Gem Diamonds recovers 442 carat diamond from Letseng mine

Gem Diamonds said on Friday that it has recovered a high quality 442 carat type II diamond from its Letseng mine in Lesotho.

Chief executive officer Clifford Elphick said recovery of the diamond - one of the world's largest gem quality diamonds to be recovered this year - is "further confirmation of the calibre of the Letseng mine and its ability to consistently produce large, high quality diamonds".

"It is also a fitting testament to the dedication of the employees in the group to have recovered such an extraordinary diamond, whilst at the same time maintaining strict adherence to health and safety precautions during the global Covid pandemic," he said.

A portion of the proceeds from the sale will be used to fund a special community project.

At 1010 BST, the shares were up 13.6% at 31.80p.

Broker Liberum said this was a "nice big timely recovery".

Analyst Ben Davis said: "From my untrained eye and looking at the photos on the website, its seems to have no large visible inclusions, good colour and is a decent shape to yield a large polished stone.

"A very rough guess it could be worth in order of magnitude between $10-$15m (the 910- carat Lesotho Legend for comparison sold for $40m), which after tax would be yielding a free cash flow yield of $6-$9m or 11%-17% of the current market cap. It is these types of discoveries that attract investors to Gem Diamonds and expect shares up strongly today."