Gem Diamonds, the UK based owners of Ghaghoo diamond mine in Botswana, has been hit by challenging market conditions as it reported lower revenues on comparison to prior period.
The company’s half year results for the six months ending 30 June, 2015 showed that revenues of US$ 118.0 million (about P1.19 billion) were recorded, which was less than the US$ 148.9 million (about P1.5 billion) registered in the first half of 2014.
The underlying Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) stood at US$ 46.1 million compared to the same period in 2014. Gem Diamonds owns Ghaghoo which sold the first parcel of commissioning diamonds in February, 2015 for US$ 2.1 million, achieving US$ 210 per carat.
“In July, a second parcel was sold for US$ 4.9 million (US$ 165 per carat), a lower price given the current market conditions,” CEO Clifford Elphick said. The company paid its maiden dividend of 5 US cents per share (US$ 6.9 million) in June.
Gem Diamonds is a leading global diamond producer of high value diamonds. The company owns 70 percent of the Let┼íeng mine in Lesotho and 100% of the Ghaghoo mine in Botswana. The company saw its Neutral Rating maintained by Goldman Sachs with Barclays restating an “overweight” rating on the stock.
The diamond industry is currently impacted by the events in the United States and China with a number of majors adjusting production guidance to align to the market. Last week Debswana said it has reduced its production target to align it to the global developments as the diamond market is currently subdued on the back of a slowdown in demand in diamond jewellery.
“This, combined with liquidity and working capital challenges, has put pressure on midstream finances, negatively affecting rough diamond sales in the first half of the year,” the company said in response to Sunday Standard enquiry.
“In response to prevailing market conditions, we have utilised operational flexibility to make marginal adjustments to production plans.”
