Gem Diamonds is considering an offer for its Ghaghoo mine in Botswana after discontinuing the operation earlier in the year due to a slump in prices.
“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 Thursday in a statement accompanying its first-half results.
Those results showed a 15% drop in revenue year on year to $92.9 million for the period, owing to lower output and a fall in average diamond prices at the company’s Letšeng mine in Lesotho. Net income came to $600,000, up from a loss of $15.9 million the previous year, when it incurred a $40 million impairment cost related to discontinuing the Ghaghoo mine. Operating profit slumped 77% to $10 million.
The average price per carat at Letšeng sank to $1,779 during the half-year, compared with $1,899 in the same period of 2016, while production at the mine dropped 12% to 50,478 carats, the company said. Gem Diamonds implemented a revised mining plan at Letšeng during the six months, aiming to reduce waste over the remaining life of the mine.
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.
The miner placed Ghaghoo, which opened in 2014, on care and maintenance in February with the intention of resuming operations once market conditions improved. Gem Diamonds acquired the mine in 2007.