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Gem Diamonds Jumps Back into Black

Company sees profit after mine devaluation last year led to a loss.
Mar 14, 2018 10:55 AM   By Rapaport News
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RAPAPORT... Gem Diamonds returned to profit last year, after the devaluation of an underperforming mine drove it to a loss in 2016.

The miner recorded a net profit of $17.2 million for 2017, versus a loss of $144.1 million in 2016, it said Wednesday. The 2016 loss was mainly the result of a $170.8 million impairment charge, after the company decided to cease production at the Ghaghoo mine in Botswana due to weak prices. Gem Diamonds is currently seeking a buyer for the mine, and intends to focus primarily on its higher-value Letšeng asset in Lesotho.

Much of the miner’s financial performance depends on its success in recovering large diamonds. In 2017, revenue rose 13% to $214.3 million as it found seven stones above 100 carats, compared with five in 2016, while the average price jumped 14% to $1,930 per carat. Since the start of 2018, the company has already recovered seven stones over 100 carats, including, most recently, a 169-carat, white, type IIa stone it unveiled Wednesday.

“The second half of 2017 saw the company begin to benefit from the operational improvements implemented during the year, with a significant improvement in the recovery of the large diamonds from Letšeng,” said Clifford Elphick, CEO of Gem Diamonds. “The market for the mine’s large, high-quality white rough diamonds remained strong over the course of 2017, a trend which has continued into early 2018.”

The miner recently sold the 910-carat Lesotho Legend — believed to be the fifth-largest diamond in history — for $40 million at tender in Antwerp, after extracting the rough diamond in January.
Tags: Botswana, Clifford Elphick, Gem Diamonds, Ghaghoo Mine, impairment, Lesotho, Lesotho Legend, Letšeng, Rapaport News
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