By Brenton Cordeiro
July 30 Gem Diamonds Ltd said
production rose for the first half on higher output from its
Ellendale mine in Australia, but said average diamond prices
fell during the period.
The company also said it suspended the formal process of
exploring options for its Ellendale mine, which produces an
estimated 50 percent of the world's supply of yellow diamonds,
after receiving offers that were not "at a sufficiently high
"Some people approached us to acquire the mine and the
offers that they made were not acceptable so we've stopped
that," Chief Executive Clifford Elphick told Reuters.
Gem Diamonds' prized yellow diamonds that were sold to
upscale jeweller Tiffany & Co got an average selling
price 7 percent higher than a year ago, but commercial diamonds
were sold at about 8 percent lower price.
The company said production at Ellendale grew 51 percent to
78,881 carats in the first half after the commissioning of the
primary plant feed section of the processing plant. Production
from its other mine, the Letseng mine in Lesotho, rose 8 percent
to 57,116 carats.
Gem Diamonds reiterated its outlook for the diamond market,
expecting it to continue to experience short-term volatility.
"Our view on the long-term outlook for the diamond market
remains positive, with supply forecast to remain tight and
growing demand in key markets expected to put upward pressure on
diamond prices," CEO Elphick said.
Gem Diamonds said it may delay expanding two projects -- its
Kholo project at Letseng and development at its Ghaghoo mine in
"The directors have initiated a review of the group's
capital expenditure programme to ensure the balance sheet
remains strong in the event of further deterioration in market
conditions," the company said in a statement.
Last month, Gem Diamonds said initial production at Ghaghoo
would be delayed until the first half of 2014 following an
accident that killed two employees.
"After implementation of all the corrective action
recommendations, the advancement of the decline tunnel is
expected to re-commence in mid-August 2012," Gem Diamonds said.
The company's shares, which have lost about a quarter of
their value in the last three months, were up 1 percent at 195.2
pence at 1035 GMT on Monday on the London Stock Exchange.