By Michelle Graff
This Type II, D color, 198-carat rough diamond from the Letšeng mine sold for $10.6 million in September. The strength of diamond prices last year helped Gem Diamonds’ full-year revenue grow 27 percent.
London--After a year that saw mostly strong prices for both rough and polished diamonds at tender for the miner, Gem Diamonds’ revenue for the fiscal full year ended Dec. 31 hit $270.9 million.

Revenue for the company’s full year 2014 was up 27 percent on the strength of the prices from the Letšeng diamond mine in the Kingdom of Lesotho and it’s notable number of 20-plus-carat finds, while operating profit also increased 53 percent to $92.7 million.

Cash on hand at the end of the year was $110.7 million.

A total of 108,569 carats were recovered from the Letšeng mine in 2014, among them the highest number of diamonds greater than 20 carats produced in a single year since Gem Diamonds acquired the mine in 2006. This included seven diamonds that were greater than 100 carats each, five of which sold for a total of $37.4 million and made up approximately 14 percent the mine’s total revenue.

The largest recovered during the year was a 299.3-carat yellow diamond, which was sold into a partnership at the beginning of 2015 and will give Letšeng a 50 percent benefit from its polished sale.

Letšeng achieved an average of $2,540 per carat in 2014, up 24 percent from the per-carat average in the prior year.

Last year, Gem Diamonds initiated a number of projects to drive growth and innovation at Letšeng, including the installation of the new Coarse Recovery Plant to improve diamond recovery. It remains on track to be completed by the second quarter of 2015.

Gem Diamonds also implemented the Plant 2 Phase 1 upgrade project in the third quarter of 2014, expected to result in an increased treatment capacity of 250,000 tons per year and a reduction in diamond damage. It’s slated for completion in early 2015 as well.

These two projects will position the mine as a long-life open pit, the company said.

Gem Diamonds also brought its Ghaghoo mine in Botswana--its first underground diamond mine--into production, reporting in its annual results that the first diamonds produced there have been of better quality and average size than the stones initially recovered during the exploration phase.

After opening the Ghaghoo mine in September, the company now is developing the mine in phases, the first of which is aimed at confirming diamonds grades and prices as well as testing the different mining techniques. Production will be increased as appropriate in the next phases, Gem Diamonds said.

So far in the first phase, 48,023 tons of ore have been treated with 10,167 carats recovered, including a 20- and 17-carat white diamond. The company also has confirmed the mine as a source of rare colored diamonds, with three orange diamonds recovered.

A production rate of about 60,000 tons per month is expected to be achieved by mid-2015.

Gem Diamonds said it saw both rough and polished diamond prices stand firm over the first three quarters of the year before declining a bit in the fourth quarter, due in part to concerns over bank lending and liquidity.

Despite that weakening at the end of the year, Gem Diamonds said it expects some firming in the market this year as banks start to fill the funding gaps that created these concerns in the first place.

“We successfully delivered on a number of key growth objectives including bringing Ghaghoo into production, significantly enhancing operational efficiencies at Letšeng and delivering a maiden dividend,” CEO Clifford Elphick said. “As we expand from a single producing mine to two producing mines, with the ramp up of production at Ghaghoo, we will start to see a significant shift in production figures.”

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