GEM lowers diamond output and sales for 2022 following continued interruptions at Letšeng

Letseng Diamond Mine

GEM Diamonds, the UK-listed miner, lowered full year diamond production and sales from its Letšeng mine in Lesotho following interruptions in October.

Production was now forecast to be 104,000 carats for the 12 months ended December while sales would total 105,000 carats. This compares to previous guidance of between 112,000 to 116,000 carats for production and 110,000 to 114,000 carats for sales.

The company said in a trading update today that loss of production over the two days of elections in Lesotho during Octoberm a breakdown of a crusher, as well as continued power disruption on the energy supply network were behind the guidance adjustment.

Repairs to the secondary crusher have been completed and the plant was now running at normal capacity, the company said.

The interruptions and lower production are likely to heap further pressure on the company’s costs.

The company’s guidance was already under pressure after reporting excessive rain at Letšeng, as well as power interruptions, and supply constraints of equipment parts in the first half of its financial year.

Gem said at the time that operating costs would increase to between $330 to $350 per ton compared to a previous forecast of $275 to $285/t.

Gem generated $56.6m in revenue for the third quarter achieving an average price of $2,028 per carat which compares to $1,589 per carat in the corresponding quarter of the previous financial year.

Clifford Elphick, CEO of GEM said a downturn in the global economy had “impacted” the diamond market. However, the company’s tenders in Antwerp and a Dubai tender viewing in September were “well attended” and assisted pricing in the period.

GEM ended the third quarter with net cash of $5.4m excluding $15.2m of September tender proceeds that were received period end.