CORRECTED-Gem Diamonds lowers forecast for Letseng mine

(Corrects paragraph 1 and 3 to clarify carats recovered were 26percent lower than the second half of 2012, not the first half)

July 29 (Reuters) - Gem Diamonds Ltd said itrecovered 26 percent fewer carats in the first half comparedwith the second half of last year and cut its 2013 productionforecast for its key Letseng mine in Lesotho.

Gem Diamonds said it expected to recover carats in the rangeof 95,000 to 105,000 from Letseng in 2013.

Carats recovered during the six months to June 30 fell to42,268 from 57,234 in the second half of 2012.

The company said the shortfall was because of mining withinthe lower-grade main pipe, tonnage loss due to the installationof crushers, and mining within a region of high basalt content.

"Although higher grade recoveries are expected in H2 2013,this won't be sufficient to recover the full shortfall," thecompany said in a statement.

Gem Diamonds' shares were down 4.5 percent at 136 pence inearly trade on the London Stock Exchange on Monday. (Reporting by Karen Rebelo in Bangalore)

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