Gem Diamonds Ltd. said it’s still looking to increase production of the precious stones at its Letseng mine in Lesotho after it canceled plans to double output at the site.
“We are looking at increasing production, but it’s not on the grand scale of doubling production,” Clifford Elphick, chief executive officer, said in an interview today in London. “There’s a constant review of what’s possible and how we can put more material through the plant.”
Diamond producers are seeking to expand output to benefit from rising prices. Rough-diamond prices gained 10 percent last year as the U.S. economy recovered and Chinese consumers bought more of the stones. Prices have more than doubled in the past five years.
Gem, which produced 95,053 carats at Letseng last year, is building a mine in Botswana that will produce about 60,000 carats this year and add an additional 220,000 carats in 2015, Elphick said. The London-based company, which had sought to double production at Letseng to 200,000 carats a year, delayed the expansion in 2012 to save cash. Elphick wouldn’t say how much production could be added at Letseng under the new plans.
“In a capital-constrained world, which we’ve been facing for the last two or three years, I don’t think it’s the right way to go, spending huge amounts of capital,” Elphick said.
Gem today reported a $21.2 million profit for 2013 compared with a $117.9 million loss a year earlier. Sales rose 5.3 percent to $212.8 million and the company said it will pay its first dividend at the end of the year.
The outlook for diamond prices remains “fantastic” this year, Elphick said. “The strength that started to emerge in the last quarter of last year has continued into the first quarter.”