Gem Diamonds announced today that its Board has decided to place the Ghaghoo mine in Botswana “on care and maintenance with immediate effect” – which effectually means that its operations will be suspended. 

The Company in its announcement stressed that the development of the Ghaghoo mine “has progressed well and has now reached the point where it will shortly be in a position to commence full commercial production”.

“However, the material fall in the 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,” the Company said to explain its move. “With the Company's focus on profitable production, the decision has been made to place the asset on care and maintenance, and to continue to monitor market conditions for a time when commencing full production would make economic sense.”

Gem Diamonds also revealed that apart from the one-off costs this move is expected to involve, the annualised care and maintenance cost would amount to US$ 3 million.