Gem Diamonds has announced that it has received a purchase offer for its Ghaghoo mine in Botswana, which it discontinued earlier in the year due to a lower revenue and earnings for its half year result.
“Shareholders are advised that an offer to acquire 100% of the Ghaghoo asset has been received, and the board is considering the offer,” Gem Diamonds said on Thursday in a statement added to its first-half results. Underlying earnings before interest, taxes, depreciation and repayment also decreased to $13-million in the period under review, compared with $43.5-million in the prior comparable period.
Gem Diamonds, which also operates Letseng in Lesotho, its leading mine, produced 50,478 carats in the six months to June 30 dropped by 12 percent, compared with 57,380 carats in the same period last year. The average price per carat at Letseng descended to $1,779 during the half-year, compared with $1,899 in the same period of 2016, the company said.
“The updated life-of-mine plan (at Letseng) was implemented during the period, with the objective of reducing waste tonnes mined and improving near-term cash flows, and mining progressed well against this plan during the period,” the company reported.
The mine said it remains cautious about the state of the global market for both rough and polished diamonds, noting that financing challenges persist and that the volatile macro-economic environment continues to create challenges for the middle diamond market.
Despite year-on-year declines, the company noted an improvement in average price compared with the previous half, when it earned only $1,480 per carat, and the latest sale in July achieved $2,385 per carat. According to the company, Letseng’s large, high quality goods continued to perform well, as demonstrated by the price achieved for an exceptional high-value of 8.65 carat pink diamond which was sold for US$164 855 per carat, the sixth highest single diamond per carat value achieved at Letseng. In addition, one of the large high value white diamonds achieved the highest price per carat for a Letseng white diamond since February 2016. A moderate increase was also seen in the prices achieved for certain categories of the smaller goods. Even though the company is considering the offer, they did not reveal who is interested in acquiring the mine.