Gem Diamonds Di Share News (GEMD)

LONDON (Alliance News) - Gem Diamonds Ltd on Wednesday said the key metrics at its Letseng mine are moving in the right direction, leading it to increase its full-year guidance, whilst production from the Ghaghoo mine also is up thanks to grades coming in higher than expected.

The diamond miner operating in Africa said production is up from the Letseng mine in Lesotho, whilst costs are down and prices "firm", whilst grades at the Ghaghoo mine in Botswana are coming in higher than the average reserve grade.

Gem Diamonds said the satellite waste stripping at the Letseng mine has already contributed just under 1.58 million tonnes of ore since the start of 2015, only a fraction off its full target of 1.65 million tonnes, leading it to up its guidance to for all of 2015 to 1.80 million tonnes.

Gem Diamonds said Letseng is now expected to produce between 105,000 to 108,000 carats in the full year, compared to its previous guidance in March of 102,000 to 107,000 carats. However, it also said full year sales from the mine will now be in the region of 103,000 to 105,000 carats compared to its March guidance of 102,000 to 107,000 carats.

Operating cash costs for the full year are now also expected to be lower than originally projected, within a range of USD205 to USD225 per tonne of ore compared to its previous guidance of USD210 to USD230 per tonne.

Letseng produced 29,460 carats in the third quarter of 2015, pushing production since the start of the year to 79,479 carats. Grades in the third quarter averaged 1.68 carats per hundred tonnes of ore, which is higher than the 1.61 carat average in the first half of the year.

Gem Diamonds said prices at Letseng remain "firm", averaging USD2,578 per carat in the third quarter compared to the first half average of USD2,264 per carat.

Total sales from Letseng in the third quarter totalled 25,460 carats, generating revenue of USD65.6 million.

Included in those sales, the company sold three diamonds of over 100.0 carats each in the period and sold 13 rough diamonds in the period for more than USD1.0 million each, including one 357.0 carat diamond that sold for USD19.3 million on its own.

Sales from Letseng since the start of 2015 total 72,421 carats, which generated nine-month revenue of USD171.9 million with an average price of USD2,374 per carat.

"Letseng has also delivered a strong operational performance, with ore treated, grade and carat recoveries ahead of those of the previous quarter and expected to exceed original full year guidance," said Chief Executive Clifford Elphick.

At the Ghaghoo mine, Gem Diamonds reported an average third quarter grade of 29.1 carats per hundred tonnes of ore, which is above the reserve grade of 27.8 carats.

The mine produced 31,922 carats in the third quarter of 2015, including two blue rough diamonds, 115 diamonds greater than 4.8 carats each and 13 diamonds greater than 10.8 carats each.

That pushed production from Ghaghoo since the start of 2015 to 67,205 carats.

Gem Diamonds said it sold a parcel, which is a collection of stones sold in a group, in July for USD4.9 million. That parcel contained 29,891 carats to achieve an average price of USD165 per carat, bringing the average price from Ghaghoo since the start of 2015 to USD176 per carat.

"Ghaghoo continues its ramp up, with ore treated and carats recovered up over 30% on the previous quarter. The Ghaghoo production faces a very challenging market at present," said Elphick.

At the end of September, Gem Diamonds reported a cash balance of USD86.1 million, with a net cash position of USD54.0 million.

Gem Diamond shares were up 5.1% to 104.35 pence per share on Wednesday morning.

By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance

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