REG - Gem Diamonds Limited - H1 2022 Trading Update

Gem DiamondsAnnouncement

17/08/2022 07:00

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RNS Number : 2439W  Gem Diamonds Limited  17 August 2022

17 August 2022
 

 

GEM DIAMONDS LIMITED

H1 2022 Trading Update

 

Gem Diamonds Limited (LSE: GEMD) ("Gem Diamonds" or the "Company" or the
"Group") provides the following Trading Update detailing the Group's
operational and sales performance from 1 January 2022 to 30 June 2022 ("H1
2022" or the "Period").

 

Highlights:

·    57 075 carats were sold during the Period (H2 2021: 54 573 carats),
generating revenue of US$99.6 million (H2 2021: US$97.3 million) and achieving
an average price of US$1 745 per carat (H2 2021: US$1 783 per carat).

·    The highest price achieved in the Period was US$66 059 per carat for
an 8.41 carat pink diamond.

·    15 diamonds sold for more than US$1.0 million each, generating
revenue of US$25.8 million during the Period.

·    Three diamonds greater than 100 carats (244.34, 127.58 and 124.65
carats) were recovered during the Period, which were sold in the first tender
after Period end for US$13.9 million.

·    Carats recovered during the Period were 55 157 (H2 2021: 56 504).

Corporate and Financial:

 

·    The Group ended the Period with US$24.2 million cash on hand.

·    Drawn down facilities amounted to US$12.1 million resulting in a net
cash position of US$12.1 million at Period end (Q4 2021: net cash of US$20.9
million).

·    The Group had undrawn and available facilities of US$69.9 million at
Period end.

·    The 2021 dividend of 2.7 US cents per share (US$3.8 million) proposed
by the Board in March 2022 was approved at the Annual General Meeting on 8
June 2022 and has been paid.

 

·    During the Period, the Company purchased 1 520 170 of its shares at
a weighted average purchase price of 60.05 GB pence (78.07 US cents) per share
under its share buyback programme. The shares are currently held as treasury
shares.

 

·    The purchaser for the Ghaghoo diamond mine did not meet the extended
long stop date of 10 May 2022 resulting in the agreement lapsing on that date.
The Group continues to pursue potential sales opportunities while other
disposal or closure alternatives are also being considered.

 

Gem Diamonds' CEO, Clifford Elphick, commented:

 

"We continue to see a firm diamond market for the high quality Letšeng
diamonds in 2022. We are managing the economic impact of global events which
are contributing significantly to the slowing down of global economic growth
and which are materially impacting energy and commodity prices and disrupting
supply chains worldwide.

 

The sanctions imposed on the Russian diamond producer Alrosa have exacerbated
a shortage of rough diamonds in the market, supporting continued strong demand
and robust prices for Letšeng's high-quality rough diamonds"

 

1.    Diamond Market

 

Strong demand and robust prices achieved for Letšeng's diamonds reflected the
continued positive sentiment in the diamond market.  The Group hosted another
Dubai tender viewing in March 2022 which was well-attended and contributed
positively to the firm prices achieved during the Period.

 

2.    Letšeng

 

2.1.  Rough diamond sales

 

                             H1 2022  Q2 2022  Q1 2022  H2 2021  H1 2022 vs H2 2021 % Change
 Carats sold                 57 075   28 614   28 461   54 573   5%
 Total value (US$ millions)  99.6     47.5     52.1     97.3     2%
 US$/carat                   1 745    1 660    1 831    1 783    -2%

 

2.2.  Production

 

                                       H1 2022     Q2 2022     Q1 2022     H2 2021     H1 2022 vs H2 2021 % Change
 Waste tonnes stripped                 6 289 380   2 436 654   3 852 726   8 495 967   -26%
 Ore tonnes treated                    3 017 664   1 453 010   1 564 654   3 032 710   -
 Satellite pipe contribution (tonnes)  1 378 404   744 039     634 365     1 654 169   -17%
 Carats recovered(1)                   55 157      26 727      28 430      56 504      -2%
 Grade recovered (cpht)(1)             1.83        1.84        1.82        1.86        -2%

(1) Includes carats produced from the Letšeng Plants, the Alluvial Ventures
(AV) plant and the recovery tailings treatment facility.

 

The 26% reduction in waste tonnes mined and the 17% reduction in Satellite
pipe contribution to tonnes treated in H1 2022 is in line with plan. Satellite
pipe contribution increases in H2 2022 and is on track to meet guidance as set
out below.

 

Letšeng's Plants treated a total of 2.58 million tonnes of ore during the
Period, 53% of which was sourced from the Satellite pipe and 47% from the Main
pipe. In addition, 0.44 million tonnes of Main pipe material were treated
through the third-party processing contractor, Alluvial Ventures. This
contract ended on 30 June 2022 as planned.

 

2.3.  Guidance for 2022

 

During the Period, Letšeng experienced excessive rain, increased power
disruptions on the energy supply network and negative impacts on the supply of
critical parts and spares of equipment which impacted production. However, the
2022 production metrics remain on track to be achieved, albeit at the lower
end of original guidance published in March 2022. The related cost impact of
disruptions to the supply chain, combined with significant increases in fuel,
explosives and other consumables prices were experienced in the Period,
exacerbated by the Russian invasion of Ukraine. This is expected to continue
into H2 2022, resulting in a revision to the full year cost guidance as set
out in the table below. A review of capital projects for 2022 has resulted in
a significant reduction of capex for 2022.

 

                                                                 FY 2022           FY 2022
                                                                 Revised Guidance  Original Guidance

                                                                 June 2022         March 2022
 Waste tonnes mined (Mt)                                         No change         10 - 12
 Ore treated (Mt)                                                No change         5.6 - 5.8
 Satellite pipe ore contribution (Mt)                            No change         2.8 - 3.0
 Carats recovered (Kct)                                          No change         112 - 116
 Carats sold (Kct)                                               No change         110 - 114
 Direct cash costs, (before waste) per tonne treated (Maloti)    250 - 270         220 - 230
 Operating costs per tonne treated (Maloti)                      330 - 350         275 - 285
 Mining waste cash costs per tonne of waste mined (Maloti)       62 - 65           51 - 53
 Total capex (US$ million)                                       19 - 23           25 - 30

 

3.    Sustainability

 

The Group won three awards at the Investing in African Mining Indaba Junior
ESG Awards in May 2022, in the categories of Health and Safety, Responsible
Water and Protection of Biodiversity.

 

In addition, Gem Diamonds' Sustainability and Climate Change Reports have been
nominated as finalists by the influential investor media platform ESG
Investing in two reporting categories, namely (i) Best Sustainability Report:
Metals and Mining and (ii) Best Climate-Related Reporting: Small Cap.

 

During the Period, two LTI's occurred at Letšeng, and the Group-wide All
Injury Frequency Rate was 0.82. Letšeng continued to advance its Critical
Control Management programme, aimed at eliminating work-related risk to
employee health and safety. No major or significant community or environmental
incidents occurred across the Group during the Period.

 

FOR FURTHER INFORMATION:

 

Gem Diamonds Limited

Susan Wallace, Company Secretarial department

ir@gemdiamonds.com (mailto:ir@gemdiamonds.com)

 

Celicourt Communications

Mark Antelme / Felicity
Winkles

Tel: +44 (0) 208 434 2643

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014.

 

The Gem Diamonds Limited LEI number is 213800RC2PGGMZQG8L67.

 

ABOUT GEM DIAMONDS:

 

Gem Diamonds is a leading global diamond producer of large high value
diamonds. The Company owns 70% of the Letšeng mine in Lesotho and is
currently in the process of selling its 100% share of the Ghaghoo mine in
Botswana. The Letšeng mine is famous for the production of large, exceptional
white diamonds, making it the highest dollar per carat kimberlite diamond mine
in the world.  www.gemdiamonds.com (http://www.gemdiamonds.com)

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