17 June 2017

Lesotho: Letšeng Recovers Two Large Diamonds

GEM Diamonds Ltd has announced the recovery of two diamonds bigger than 100 carats from its flagship Letšeng Mine in Mokhotlong.

In a statement issued earlier this week, the British firm said it had recovered a high-quality 104.73 carat, D-colour Type IIa diamond and a 151.52 carat Type I yellow diamond from the mine.

Letšeng Mine is jointly owned by Gem Diamonds, with a 70 percent stake, and the government of Lesotho which owns the other 30 percent.

The announcement follows recent Letšeng recoveries announced in May of an exceptional 80.58 carat D-colour Type IIa diamond and a 98.42 carat D-colour Type IIa diamond, as well as the recovery of a 114 carat D colour Type IIa diamond in April.

Since Gem Diamonds' acquisition of Letšeng in 2006, the mine has produced four of the 20 largest white gem quality diamonds ever recorded.

"The Letšeng mine is well-known for the production of large, top colour, exceptional white diamonds, making it the highest dollar per carat kimberlite diamond mine in the world," reads part of the Gem Diamonds statement.

In a note to clients, analysts at British investment banking firm SPAngel said: "The recovery of two more large, potentially very valuable diamonds from Letseng should enhance Gem Diamonds' revenues; we look forward to learning the prices they achieve when they are sold."

At an average elevation of 3 100 metres above sea level, Letšeng is one of the highest diamond mines in the world.

Letseng is renowned for the size and quality of its stones, with an average sales price of almost $2 000 a carat, the highest in the industry. Yet the company has suffered recently from a lack of big finds and discovered just five stones bigger than 100 carats last year, fewer than half as many as it found in 2015.

Gem, which fell to a record low in April, has also been hurt by weakening prices for lower-quality stones produced at its Ghaghoo mine in Botswana. In February, the company said it was shutting the newly-built operation because prices had fallen by one-third since 2015.

While the latest finds will offer some reassurance to investors, they are not even close to the biggest found at Letšeng. In 2015, Gem sold a 357-carat stone for $19.3 million and in 2006 found the 603-carat Lesotho Promise.

Last week, 27 percent of shareholders voted against the re-election of Chief Executive Officer Clifford Elphick.

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