Gem Diamonds is planning major investments at two diamond mines, buoyed by increasing global demand for the precious stones.
The London-based company, which recently announced its 2010 results, is betting on the price of rough diamonds continuing to rise this year. The increase is partly driven by strong demand from Chinese consumers.
Gem, which reported a profit rise of 43 per cent from 2009, said that more than 500 rough diamonds greater than 10.8 carats in size were recovered in 2010 at the Letšeng diamond mine in Lesotho, of which it owns 70 per cent. It said it now plans to invest around $245 million on projects to increase overall value at the mine.
Plans are also underway for construction of a new mine at Gope, Botswana, for which a mining licence has been awarded. The first phase of construction is expected to cost around $85 million.
The two growth projects are expected to add 600,000 carats a year to Gem’s diamond production by 2020. The company produced 255,000 carats in 2010 and expects to produce 273,000 carats in 2011.
Commenting, Clifford Elphick, Gem’s CEO, said: “2011 has begun on an extremely positive note. Not only have rough diamond prices continued to increase as a result of perceived supply shortages, but polished prices have too, and volumes of trading are pleasing. Management has been concentrating on delivery of growth and control of costs.
“Much effort has been expended on these aspects of the Company’s activities and it is pleasing to report to shareholders the fruits of these labours. The Company is very well placed with a pipeline of opportunities and a balance sheet to fund them.”
Gem’s portfolio comprises producing kimberlite and lamproite mines in Lesotho and Australia, as well as operations, development projects and exploration assets in Angola, Botswana and Indonesia.
