REG - Gem Diamonds Limited - Q4 2022 Trading Update

Gem DiamondsAnnouncement

01/02/2023 07:00

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RNS Number : 4722O  Gem Diamonds Limited  01 February 2023

1 February 2023
 
 

 

GEM DIAMONDS LIMITED

Q4 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 October 2022 to 31 December 2022 ("Q4
2022" or the "Period").

 

Highlights:

·    All operational metrics achieved for FY 2022 were within or better
than guidance.

·      26 530 carats were recovered during the Period, resulting in 106
704 carats recovered for the year (FY 2021: 115 335 carats).

·    107 498 carats were sold in 2022, achieving an average price of US$1
755 per carat (FY 2021:  109 697 carats sold for US$1 835 per carat).

·    The highest price achieved in the Period was US$34 170 per carat for
a 42.98 carat white diamond for a total price of US$1 469 000.

·    Four diamonds sold for more than US$1.0 million each, generating
revenue of US$5.3 million during the Period.

Corporate and Financial:

 

·    The Group ended the Period with US$8.7 million cash on hand and
utilised project facilities of US$5.5 million (under the project debt facility
for the replacement of the Primary Crushing Area (PCA)), resulting in a net
cash position of US$3.2 million at Period end (Q3 2022: US$5.4 million).

·    The Group had undrawn and available facilities of US$82.6 million at
Period end including the remaining US$2,6 million project debt facility for
the replacement of the PCA.

Gem Diamonds' CEO, Clifford Elphick, commented:

 

"Despite Letšeng continuing to be impacted by Eskom-driven power outages
which not only interrupt the production cycle but also impact costs
significantly due to the increased alternative power generation costs, it was
pleasing to meet planned operational metrics in 2022. Long-term alternative
power supply options are being actively investigated.

Pleasingly, the implementation of initiatives aimed at energy efficiency and
carbon reduction resulted in a year-on-year reduction in the Group's carbon
footprint of ~10%".

 

 

1.    Diamond Market

 

Letšeng's tenders were well-attended which contributed positively to the
prices achieved for Letšeng's large high-value diamonds during the Period.

 

2.    Letšeng

 

2.1.  Rough Diamond Sales

 

                             H1 2022  Q3 2022  Q4 2022  FY 2022  FY 2021  FY 2022 vs FY 2021 % Change
 Carats sold                 57 076   27 913   22 509   107 498  109 697  -2%
 Total value (US$ millions)  99.6     56.6     32.4     188.6    201.3    -6%
 US$/carat                   1 745    2 028    1 438    1 755    1 835    -4%

 

2.2.  Production

 

                                       H1 2022     Q3 2022     Q4 2022     FY 2022      FY 2021      FY 2022 vs FY 2021 % Change
 Waste tonnes stripped                 6 289 380   2 116 761   1 747 704   10 153 845   18 663 492   -46%
 Ore tonnes treated                    3 017 664   1 246 209   1 242 703   5 506 576    6 172 429    -11%
 Satellite pipe contribution (tonnes)  1 378 404   713 239     946 323     3 037 966    3 326 458    -9%
 Carats recovered(1)                   55 156      25 018      26 530      106 704      115 335      -7%
 Grade recovered (cpht)(1)             1.83        2.01        2.13        1.94         1.87         4%

(1) Includes carats produced from the Letšeng Plants, the recovery tailings
treatment facility and the Alluvial Ventures (AV) plant (Until 30 June 2022)

The 46% reduction in waste tonnes mined in 2022 compared to 2021 was in line
with the mine plan. The reduced waste profile from slope steepening of the
active cutbacks in Main pipe contributed to this reduction. The Satellite pipe
contribution of 3.0 million tonnes treated in 2022 was in line with the
planned annual Satellite ore contribution.

 

Letšeng's Plants treated a total of 1.2 million tonnes of ore during the
Period. The 11% reduction in total ore tonnes treated in 2022 compared to 2021
was mainly driven by the expiry of Alluvial Ventures' processing contract on
30 June 2022 as planned to allow for the waste stripping of the new cutback in
the Main pipe to commence.

 

The reduction in ore tonnes treated for the Period was, as previously
reported, due to the Lesotho general election requiring a compulsory two-day
site wide shutdown at Letšeng to allow the workforce to vote in their
respective constituencies, a secondary crusher breakdown in Plant 2 and
continued power disruption on the energy supply network. The reduction in ore
tonnes treated for 2022 consequently impacted the carats recovered for the
year negatively.

 

Frequency of recovery of large diamonds

                                2022  2021  FY Average   2008 - 2021
 Number of diamonds
 >100 carats                    4     6     8
 60-100 carats                  18    16    19
 30-60 carats                   69    81    77
 20-30 carats                   108   122   114
 Total diamonds > 20 carats     199   225   218

 

The recovery of four >100 carat diamonds during the year which was lower
than the 14-year average of eight, impacted overall revenue generated during
the year.  Demand for Letšeng's high quality goods however remained high and
the prices achieved for these high quality >100 carat diamonds remained
strong.

 

2.3.  FY 2022 Guidance

 

2.3.1.  Production

 

 Mine Plan                             FY 2022  Guidance issued
 Waste tonnes mined (Mt)               10.2     10 - 12
 Ore treated (Mt)                      5.5      5.45
 Satellite pipe ore contribution (Mt)  3.0      2.8 - 3.0
 Carats recovered (Kct)                106      104
 Carats sold (Kct)                     107      105

 

2.3.2.  Cost

Letšeng maintained its direct cash and operating costs per tonne treated
within expected targets and capex under the full year 2022 guidance. All costs
were however impacted by the increased diesel usage due to the Eskom-driven
power outages and increased costs of diesel and other consumables. Waste cash
costs per waste tonne were slightly above guidance further impacted by the
lower waste tonnes (on the lower end of guidance) during the year.

 

 Costs                                                          FY 2022  Guidance issued
 Direct cash costs (before waste) per tonne treated (Maloti)    264      250 - 270
 Operating costs per tonne treated(1) (Maloti)                  340      330 - 350
 Mining waste cash costs per tonne of waste mined (Maloti)      67       62 - 65
 Total capex(2) (US$ million)                                   11.5     19 - 23

(1) Operating costs per tonne excludes royalty, selling costs, depreciation
and mine amortisation, but includes inventory, waste and ore stockpile
adjustments.

(2) The 2022 guidance for capital included the full costs of the PCA capital.
This was not fully incurred in 2022 and will be carried over to 2023.

 

3.    Sustainability

 

Energy efficiency and carbon reduction initiatives contributed to a
year-on-year reduction in the Group's carbon footprint of ~10%

 

During the Period, one LTI occurred at Letšeng, and the Group-wide All Injury
Frequency Rate was 0.72 for 2022. 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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