Gem Diamonds, releasing its operational and sales figures for the three months ended September 30, 2019, said that a combination of lower grade recovered at its Letšeng mine in Lesotho, coupled with a decline in rough prices, led to a 15% drop in its revenue as compared to the preceding quarter. The company also revised downward its guidance for the carats it expected to sell in 2019.

On the positive side, Gem Diamonds said that it finalised terms for the renewed mining lease at Letšeng with the Lesotho Mining Board, extending it for an immediate period of 10 years with an exclusive right granted to renew the mining lease for a further period of 10 years.

The Company said that it sold 25,631 carats during the quarter, achieving an average price of US$ 1,417 per carat. This was 15% and 6% below the corresponding Q2 2019 figures of 28,379 carats at US$ 1,501 per carat.

A total of five diamonds were sold for more than US$ 1.0 million each, generating revenue of US$ 11.0 million during the period. Recovery of large diamonds also continued, with four diamonds greater than 100 carats recovered during the Period, bringing the total to seven for 9M 2019.

However, it said that while prices for smaller and commercial type goods remain under pressure with polished inventory levels remaining high, larger high-quality diamonds have also experienced some price pressures in 2019.

The Company also reported that as Letšeng transitioned into the new cutback to accommodate the planned increase in contribution from Satellite pipe ore in H2 2019, it identified a deviation in the anticipated contact face position, which was last mined in 2014, which resulted in a lower contribution of the pipe.

Following the positive impact of the improved plant performance in Q3 2019 and the lower contribution from Satellite pipe ore and the scheduling thereof impacting carat sales for the year, production guidance for 2019 has been revised.

The overall impact on carats recovered for the year remain unchanged, however guidance for carats sold have been reduced from 115-119 Kct to 111-113 Kct due to the lower contribution from the higher-grade Satellite pipe.

Gem Diamonds’ CEO, Clifford Elphick, commented: “It is pleasing to report that Gem Diamonds has successfully renewed the mining lease for Letšeng with the Government of the Kingdom of Lesotho, and we look forward to continue the shared value creation long into the future.”

He also said that Letšeng’s high-value large diamond production has experienced price pressure during the Period. “This, together with diamonds sold from the lower value ore mined in the previous quarter, resulted in an average price achieved of 6% lower than the previous quarter.”