Letšeng shrugs off Covid woes

… registers 50 percent revenue increase

NEO SENOKO

MASERU – GEM Diamonds Limited, which owns 70 percent of Letšeng Diamond, has shrugged off the disruptive effects of the COVID-19 pandemic, to register a 50 percent revenue increase to US$104.5 (about M1.5 billion), compared to the same period the previous year. Among other things, Letšeng, which is 30 percent owned by the government of Lesotho, was able to recover three diamonds greater than 100 carats, and achieved an average price of US$ 1 886 (M26 996.20) per carat while the highest price achieved was US$119 886 (M1 718 602.97) per carat for a 3.35 carat pink diamond.

The highest price achieved for a Type IIa white diamond was for a 254 carat diamond that was sold at US$40 139 (M575 405.01) per carat. The underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) from continuing operations improved by 207 percent to US$34.7 million (M497 435 257) against US$ 11.3 million (M161, 989 million) in 2020, with attributable profit of US$9.3m (M133 310 385) achieved.

Gem Diamond revealed this while announcing its 2021 half year results for the six months ending June 30. The results were published on Thursday last week. The group ended the period in a strong cash position with a cash balance of US$33.9 million (M485 937 855) and drawn down facilities of US$14.3 million (M204 982 635), resulting in a net cash position of US$19.6 million (M280 955 220) and unutilised available facilities of US$61.0 million (M874 401 450).

“The Group’s Letšeng operation has managed to operate in line with its normal operating activities during the period, despite numerous challenges presented by the continuing impact of Covid-19 pandemic on the availability of spares and limited access to certain skills and services due to lockdown and travel restrictions, as well as a high rainfall season which impacted both mining and treatment activities.

“Despite these challenges, waste tonnes mined during the period were 10.2 million tonnes, ore tonnes treated were 3.1 million tonnes, 58 831 carats were recovered and the mine’s 2021 production metrics remain on track,” Gem Diamond said in its half year results.

In line with the Group’s commitment to delivering sustainable shareholder returns, the group further revealed that dividends were also paid to shareholders on June 15. “The board proposed a dividend of 2.5 US cents per share, US$3.5 (M50, 206, 275.00) million which was approved at the Annual General Meeting (AGM) on June 2 and paid to shareholders on June 15,” Gem diamond added.

Furthermore, the group’s Business Transformation (BT) programme remains on track to deliver the targeted US$100 million (about M1.4 billion) in revenue, productivity and cost saving, measured against the 2017 base by the end of 2021.

Since its inception, the BT programme has, according to Gem Diamond, delivered US$95.4 million (about M1.36 billion) net of fees and costs. The reduced costs and improved efficiencies realised through the BT initiatives have been critical in maximising operational cash flows over the past three years. Going forward, Gem Diamonds continues to advance to key technologies to identify locked diamonds within kimberlite and to liberate diamonds using a non-mechanical process.

“While the enhancements and troubleshooting of the pilot plant operation were hindered by Covid-19 related travel restrictions, the group has made steady progress through collaboration with its technical partners to advance the detection of diamonds within kimberlite and will greatly reduce diamond damage and reduce operating costs while adding significant value for its shareholders,” Gem Diamond further revealed.

The group will continue to focus on the health and safety of its workforce. It will also continue to support surrounding communities and assist the government to manage the impact of the pandemic. At an operational level, the group will continue to realise the benefits from the BT programme to drive efficiencies and cost reduction initiatives to maximise cash flows and maintain its status as a responsible, safe and low cost operation. The group believes this focus helps it achieve its strategic objectives and will continue to unlock value for its shareholders.

 

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