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Gem Diamonds (LSE:GEMD) reported a significant increase in underlying profits for the first half of the year, driven by higher production levels and an increase in the recovery of larger gemstones. For the six months ending 30 June, underlying EBITDA surged to $19.1 million, up from $8.4 million in the same period the previous year.
The company, which operates the Letšeng mine in Lesotho—one of the largest open-pit diamond mines globally—has updated its full-year guidance for both output and sales due to operational improvements. Total carats recovered are now projected to range between 98,000 and 101,000 carats in 2024, down from 109,656 carats last year. Carats sold are now forecasted to be between 100,000 and 103,000, a reduction from the previous estimate of 104,520 carats.
Revenues for the first half of the year reached $78 million, an increase from $71.8 million in the same period last year. Despite this, the average value per carat fell slightly to $1,366 from $1,373. The total number of carats recovered during the period rose to 55,873 from 50,601 carats in the prior year.
Gem Diamonds attributed the strong performance to targeted cost and operational efficiency measures implemented at Letšeng since the second half of 2023. These initiatives led to greater plant stability, higher plant utilization, increased carat recovery, and an improvement in the recovery of large diamonds. During the period, the company recovered eight diamonds weighing over 100 carats each, compared to just two the previous year. Additionally, two more large diamonds have been found since the end of the first half.
Looking ahead, Gem Diamonds anticipates ongoing challenges in the global diamond market, which remains under significant pressure due to a difficult macroeconomic environment. The entry of Russian diamonds into the market despite sanctions and the rising production of lab-grown diamonds are contributing to a higher rough diamond supply, affecting market dynamics.
