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Gem Diamonds Studies African Expansion Delay as Prices Fall

July 30 (Bloomberg) -- Gem Diamonds Ltd., a mining company in Lesotho and Australia, said it may delay expansion projects in Africa as prices for the precious stones fall.

“In light of continued economic uncertainty, the directors have initiated a review of the company’s capital investment plans,” the London-based producer 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 still plans to double production at its Letseng mine in Lesotho and develop the Ghaghoo site 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 purchases slowed and the euro-zone debt crisis eroded demand, 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 consumption.

Gem produced 57,116 carats at the Letseng mine in the first six months of the year and 78,881 carats at its Ellendale project in Australia.

Gem rose 1.4 percent to 195.6 pence by the close in London trading.

To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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