August 21, 2012 / 6:35 AM / in 5 years

Gem Diamonds profit halves on higher costs, lower prices

Aug 21 (Reuters) - Gem Diamonds Ltd’s first-half profit more than halved, hurt by a rise in costs and lower prices for the precious stone during the period.

Profit before tax was $36.3 million, down from $79 million, a year earlier.

Revenue fell 9 percent to $180.2 million. Cost of sales rose about 28 percent to $105.4 million.

Gem Diamonds said last month that production rose for the first half at both its producing mines -- Ellendale in Australia and Letseng in Lesotho. But average diamond prices fell during the period.

Diamond prices have fallen since the beginning of this year, on weaker demand amid the euro zone crisis and a slowdown in growth in key diamond markets China and India.

The diamond miner has delayed development work at its Kholo project at Letseng and its Ghaghoo mine in Botswana.

“Should market conditions improve materially, the project execution will be accelerated,” the company said.

Gem Diamonds shares, which fell 18.56 percent in the last six months, closed at 190 pence on the London Stock Exchange on Monday.

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