Gem Diamonds recovered 27,227 carats from its Letseng mine in Lesotho during the fourth quarter, ended December 31, 2013, up 7 percent compared to the third quarter of 2013, when production totaled 25,559 carats.

Letseng Production

During the quarter, waste stripping at Letseng was in line with the mine plan and the requirements to access higher grade ore from the Satellite pipe. As such, during the period, Letseng's plants 1 and 2 treated 700,000 and 600,000 tonnes of ore, respectively, 52 percent of which was sourced from the Satellite pipe. The balance of ore was treated through the Alluvial Ventures plant and sourced from the Main pipe. For the full year 2013, 84 percent or ore was sourced from the Main pipe, and 16 percent was sourced from the Satellite pipe.

Gem Diamonds reports that improved plant availabilities and improvements to the cone crushers, which were installed earlier in the year, led to tonnes treated being higher in the fourth quarter. This increase in tonnes treated, as well as increased tonnes of the higher grade Satellite ore being treated, has resulted in an increase in carats recovered during the fourth quarter over the third quarter.

Diamond Sales

The company, which owns a 70 percent interest in the mine, sold 29,825 carats during the fourth quarter's three Letseng tenders for revenues of US$75.6 million. This was a 46 percent increase in sales volume and 83 percent increase in sales value over the third quarter. The average value per carat achieved during the quarter was US$2,533, which increased 25 percent compared to US$2,022 per carat in the third quarter of 2013.

Eleven rough diamonds achieved a value in excess of US$1 million each during the period, while 35 rough diamonds achieved a value in excess of US$20,000 per carat.

A total of 215 rough diamonds greater than 10.8 carats in size were exported during the fourth quarter, equating to 82 percent of Letseng's revenue for the quarter. For the full year, 566 diamonds greater than 10.8 carats have been exported, totaling 75 percent of Letseng's revenue for the full year.

Gem Diamonds reports that these "strong" prices continued with the first tender of 2014, with Letseng achieving an average price of US$2,673 per carat, bringing the 12-month rolling average to US$2,180 per carat.

"It is pleasing to see the stronger Letseng diamond prices achieved for the period, which were 25% up on the prior quarter. As mining at Letseng has moved more into the Satellite pipe in Q4 2013, we have seen an expected improvement on the quality of diamonds produced. This, together with a strong market saw the final tender of 2013 realise over US$3,000 per carat. This firmer trend in rough prices for Letseng's high value diamonds looks set to continue into the beginning of 2014," says Gem Diamonds' CEO Clifford Elphick.

Ghaghoo

Commenting on the firm's Ghaghoo mine in Botswana, Elphick said that "it is also a great milestone for the company to see that at Ghaghoo, the kimberlite has been intersected and the main decline is now less than 50 meters from the break off to the first production level. In addition, a separate US$25 million facility has been signed for capital expenditure at Ghaghoo and the Group ended 2013 with a strong cash position some US$10 million higher than at the half year."

Commercial commencement of production at Ghaghoo remains on schedule for early in the second half of the year. Ramping up to the planned steady state annual production rate by the year's end is 220,000 carats per year, extracted from 720,000 tonnes of ore. The mining support infrastructure, camp, treatment plant and other services are in place and are operating.