Gem Diamonds 2007 Revenues $153 Million

Mining and exploration company Gem Diamonds realized revenues of $153 million in the year ended December 31, most of it from the sale of rough diamonds recovered at its Letseng mine in Lesotho. 73,916 carats were produced and 60,234 carats sold from Letseng, for an average of $2,201 per carat, a 37 percent increase in value over the previous year.

The company’s EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $74 million.

Gem Diamonds listed on the London Stock Exchange in February 2007, raising $636 million, with which it acquired projects in Australia, Indonesia, Botswana and the Democratic Republic of the Congo (DRC) and further developed its existing projects in Lesotho, the Central African Republic (CAR) and Angola.

The company’s three producing projects – Letseng, alluvial projects in the DRC and in Indonesia – in 2008 are expected to produce an approximate total of 750,000 carats.

In 2006, 53,000 carats were sold from Letseng at an average price of $1,578 per carat. In 2007, the mine’s annual production forecast was increased to 101,000 carats for the coming year. Diamond prices have also risen and the mine’s resource base has been expanded. The company also notes that five 100+ carat diamond were recovered from the mine during 2007.

Letseng is a joint venture between Gem Diamonds, which holds 70 percent, and the Government of the Kingdom of Lesotho, which owns the remaining 30 percent.

Gem Diamonds CEO Clifford Elphick commented on the annual results, “The past year has seen Gem Diamonds achieve many of the milestones outlined at the time of its IPO.

“Gem Diamonds enters 2008 with three producing mines situated in different countries, all of which are in expansion mode and producing diamonds that continue to achieve extraordinary prices. Development projects throughout Africa provide an opportunity to more than double the current production levels.”

The company noted that 2007 began as a strong year for the diamond sector, which, despite the sub-prime crises, did not weaken as the year progressed. However, “with an estimated 45 percent of all diamond consumption occurring in the U.S., a weakening U.S. economy represents a significant risk to the overall industry. However it is misleading to view diamonds as a single commodity,” the firm said in a statement.