Gem Diamonds Ltd reported a 22% decline in revenue from sale of rough at its Letseng mine in Lesotho during 2016, despite a 6% increase in volume terms. The miner attributed this to recovery of fewer large special diamonds than expected, but added that this could be due to the normal statistical short term variability of the resource, as was experienced during 2012.

During the year, 108,945 carats were sold for a total value of US$ 184.6 million (2015: 102,778 carats at US$ 236.3 million) leading to an average price per carat decline of 26% from US$ 2,299 per ct in 2015 to US$ 1,695 in 2016, the Company said.

Giving further comparisons, Gem Diamonds reported that while 11 diamonds of over 100 cts were recovered in 2015, of which seven sold for more than US$ 10,000 per ct, in 2016, only four diamonds of more than 100 cts were recovered and only two sold for more than US$ 10,000 per ct. It however, clarified that Letšeng's large high quality diamonds continue to achieve firm prices. In October 2016, a 12.31 carat pink diamond sold for US$ 109,677 per carat and a 56.48 carat white diamond achieved US$ 53,451 per carat.

Recovery of large diamonds is expected to return to normal levels in the near future, the Company said, though in addition, “options are currently being assessed to further enhance recovery and reduce damage to these size diamonds through a large-diamond specific recovery plant”.

The Company reported that at its Ghaghoo mine in Botswana, where operations had been downscaled during the year, both revenue and volume was down as expected. It said that largely due to the weak prices achieved, the future of the operation remains under review, as previously announced.

Gem Diamonds' CEO, Clifford Elphick commented, "The market for large special diamonds for which Letšeng is renowned has remained firm to date, but the relative paucity of these diamonds recovered during 2016 has had an adverse impact upon the Company's revenues and cash flows during the year. Operationally, all other production metrics were achieved and within guidance issued.

 At Ghaghoo, the fall in prices of its diamonds from US$ 210 per carat in early 2015 to US$ 142 per carat at its most recent sale in December 2016, emphasises the weak state of the diamond market for this category of diamonds. With the Company's focus on profitable production, and as indicated previously, the future of the operation remains under review with a decision scheduled to be made during Q1 2017 with regards to its current financial viability."