Gem Diamonds profit falls 39 pct as Letseng mine output dips

Gem Diamonds Ltd reported a 39 percent fall in first-half profit as lower production and recovery of lower-grade ore at its key Letseng mine in Lesotho weighed on earnings.

Pretax profit decreased to $23.2 million for the six months ended June 30 from $38.2 million a year earlier. Revenue fell 21 percent to $96.5 million.

Gem cut its 2013 production forecast last month as it recovered 26 percent fewer carats in the first half from its Letseng mine than the second half of last year.

The miner said at the time that the shortfall was because of mining within the lower-grade main pipe, tonnage loss due to the installation of crushers, and mining within a region of high basalt content.

"We look forward to moving steadily into higher grade parts of the ore body in the second half of the year," Chief Executive Clifford Elphick said on Thursday. The Letseng mine is located in the Maluti mountains in Lesotho and is known for its large white diamonds.

The company said it anticipates that better-grade ore mined in the second half of the year and the effect of new crushers in reducing diamond damage would have a positive impact on revenue in the last few tenders of 2013. It added that it expects the first diamonds to be mined from its Ghaghoo mine in Botswana in the second half of 2014.

The miner's shares were trading down 5.3 percent at 150 pence at 0729 GMT. The stock was among the top percentage losers on the London Stock Exchange on Thursday.

http://www.reuters.com/article/2013/08/15/gemdiamonds-results-idUSL4N0GD3E520130815