Gem Diamonds reiterates FY production guidance as Q1 output steady

Gem Diamonds reiterated its full-year production guidance on Wednesday as it said first-quarter production was steady compared to the final quarter of 2018.

In an update for 1 January to the end of March 2019, the company said it recovered 29,458 carats, in line with its guidance targets and with Q418, when it recovered 29,523 carats. The company said it was maintaining its full-year 2019 production guidance of between 114,000 and 118,000 carats recovered.

During the quarter, it recovered and sold a 13.33 carat pink diamond for a Letseng mine record of $656,933 per carat. It also recovered two diamonds of more than 100 carats each.

The group sold 27,335 carats during the period, down 18% from 33,140 in the final quarter of last year. In value terms, however, this was up 24% at $51.9m from $41.7m in Q418.

Gem sold eight diamonds for more than $1m each, generating revenue of $ 27.2m during the quarter.

At the end of the period, the company had $40.7m of cash in hand, of which $34m is attributable to Gem Diamonds. The group's net cash position was $11m, of which $7.9m was attributable to Gem.

Chief executive officer Clifford Elphick said: "Sales of Letseng's rough production continued to realise good prices achieving an average price of $ 1,900 per carat during the quarter.

"It is also pleasing to report that initiatives that have been implemented through our business transformation focus continue to contribute to positive production results and continued cost savings and efficiencies throughout the group."

At 1030 BST, the shares were down 4% at 85.40p.

Berenberg said Q1 production was a little better than its forecast of 28,200, driven by grade.