Gem Diamonds said sales from its high-value Letšeng mine fell 22 percent last year as the company extracted fewer large rough diamonds than expected.
Sales from the deposit in Lesotho slid to $184.6 million in 2016, the miner reported. By volume, sales rose 6 percent to 108,945 carats, with the average price slumping 26 percent to $1,695 per carat.
Production at Letšeng of rough diamonds weighing 100 carats or more has crept up every year from three stones in 2012 to a peak of 11 in 2015, before falling to four last year. The decline in 2016 was because of normal variation in the mine’s output which the company also experienced in 2012, Gem Diamonds explained following a review.
“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,” said Clifford Elphick, chief executive officer of Gem Diamonds.
“This is expected to revert to normal in the near future,” Gem Diamonds said. The company is considering investing in a plant dedicated to large diamonds as a way of reducing damage to these exceptional stones during the mining process and enabling more of them to reach the market, it added.
Production of rough diamonds of all sizes at the project amounted to 108,206 carats versus 108,579 a year earlier.
Meanwhile, production at the Ghaghoo mine in Botswana dived 55 percent to 40,976 carats. Gem Diamonds sold 16,989 carats of rough from the mine on tender in December for $2.4 million at an average price of $142 per carat. The project remains under review largely because of the weak prices achieved, the miner said.