LSE-listed Gem Diamonds CEO, Clifford Elphick, reports that the company has successfully renewed the mining lease for the Letšeng mine with the government of the Kingdom of Lesotho.

This was revealed in the group’s operational and sales performance for the third quarter of 2019 for the period 1 July to 30 September.

The terms of the renewed mining lease were agreed with the Lesotho Mining Board, following a successful statutory negotiation process. The lease is renewed for an immediate period of 10 years with an exclusive right granted to Letšeng to renew the mining lease for a further period of 10 years.

The Letšeng diamond mine.

However, Elphick said that Letšeng’s high-value large diamond production has experienced price pressure during the period. “This, together with diamonds sold from the lower value ore mined in the previous quarter, resulted in an average price achieved of 6% lower than the previous quarter.”

For the quarter under review, capital expenditure has been reduced by c.US$ 7.0 million, reducing expected capital spend for the full year to c.US$ 12.0 million.

The company recovered four diamonds greater than 100 carats during the quarter, bringing the total to seven for the nine-month period to 30 September 2019; and sold 25 631 carats during the period, achieving an average price of US$ 1 417 per carat compared with US$ 1 501 per carat in the second quarter. It also sold 5 diamonds for more than US$ 1.0 million each, generating revenue of US$ 11.0 million.

Meanwhile, the company said that prices for smaller and commercial type goods remain under pressure in the diamond sector with polished inventory levels remaining high. “A recovery in these prices is expected in the medium term. Larger high-quality diamonds have also experienced some price pressures in 2019, contributing to the lower prices achieved during the period.”

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