Gem Diamonds Reports Double Digit Price Declines in Q3

(IDEX Online News) – The achieved price of the Letseng production declined in the third quarter, a result of a difficult global economic and industry market, Gem Diamonds said in an interim management report.

Letseng's production achieved an average value of $1,673 per carat (p/c) in the third quarter, a 31 percent year-over-year decline.

Ten rough diamonds fetched more than $1 million each, compared to 15 during the third quarter of 2011. Only 34 diamonds sold for more than $20,000 p/c, compared to 50 a year ago.

Diamonds selling for more than $20,000 contributed 58 percent of Letseng’s production value in the first three quarters of 2012. The company sold 116 such diamonds since the start of the year.

While prices are declining, the mine produced more "specials," diamonds weighing more than 10.8 carats. Letseng produced 180 such diamonds in the third quarter, compared to 171 a year ago.

At Gem's Ellendale mine in Australia, production increased by 28 percent to 41,680 carats.

The Ellendale goods sold at an average price of $618 p/c, falling 39.1 percent. Tiffany & Co. paid an average of $3,902 p/c for the fancy yellow diamonds it purchased from Ellendale, 24.3 percent below the average price in the third quarter of 2011.

Gem said the new floor index for the fancy yellow pricing mechanism with Tiffany & Co. introduced in October resulted in a price of $5,231 per carat for the October sale.

“The diamond mining industry continued to experience rough price headwinds during the Period from the ongoing global financial turmoil and uncertainty. However from October 2012, rough prices have begun to show a more positive trend," according to Clifford Elphick Gem Diamonds’ CEO.