Gem Diamonds Considers Delaying African Expansion as Prices Fall
“In light of continued economic uncertainty, the directors have initiated a review of the company’s capital investment plans,” Gem said today in a statement. “The review will focus on potentially extending the period over which capital is expended on its two development projects.”
Gem Diamonds is still planning to double production at its Letseng mine in Lesotho and develop the Ghaghoo mine in Botswana, according to the statement. The company said it may delay spending to guard against a “further deterioration in market conditions.”
Rough diamond prices fell 13 percent in the second quarter as Asian consumption slowed and demand waned on the euro-zone debt crisis, according to data compiled by WWW International Diamond Consultants Ltd. Prices have risen by more than 20 percent in each of the past three years as producers struggled to keep pace with demand.
Gem produced 57,116 carats at the Letseng mine in the first six months of the year and 78,881 carats at its Ellendale mine in Australia.
Gem Diamonds rose 0.9 percent to 194.8 pence by 9:15 a.m. in London.
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