LONDON (ShareCast) - (ShareCast News) - Gem Diamonds said on Tuesday that talks with a potential buyer for its Ghaghoo asset in Botswana - which was placed on care and maintenance back in February - have ended without an agreement.
The group, which had announced back in August that there was an interested party, said it is currently in discussions with other parties interested in acquiring the asset and will update the market as and when appropriate.

RBC Capital Markets said the news was a "slight negative" overall, "given the drain on valuable cash flow that Ghaghoo currently creates, as the company seeks to improve its financial position".

Analyst Richard Hatch noted that the shares have pulled back and at £76p, are trading at 0.67x NAV versus the diamond space at 0.8x.

"The issue for us remains the average realised price at Letseng, which needs to show some form of improvement (there are signs of progress here), we believe, and the impact of the significant waste strip at Letseng, which drains free cash flow. Work to safely reduce the waste strip would be positive, in our view, from a balance sheet standpoint."

At 0940 GMT, the shares were down 0.3% to 75.53p.

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