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Elphick targets five mines by year-end Posted: Thu, 19 Jul 2007 [miningmx.com] -- IF YOU WANT to hear fighting talk go no further than GEM Diamonds, Clifford Elphick’s company. Says Elphick, who is CEO of GEM: “You may well say – not wanting sound too arrogant – that we’re competing with BHP Billiton and Rio now” – pointing out that BHP Billiton has one mine and Rio three. By year-end GEM will have five, Elphick says. Such sentiments are echoed by Graham Wheelock, GEM’s chief geologist. Speaking ahead of the group's latest acquisition, the $236m bid for Kimberley Diamond Company, he announced big ambitions: “We’ve entered the league table quite high,” he says of GEM’s extraordinarily strong listing debut in London. “We want to beat up fairly soon against the majors.” The plan is to buy top-end mines and Wheelock, who was speaking at the RBC Capital Markets diamond conference in London in May, added: “We’ll work with what’s in the room.” Nervous chuckles then followed. Back in Johannesburg, Elphick says GEM wanted to jostle one of the world’s diamond majors out of the top-five league. It also covets a piece of the higher margin, downstream business, having witnessed the value add on its 603 carat Lesotho Promise, the world’s 15th largest gem discovered at the Letseng diamond mine in Lesotho last year. “It’s become clear to us that we’re leaving a lot of value in the hands of the people buying our production. It’s high value in high value stones. In absolute terms, it’s the largest amount of dollars,” Elphick says. “Letseng’s diamonds go to Antwerp to be sold at public tender. Then they disappear. That’s my problem. I next see them sold at Sotheby’s, where someone acquires them for a fortune and none of that flows to our bottom line.” GEM could possibly retain a percentage of large diamonds – possibly 50 carats or more. It won’t necessarily become involved in diamond trading or cutting and polishing, which are low-margin businesses. The interest is in the sale of a polished and set diamond, which is a high margin business. Letseng is on track to double output to 100,000 carats next year although meeting scoped capital costs may be challenging, according to a recent trading statement. The stones are of the highest quality and fetch prices averaging $1,500 to $1,600/carat, more than double the next best, which are stones from JSE-listed Trans Hex’s Baken in South Africa. Click Here to subscribe to our daily newsletter
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