LONDON (ShareCast) - (ShareCast News) - Gem Diamonds reported a drop in production from its Letseng mine on Tuesday, mostly due to lower throughput and grades.
In a trading update for the period from 1 January to 30 June, the company said production from the Letseng mine fell to 50,478 carats from 50,825 in the same period a year ago, while carats sold came in at 49,930 versus 52,997. However, the average price per carat was up 20% to $1,779 and Gem said it had recovered four diamonds greater than 100 carats in the period.

In addition, the company sold 18 diamonds for more than $1m each, generating revenue of $37m in the half.

The group had $20m cash on hand at the end pf period, of which $16.1m is attributable to Gem Diamonds, while net debt stood at $14.2m, up from $11m the year before.

Chief executive officer Clifford Elphick said: "The market for Letseng's high-quality diamonds has remained firm over the period with the last tender of the period achieving over $2,200 per carat. This positive trend has continued with the most recent July tender achieving an average price of $2,385 per carat.

"A group-wide, externally supported cost efficiency and bench-marking review has commenced and has already identified opportunities that are being actively pursued. Further progress on this review will be reported on during Q4."

RBC Capital Markets said Letseng production was light of its estimate of 52,700 while carats sold were also slightly below its 52,700 estimate. As far as net debt is concerned, RBC said the number was below its estimate of $22m.

At 0940 BST, the shares were down 2.4% to 80.80p.

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