Gem Diamonds has posted a trading review of its performance for the first half of 2010. The miner noted on its website that it will post its half year fiscal results in late August.

Reviewing the operations at Letseng, the miner said that overall, 41,544 carats were sold at an average price of US$1 728 per carat. A total of 23 diamonds from Letseng sold at prices greater than $20 000 per carat, including a 27.91 carat diamond which sold for $58,724 per carat – the highest dollar-per carat for a Letseng white diamond sold on rough tender since July 2008.

A total of 245 rough diamonds greater than 10.8 carats were sold by Letseng in H1 2010.

In H1 2010, tonnage of ore treated was above target and tonnage of waste mined and carats recovered were below target. Gem Diamonds' statement said management "still expects to achieve the annual targets for waste mined, tonnage treated and carats recovered.



"Management continues to drive a series of strategic workstreams examining potential mine expansion, reduction of diamond damage and continual focus on cost efficiency and operational improvement at Letseng."



Reviewing the operations at Ellendale, the diamond miners said that it sold 77,198 carats at an average of $434 per carat in H1 2010. In H1 2010, 9,149 carats of fancy yellow diamonds were sold to Tiffany & Co at an average price of $2,588 per carat.

An additional 68,049 carats of commercial goods were sold at an average price of $144 per carat.



While the grade at Ellendale remains in line with expectations, added the miner, both carats recovered and tonnage treated are expected to be high single digit percentage figures below the previous stated forecast due to plant availability issues in H1 2010.

The Gem Diamonds Group came to the end of H1-2010 with $108.2 million is cash, of which $89.6 million is attributable to Gem Diamonds, and no debt.

Gem Diamonds CEO, Clifford Elphick said: “In the first half of the year we have had a number of operational challenges at both Letseng and Ellendale.

"With the unique nature of Letseng’s very high value, low diamond content resource, fluctuations in production are expected, however management believe that production targets for 2010 will be achieved by year end.

"In the case of Ellendale, the seasonal nature of operations results in a better performance in the second half of the year. Management expects to achieve all production targets in the second half of 2010, but may still be slightly behind targets for the full year.

Over the past six months both rough and polished diamond prices have strengthened, driven by demand from China and India and improving US demand. The supply demand outlook remains attractive for the industry. Looking forward, Gem Diamonds is pursuing a number of growth, added value and efficiency workstreams across its operations.”