Letšeng’s Prices Drop, Sales Slump 38% to $59M

Gem Diamonds reported that sales of diamonds from the Letšeng mine in Lesotho fell 38 ‎percent year on year to $58.7 million during the period January 1 through April 15, 2012 as ‎production focused on the lower-grade main pipe. ‎

Letseng MineThe quantity of goods sold declined by 3 percent to 29,730 carats, while the average ‎price from the three tenders held during the period slumped 36 percent to $1,976 per ‎carat. First-quarter production at Letšeng, which launched a major expansion program in ‎January, rose 6 percent to 28,114 carats.‎

Clifford Elphick, Gem Diamonds’ chief executive, noted however that rough diamond ‎prices have increased by 7 percent during 2012, according to the Gem Diamonds Price ‎Index, which measures prices from the company’s Letšeng and Ellendale mines on a like ‎for like basis. ‎

‎“The market for rough diamonds has continued to improve following the correction to ‎prices in September 2011,” the company stated. “Gem Diamonds anticipates rough ‎prices across the market to continue increasing into [the second quarter of 2012].”‎

The company added that despite the relatively thin volumes of high end polished being ‎traded, prices in these goods both in the polished wholesale market and high end branded ‎auctions are expected to improve further. ‎

The average price of rough sold from the Ellendale mine more than doubled to $1,049 ‎per carat, boosting sales by 46 percent to $24.3 million during the first four months of the ‎year. Sales included 4,849 carats of fancy yellow diamonds supplied to Tiffany & Co with ‎the average price on these goods up 15 percent to $4,326 per carat. Production at ‎Ellendale increased 24 percent to 31,616 carats. ‎

Gem Diamonds did not provide an update about its re-evaluation of its ownership of ‎Ellendale. The company announced in November 2011 that it is considering its options ‎regarding the mine. ‎

Gem Diamonds also owns the Ghaghoo mine development in Botswana where ‎construction is expected to start in June 2012. Production is expected to launch in the ‎second half of 2012. ‎

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