- End of 2nd-quarter to provide better outlook: Gem Diamonds CEO
- Company's full-year profit rose 12% as sales beat estimates
It’s still to early to tell whether the recovery in rough-diamond prices will last, according to the chief of a miner that’s discovered some of the largest gems ever found.
“We’ve had a good start to the year,” Clifford Elphick, chief executive officer of Gem Diamonds Ltd., said by phone on Tuesday. “Is that sustainable? I don’t know. We’ll only be able to make that call at the end of the second quarter.”
China’s slowdown and an industrywide credit crunch pushed prices down 18 percent last year, the most since the 2008 financial crisis. That prompted the biggest producers, De Beers and Russia’s Alrosa PJSC, to choke off supply to the market to try and bolster prices. For now, that seems to have worked. Elphick said prices for diamonds from Gem’s Ghaghoo mine in Botswana have risen about 7.5 percent since December.
The industry however remains undecided on whether the bright start to the year is due to a genuine demand recovery or just driven by cutters, polishers and traders replenishing supplies. Liberum Capital Ltd. said earlier this month that rough prices might take at least another year to recover because the biggest producers are sitting on large stockpiles and demand in markets such as China remains subdued.
Gem’s Ghaghoo produces stones that are cheaper and of lower quality than its flagship Letseng mine in Lesotho. Letseng produces some of the world’s best quality and most expensive diamonds, which have proved more resilient to the industry slowdown. Gem has in the past decade uncovered some of largest white gem-quality diamonds ever found.
The company Tuesday said full-year profit rose 12 percent to $67.4 million and reported sales of $249.5 million that beat analyst estimates. The company also paid a special dividend after settling a previous tax assessment. The shares rose as much as 12 percent in London trading.
It’s “a solid result by the company and no doubt shareholders will appreciate the special dividend,” Investec Plc said in a note to investors.