and other payables
- Within one year 5 690 11 588
- After one year but not more than three years - -
Total 5 690 11 588
28. SHARE-BASED PAYMENTS
2025 2024
US$'000 US$'000
The expense recognised for employee services received during the year is shown
in the following table:
Equity-settled share-based payment transactions charged to the statement of 266 516
profit or loss
The long-term incentive plans are described below:
Long-term incentive plan (LTIP)
Certain key employees are entitled to a grant of options under the LTIP of the
Company. The vesting of the options is dependent on employees remaining in
service for a prescribed period (normally three years) from the date of grant.
Prior to the April 2022 award, the fair value of share options granted was
estimated at the date of the grant using an appropriate simulation model,
taking into account the terms and conditions upon which the options were
granted. It took into account projected dividends and share price fluctuation
co-variances of the Company. Since 2022, the fair value of the share options
granted has been based on the observable Gem Diamonds Limited share price on
the date of the award with no adjustments made to the price.
There is a nil exercise price for the options granted. The contractual life of
the options is 10 years and there are no cash settlement alternatives. The
Company has no past practice of cash settlement.
The Company's LTIP policy is reviewed every 10 years.
LTIP 2007 Award
Under the 2007 LTIP rules, there is one award where options are still
outstanding.
This award was awarded on the following basis:
To key employees (excluding Executive Directors):
· the award vests over a three-year period in tranches of one-third
of the award each year;
· the vesting of the award is dependent on service conditions and
certain performance targets being met for the same three-year period
(classified as non-market conditions). These non-market condition awards are
referred to as nil value options in the tables below;
· if the performance or service conditions are not met, the options
lapse;
· the performance conditions relating to the non-market conditions
are not reflected in the fair value of the award at grant date;
· once the award vests, it is exercisable for seven years (i.e.
contractual term is 10 years); and
· the vested award is equity settled.
To Executive Directors:
· the award vests over a three-year period;
· the vesting of the award is dependent on service conditions and
both market and non-market performance conditions;
· 75% of the award granted is subject to non-market conditions
(referred to as nil value options in the tables below) and 25% to market
conditions (referred to as Market Value options in the tables below) by
reference to the Company's total shareholder return (TSR) as compared to a
group of principal competitors;
· if the performance or service conditions are not met, the options
lapse;
· the performance conditions relating to the non-market conditions
are not reflected in the fair value of the award at grant date;
· once the award vests, it is exercisable for seven years (i.e.
contractual term is 10 years); and
· the vested award is equity settled.
The fair value of the nil value award is based on the observable Gem Diamonds
Limited share price on the date of award, with no adjustments to the price
made.
The following table reflects details of the award within the 2007 LTIP that
remains outstanding:
LTIP
March
2016
Number of options granted - Nil value 1 215 000
Number of options granted - Market value 185 000
Date exercisable 15 March 2019
Options outstanding 26 037
Dividend yield (%) 2.00
Expected volatility (%)(1) 39.71
Risk-free interest rate (%)(2) 0.97
Expected life of option (years) 3.00
Exercise price (US$) nil
Exercise price (GBP) nil
Weighted average share price (US$) 1.56
Fair value of nil value options (US$) 1.40
Fair value of nil value options (GBP) 0.99
Fair value of market value options (US$) 0.69
Fair value of market value options (GBP) 0.49
Model used Monte Carlo
(1) Expected volatility was based on the average annual historic volatility of
the Company's share price over the previous three years.
(2) The relevant risk-free interest rate is taken from a UK Treasury Bond
issued which closely matches the lifetime of the option.
LTIP 2017 Award
Under the 2017 LTIP rules, there are eight awards where options are still
outstanding.
Employee Share Option Plan 2017 Award (ESOP) - 10 April 2025 award
On 10 April 2025, 375 970 nil-cost options were granted to certain key
employees under the ESOP of the Company. In addition, 2 226 929 nil-cost
options were granted to certain Executive employees and the Executive
Directors on a similar basis as the 2007 LTIP. These options were granted in
line with the introduction of the Gem Diamonds Incentive Plan (GDIP) in 2021,
which integrated annual bonus awards with awards under the ESOP. The options
vest in tranches of one-third per annum commencing on 10 April 2026 and ending
on 10 April 2028. The options are exercisable between the respective vesting
dates and 10 April 2035.
This award was made under predominantly the same basis as the 2007 LTIP, with
the following differences:
To key employees (excluding Executive Directors):
· the number of awards granted is determined on the Group's
performance in the preceding financial year in terms of the Gem Diamonds
Incentive Plan (GDIP) introduced in 2021;
· the vesting of the award is dependent only on service conditions.
There are no future performance conditions attached to the award;
· if the service conditions are not met, the options lapse;
· the fair value of the awards is based on the observable Gem
Diamonds Limited share price on the date of award, with no adjustments to the
price made;
· the awards are exercisable for 10 years from the award date; and
· the awards are subject to malus and clawback.
To Executive Directors and the Chief Operating Officer as a bonus share award,
with the only additional criteria to the ones above being:
· the awards have a two-year holding period from the respective
vesting dates.
The following table reflects details of all the awards within the 2017 LTIP
that remain outstanding:
LTIP LTIP LTIP LTIP LTIP LTIP LTIP LTIP
April April April April June March March July
2025 2024 2023 2022 2020 2019 2018 2017
Number of options granted - Nil value 2 602 899 1 996 047 1 060 055 1 007 098 1 069 000 1 160 500 1 265 000 1 150 000
Number of options granted - Market value - - - - 180 000 142 500 185 000 185 000
Date exercisable 10 April 2026 17 April 2025 21 April 2024 4 April 2023 9 June 2023 20 March 2022 20 March 2021 4 July 2020
Options outstanding 2 584 119 1 946 561 983 039 858 140 327 205 244 035 226 072 45 185
Dividend yield (%) - - - - - - - 2.00
Expected volatility (%)(1) n/a n/a n/a n/a 47.00 43.00 40.00 40.21
Risk-free interest rate (%)(2) n/a n/a n/a n/a 0.34 1.20 1.20 0.67
Expected life of option (years) 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Exercise price (US$) nil nil nil nil nil nil nil nil
Exercise price (GBP) nil nil nil nil nil nil nil nil
Weighted average share price (US$) 0.10 0.11 0.34 0.74 0.39 1.20 1.35 1.24
Fair value of nil value options (US$) 0.10 0.11 0.34 0.74 0.39 1.20 1.35 1.11
Fair value of nil value options (GBP) 0.08 0.09 0.27 0.58 0.31 0.90 0.96 0.86
Fair value of market value options (US$) - - - - 0.19 0.58 0.74 0.72
Fair value of market value options (GBP) - - - - 0.15 0.44 0.53 0.56
Model used n/a n/a n/a n/a Monte Carlo Monte Carlo Monte Carlo Monte Carlo
(1) Expected volatility was based on the average annual historic volatility of
the Company's share price over the previous three years.
(2) The relevant risk-free interest rate is taken from a UK Treasury Bond
issued which closely matches the lifetime of the option.
The following table illustrates the number ('000) and movement in the
outstanding share options during the year:
2025 2024
'000 '000
Outstanding as at 1 January 4 846 2 825
Granted during the year 2 603 1 996
Exercised during the year(1) (207) (26)
Forfeited during the year (67) (71)
Dividends allocated to vested options 64 122
Outstanding as at 31 December 7 239 4 846
Exercisable as at 31 December 1 122 1 908
(1) Options were exercised regularly throughout the year. The weighted average
share price during the year was £0.06 (US$0.09) (2024: £0.11 (US$0.14)).
The weighted average remaining contractual life for the share options
outstanding as at 31 December 2025 was 7.7 years (2024: 7.4 years).
The weighted average fair value of the share options outstanding as at 31
December 2025 was US$0.18 (2024: US$0.26).
ESOP
In September 2017, 47 200 shares which were previously held in the Company
Employee Share Trust were granted to certain key employees involved in the
Business Transformation of the Group. The Company Employee Share Trust was
deregistered in 2017 following the grant of these shares. The fair value of
the award was valued at the share price of the Company at the date of the
award of £0.71 (US$0.96). These shares vested on 18 March 2019 and became
immediately exercisable. The fair value of these outstanding awards at 31
December 2025 was £0.03 (US$0.04) (2024: £0.11 (US$0.14)).
The shares outstanding at the end of the year are as follows:
2025 2024
US$'000 US$'000
Outstanding as at 1 January 10 10
Exercised during the year - -
As at 31 December 10 10
Exercisable as at 31 December 10 10
29. FINANCIAL INSTRUMENTS
Set out below is an overview of financial instruments, other than the current
portions of the prepayment disclosed in Note 13, Receivables and other assets,
which do not meet the criteria of a financial asset.
2025 2024
Notes US$'000 US$'000
Financial assets at amortised cost
Cash 15 3 773 12 878
Receivables and other assets 13 12 035 11 917
Total 15 808 24 795
Total non-current 908 7 341
Total current 14 900 17 454
Financial liabilities at amortised cost
Interest-bearing loans and borrowings 18 24 876 21 030
Trade and other payables 20 5 690 11 589
Total 30 566 32 619
Total non-current 6 228 16 633
Total current 24 338 15 986
The carrying amounts of the Group's financial instruments held approximate
their fair value.
There were no open hedges at year end (2024: nil).
30. EVENTS AFTER THE REPORTING PERIOD
No other fact or circumstance has taken place between the end of the
reporting period and the approval of the financial statements which, in our
opinion, is of significance in assessing the state of the Group's affairs or
requires adjustments or disclosures.
31. MATERIAL PARTLY OWNED SUBSIDIARY
Financial information of Letšeng Diamonds, a 70% held subsidiary which has a
material non-controlling interest, with the remaining 30% being held by the
Government of the Kingdom of Lesotho, is provided below. This information is
based on amounts before intercompany eliminations and other consolidation
adjustments.
2025 2024
US$'000 US$'000
Name Country of incorporation and operation
Letšeng Diamonds (Proprietary) Limited Lesotho
Accumulated balances of material non-controlling interest 55 654 68 087
(Loss)/profit allocated to material non-controlling interest (3 527 ) 4 306
Summarised statement of profit or loss for the year ended 31 December
Revenue 96 799 149 196
Cost of sales (95 381 ) (111 400 )
Gross profit 1 418 37 796
Royalties and selling costs (4 953 ) (15 368 )
Other operating (loss)/income (9 502 ) 809
Operating (loss)/profit (13 037 ) 23 237
Net finance costs (3 549 ) (4 710 )
(Loss)/profit before tax (16 586 ) 18 527
Income tax benefit/(expense) 4 832 (4 173 )
(Loss)/profit for the year (11 754 ) 14 354
Total comprehensive income (11 754 ) 14 354
Attributable to non-controlling interest (3 527 ) 4 306
Dividends paid to non-controlling interest - (4 289 )
Summarised statement of financial position as at 31 December
Assets
Non-current assets
Property, plant and equipment, deferred tax assets, intangible assets and 224 853 291 506
receivables and other assets
Current assets
Inventories, receivables and other assets, and cash and short-term deposits 48 826 48 888
Total assets 273 679 340 394
Non-current liabilities
Interest-bearing loans and borrowings, trade and other payables, provisions, 73 355 90 605
lease liabilities and deferred tax liabilities
Current liabilities
Interest-bearing loans and borrowings, trade and other payables and lease 14 810 22 830
liabilities
Total liabilities 88 165 113 435
Total equity 185 514 226 959
Attributable to:
Equity holders of parent 129 860 158 872
Non-controlling interest 55 654 68 087
Summarised cash flow information for the year ended 31 December
Operating cash inflows 10 053 55 313
Investing cash outflows (13 897 ) (26 921 )
Financing cash outflows (5 838 ) (35 542 )
Foreign exchange differences 2 543 2 523
Net decrease in cash and cash equivalents (7 139 ) (4 627 )
REPORT ON PAYMENTS TO GOVERNMENTS
INTRODUCTION
This report provides an overview of the payments made to governments by Gem
Diamonds Limited and its subsidiaries (the Group) for the 31 December 2025
financial year, as required under the UK Report on Payments to Governments
Regulations 2014 (as amended December 2015). These UK Regulations enact
domestic rules in line with Directive 2013/34/EU (the EU Accounting Directive
2013) and apply to companies that are involved in extractive activities. This
report is unaudited.
This report is also filed with the National Storage Mechanism intended to
satisfy the requirements of the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority in the UK.
The Gem Diamonds Limited LEI number is 213800RC2PGGMZQG8L67.
BASIS FOR PREPARATION
Reporting entities
This report includes payments to governments made by subsidiaries in the Group
that are engaged in extractive activities. During the 2025 financial year,
extractive activities were conducted in Lesotho, while the operation in
Botswana was under care and maintenance until the mine site was formally
handed back to the Botswana Ministry of Minerals and Energy effective from 1
June 2025. All payments made in relation to the Botswana entity were under the
materiality level and are therefore not reported.
Extractive activities
Extractive activities relate to the exploration, prospection, discovery,
development and extraction of minerals, oil, natural gas deposits or other
materials. Gem Diamonds Limited, through its subsidiaries, is engaged in
diamond mining activities.
Scope of payments
The report discloses only those significant payments made to governments
arising from extractive activities.
Government
Government includes any national, regional, or local authority of a country.
It includes a department, agency or undertaking (i.e. corporation) controlled
by that authority.
Payment types disclosed at legal entity level
Production entitlements
There were no payments of this nature for the year ended 31 December 2025.
Taxes
These are payments on the entity's income, production, or profits, excluding
taxes levied on consumption such as value added taxes, personal income taxes
or sales taxes in line with in-country legislation.
Royalties
These are payments for the right to extract diamonds and are determined on
percentage of sales in terms of in-country legislation and/or mining lease
agreements.
Dividends
These are dividend payments, other than dividends paid to a government as an
ordinary shareholder of an entity unless paid in lieu of production
entitlements or royalties. There were no dividend payments of this nature to
governments for the year ended 31 December 2025.
Signature, discovery, and production bonuses
There were no payments of this nature to governments for the year ended 31
December 2025.
Licence fees
These are fees paid for acquisition of leases and licences, including annual
renewal fees, in order to obtain and maintain access to the areas in which
extractive activities are performed.
Payments for infrastructure improvements
There were no payments of this nature to governments for the year ended 31
December 2025.
Cash flow basis
Payments reported are on a cash flow basis and may differ from amounts
reported in the Gem Diamonds Limited 2025 Annual Report and Accounts, which
are prepared on an accrual basis.
Materiality level
In line with the guidance provided in the Report on Payments to Governments
Regulations, payments made as a single payment, or as a series of related
payments, which are equal to or exceed US$115 669 (£86 000), are disclosed
in this report. All payments below this threshold have been excluded.
Reporting currency
The payments to government have been reported in US dollar.
Payments made in currencies other than US dollar were translated at the
relevant annual average exchange rate for the year ended 31 December 2025.
Summary report
Operation Country Taxes Royalties Licence fee Total US$'000
US$'000 US$'000 US$'000
Letšeng Diamonds (Proprietary) Limited Lesotho 12 401 6 656 185 19 242
Total 12 401 6 656 185 19 242
Lesotho Taxes Royalties Licence fee Total US$'000
Letšeng Diamonds (Proprietary) Limited US$'000 US$'000 US$'000
Revenue Services Lesotho 12 401 - - 12 401
Government of the Kingdom of Lesotho - 6 656 185 6 841
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