Gem Diamonds’ revenue slipped in the first quarter, as the coronavirus weighed on the average price of rough diamonds from its Letšeng mine in Lesotho.
“Prices for Letšeng’s diamonds have been negatively impacted in March 2020 due to the global COVID-19 pandemic, but have demonstrated a resilience in this global crisis,” the company said Tuesday.
Sales fell 9% to $47.3 million for the three months ending March 31, as the average price dropped 15% to $1,615 per carat. The miner was forced to cancel its March large-diamond tender in Belgium, and instead implemented a flexible tender for those stones. The price decrease was partially offset by a 7% increase in sales volume to 29,298 carats.
During the period, Gem Diamonds recovered two rough stones weighing more than 100 carats each, on par with the year before. The company unearthed a total of 26,110 carats in the first quarter. It sold 11 diamonds for more than $1 million each, compared to eight in the same quarter of 2019.
While Letšeng is currently closed due to a nationwide lockdown, the miner has performed extensive cash-flow planning for the shutdown period, and does not expect to have an issue with resuming full production.
“Letšeng’s mining progressed well during the period, and we are confident that the mine will be able to rapidly ramp up to full production once the lockdown period is lifted and it is safe for all our employees and contractors to return to [the] site,” said Gem Diamonds CEO Clifford Elphick.
“The group’s cash on hand, together with its available facilities, flexible-tender sale process, and implemented cost-cutting measures, are sufficient to withstand the lockdown period and the anticipated ramp-up to full production,” the company added.
Due to the uncertainty surrounding the industry amid the coronavirus crisis, Gem Diamonds will issue an updated forecast for 2020 once it has assessed the full extent of the pandemic’s operational and financial impact on the company, it added.
Image: The Letšeng mine. (Gem Diamonds)