GEM DIAMONDS HALF YEAR 2012 RESULTS
Gem Diamonds Limited (LSE: GEMD) (“Gem Diamonds”, the “Company” or the “Group”) today announces its half year results for the six months ending 30 June 2012 (“H1 2012” or “the Period”).
· Revenue of US$ 180.2 million (US$ 196.5 million in H1 2011).
· Underlying EBITDA of US$ 52.7 million (US$ 90.8 million in H1 2011).
· Attributable net profit of US$ 14.3 million (US$ 28.9 million in H1 2011).
· Basic EPS of 10.36 US cents (21.76 US cents in H1 2011).
· Cash on hand of US$ 139.0 million as at 30 June 2012 (US$ 127.7 million attributable to Gem Diamonds).
· Continued solid performance at Letšeng with carat production of 57 116 carats, up 8% from H1 2011 and recovered grade of 1.68 carats per hundred tonnes (“cpht”), up 8% from H1 2011.
· Letšeng ore mined of 3.3 million tonnes and ore treated of 3.4 million tonnes.
· Good progress made on the Letšeng production expansion project (Project Kholo) which commenced in January 2012.
· Ellendale ore mined of 2.0 million tonnes, up 234% and ore treated of 2.1 million tonnes, up 44% from H1 2011.
· Ellendale carat production of 78 881 carats, up 51% from H1 2011.
· Ghaghoo mine development project underway with US$ 37 million of the capital budget spent to date.
UPDATE ON PROJECT REVIEW:
· Review of development projects at Letšeng and Ghaghoo announced in July 2012.
· The Company remains committed to doubling production at Project Kholo and the development of Ghaghoo but, in light of the current economic climate and to maintain the Company’s strong balance sheet, the Board has taken the decision to extend the completion dates of Project Kholo and Ghaghoo and will keep the global economic environment under review. Should market conditions improve materially, the project execution will be accelerated.
Commenting on the results today, Clifford Elphick, Chief Executive of Gem Diamonds, said:
“Against a challenging price backdrop for the diamond industry, the first half of 2012 was marked by strong operating performance by both Gem Diamonds’ producing mines, the Letšeng mine in Lesotho and the Ellendale mine in Australia. Letšeng reported an increase in both carats recovered and recovered grade compared to H1 2011, with cash costs being held in line with management estimates. Ellendale reported a significant increase in both ore mined and treated and carats produced, which achieved strong prices during the Period despite the challenging market conditions.”
“Gem Diamonds maintains a strong balance sheet, with US$ 139 million of cash as at 30 June 2012, no debt and strong operating cashflows. This positions the Company well to weather the current downturn in the diamond market. In the interests of preserving this strong financial position, whilst remaining committed to its strategic growth projects, the Board has taken the decision to extend the delivery of its development projects at Letšeng and Ghaghoo. Should there be improvement in the global economic climate, there is sufficient flexibility to allow for the delivery of the projects to be accelerated. ”
ABOUT GEM DIAMONDS:
Gem Diamonds is a leading global diamond producer of high value diamonds. The company owns two production mines, the Letšeng mine in Lesotho and the Ellendale mine in Australia, as well as the Ghaghoo mine, currently in development in Botswana. The Letšeng mine is famous for the production of large, top colour, exceptional white diamonds, making it the highest dollar per carat kimberlite diamond mine in the world. Since Gem Diamonds’ acquisition of Letšeng in 2006, the mine has produced four of the twenty largest white gem quality diamonds ever recorded.
Gem Diamonds has a growth strategy based on the expansion of the Letšeng mine to double its production capacity by mid-2015 and the development of the Ghaghoo mine. The Company seeks to maximise revenue and margin from its rough diamond production by pursuing cutting, polishing and sales and marketing initiatives further along the diamond value chain. With favourable supply/demand dynamics expected to benefit the industry over the medium to long term, particularly at the high end of the market supplied by Gem Diamonds, this strategy positions the Company well to generate attractive returns for shareholders in the coming years.