TIDMGEMD
RNS Number : 4980Q
Gem Diamonds Limited
28 October 2021
28 October 2021
GEM DIAMONDS LIMITED
Q3 2021 Trading Update
Gem Diamonds Limited (LSE: GEMD) ("Gem Diamonds" or the
"Company" or the "Group") provides the following Trading Update
detailing the Group's operational and sales performance from 1 July
2021 to 30 September 2021 ("Q3 2021" or the "Period").
-- 23 435 carats were recovered during the Period, resulting in
82 266 carats recovered for the year to date (14% higher than YTD
2020: 72 403 carats).
-- 84 906 carats have been sold for the year to date, achieving
an average price of US$1 782 per carat (YTD 2020: US$1 908 per
carat).
-- Revenue generated in the Period amounted to US$47.3 million,
achieving an average price of US$1 589 per carat.
-- The highest price per carat achieved in the Period was US$88
889 per carat for a 4.41 carat light blue diamond.
-- The highest price per carat achieved in the Period for a
white Type IIa diamond was US$47 574 per carat for a 65 carat
diamond.
-- Six diamonds sold for more than US$1.0 million each,
generating revenue of US$12.2 million during the Period, bringing
the total number of diamonds sold for greater than US$1.0 million
to 16 for the year to date, generating revenue of US$48.3
million.
-- Post Period end, two large high-quality Type IIa white
diamonds (a 245 carat and 102 carat) were recovered. These diamonds
are scheduled to be sold in Q4 2021.
-- The Group ended the Period with cash on hand of US$10.8
million. This does not include US$37.3 million of September tender
proceeds received after Period end.
-- Following operational challenges experienced in Q3,
production and cost guidance for full year 2021 has been
revised.
Covid-19:
-- The health and safety of our people remains our priority. All
requisite staffing, facilities and equipment, as well as
communication and education mechanisms, as developed and
implemented in response to the Covid-19 pandemic, remain in place
to ensure the safety of employees and contractors and the
achievement of the Group's objectives. The controls implemented
were effective in mitigating the risk associated with Covid-19
during the third wave of infections experienced in Lesotho and
South Africa between July and August 2021.
-- The successful rollout of the onsite vaccination drive by
Letšeng with the support of the Lesotho Ministry of Health has
resulted in 1 503 (over 85%) staff and contractors at Letšeng being
fully vaccinated to date.
Corporate and Financial:
-- Utilised facilities amounted to US$22.5 million, resulting in
a net debt position of US$11.7 million at Period end (excluding
US$37.3 million of September tender proceeds received after Period
end ).
-- US$49.6 million of unutilised facilities were available to the Group at Period end.
-- The Business Transformation target of US$100 million in
incremental revenue, productivity improvements and cost savings up
to year end 2021 remains on target to be delivered as planned.
-- The sale of Gem Diamonds Botswana is well advanced with the
transaction expected to be finalised by the end of Q4 2021, subject
to certain Suspensive Conditions and relevant regulatory authority
and approvals within Botswana. Post Period end, the Botswana
Competition Commission approval has been received and the Group is
currently awaiting regulatory approval for the transaction from the
Botswana Department of Mineral Resources, Green Technology and
Energy Security.
Gem Diamonds' CEO, Clifford Elphick, commented:
"During the quarter, diamonds recovered were of a relatively
lower quality for Letšeng's normal Run of Mine production.
Notwithstanding that, prices achieved for these goods were strong
reflecting the continued good demand and market prices paid for
Letšeng category diamonds.
We are pleased with the successful vaccine rollout at Letšeng
which has resulted in more than 85% of the workforce being fully
vaccinated. We however continue to be vigilant by remaining focused
on maintaining stringent Covid-19 protocols and appropriate support
at Letšeng and the rest the Group. This, combined with the positive
uptake of the vaccine throughout the Group has assisted in
protecting our people and allowed for continued production in a
safe and responsible manner.
Following operational challenges in the quarter which have been
successfully managed, full year guidance has been revised."
1. Diamond Market
Good prices achieved in the September tender for Letšeng's high
value diamonds reflected a continued recovery of the diamond market
which was supported by strong consumer demand. The first trial
viewing held in Dubai in September was well attended and the
increased competition and confidence in the product contributed to
the stronger prices achieved.
2. Letšeng
2.1. Rough diamond sales
H1 2021 Q3 2021 YTD 2021 YTD 2020 YTD 2021 vs YTD 2020 % Change
Carats sold 55 124 29 782 84 906 70 559 20%
-------- -------- --------- --------- ------------------------------
Total value (US$ millions) 104.0 47.3 151.3 134.6 12%
-------- -------- --------- --------- ------------------------------
US$/carat 1 886 1 589 1 782 1 908 -7%
-------- -------- --------- --------- ------------------------------
2.2. Production
H1 2021 Q3 2021 YTD 2021 YTD 2020 YTD 2021 vs YTD 2020 % Change
Waste tonnes stripped 10 167 526 3 999 532 14 167 058 9 991 260 42%
----------- ---------- ----------- ---------- ------------------------------
Ore tonnes treated 3 139 719 1 503 125 4 642 844 3 892 553 19%
----------- ---------- ----------- ---------- ------------------------------
Satellite pipe contribution
(tonnes) 1 672 289 641 273 2 313 562 1 973 485 17%
----------- ---------- ----------- ---------- ------------------------------
Carats recovered (1) 58 831 23 435 82 266 72 403 14%
----------- ---------- ----------- ---------- ------------------------------
Grade recovered (cpht) (1) 1.87 1.56 1.77 1.86 -5%
----------- ---------- ----------- ---------- ------------------------------
(1) Includes carats produced from the Letšeng Plants, the
Alluvial Ventures (AV) plant and the recovery tailings treatment
facility.
Waste stripping continued in line with the requirements of the
updated long-term mine plan to ensure the future availability of
ore and incorporate the steeper inter-ramp slope angles. During the
Period, a total of 4.0 million tonnes of waste material was
mined.
Letšeng's Plants treated a total of 1.2 million tonnes of ore
during the Period of which 0.6 million tonnes were sourced from the
Satellite pipe and 0.6 million from the Main pipe. In addition, 0.3
million tonnes of Main pipe material was treated through the
Alluvial Ventures contractor plant.
2.3. U pdated guidance for 2021
During the Period, the Letšeng Plants experienced a number of
interruptions and unplanned downtime mainly due to the
following:
-- Toward the end of the Period, a breakdown of the jaw crusher
in the primary crushing area resulted in an extended downtime of
the PCA for 14 days;
-- Unplanned failures of key mainstream units in both plants (e.g. scrubber);
-- Extreme weather conditions and intermittent external power outages and dips; and
-- Lost shifts resulting from cross border travel limitations
due to the third wave of Covid-19. In addition, the residual impact
of Covid-19 continued to place significant strain on the
operation's supply chain.
Although these issues have now been addressed, the negative
impact on tonnes treated during Q3 has resulted in revised guidance
with a reduction of carats recovered and carats sold. The lower
volumes have also consequently impacted unit costs per tonne. Waste
stripping for the remainder of the year will be reduced in line
with the lower treated tonnes required. Capital expenditure has
also been reduced following the deferment of the replacement of the
PCA to 2022.
The table below sets out the revised production and cost
guidance following the operational challenges experienced in Q3 and
the first part of Q4 2021.
FY 2021 FY 2021
Updated Guidance Previous Guidance
October 2021 March 2021
---------------- -------------------
Waste tonnes mined (Mt) 18 - 20 19 - 21
---------------- -----------------
Ore treated (Mt) 6.1 - 6.3 6.3 - 6.5
---------------- -----------------
Satellite pipe ore contribution (Mt) 3.0 - 3.1 2.6 - 2.7
---------------- -----------------
Carats recovered (Kct) 110 - 114 123 - 127
---------------- -----------------
Carats sold (Kct) 103 - 107 119 - 123
---------------- -----------------
Direct cash costs, (before waste) per
tonne treated (Maloti) 200 - 210 195 - 205
---------------- -----------------
Operating costs per tonne treated(1)
(Maloti) 280 - 290 275 - 285
---------------- -----------------
Mining waste cash costs per tonne of
waste mined (Maloti) 44 - 46 40 - 42
---------------- -----------------
Total capex (US$ million) 6 - 8 14 - 15
---------------- -----------------
(1) Operating costs per tonne excludes royalty, selling costs,
depreciation and mine amortisation, but includes inventory, waste
and ore stockpile adjustments.
3. Sustainability
The Group recorded one LTI during the Period, resulting in a
Group-wide All Injury Frequency Rate of 1.07 for the year to Period
end. No major or significant community or environmental incidents
occurred across the Group during the Period. The Letšeng operation
retained both its ISO 14001 and ISO 45001 certification following
successful audits conducted during the Period.
The Group is advancing with its work to adopt the
recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD) and has completed a Group-specific Climate
Change Scenario Analysis.
FOR FURTHER INFORMATION:
Gem Diamonds Limited
Susan Wallace, Company Secretarial department
ir@gemdiamonds.com
Celicourt Communications
Mark Antelme / Ollie Mills
Tel: +44 (0) 208 434 2643
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
The Gem Diamonds Limited LEI number is 213800RC2PGGMZQG8L67.
ABOUT GEM DIAMONDS:
Gem Diamonds is a leading global diamond producer of high value
diamonds. The Company owns 70% of the Letšeng mine in Lesotho and
is currently in the process of selling its 100% share of the
Ghaghoo mine in Botswana. The Letšeng mine is famous for the
production of large, exceptional white diamonds, making it the
highest dollar per carat kimberlite diamond mine in the world.
www.gemdiamonds.com
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