Gem hopeful Letseng meets output target

[] — GEM Diamonds has enjoyed rising gem prices and hopes to meet its full-year production target at its flagship mine despite challenges in the first half, including higher costs, the London-listed firm said on Monday.

First half output fell five percent to 44,748 carats at its most lucrative operation, the Letseng mine in Lesotho, a trading statement said.

“In the first half of the year we have had a number of operational challenges,” said CEO, Clifford Elphick.

“With the unique nature of Letseng’s very high value, low diamond content resource, fluctuations in production are expected, however management believe that production targets for 2010 will be achieved by year end.”

At the Ellendale mine in Australia, production targets for the second half were expected to be achieved, but it may be slightly behind on the full-year objective, he added.

Mining costs at both mines were still being “severely” impacted by the weaker dollar against local currencies.

Balancing some disappointment in first half production and higher costs were rising prices.

“Over the past six months both rough and polished diamond prices have strengthened, driven by demand from China and India and improving U.S. demand,” Elphick said.

The group, which has no debt, had $108.2m of cash at the end of the first half, of which $89.6m was attributable to Gem Diamonds.