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Letšeng to increase production as diamond prices surge


GEM Diamonds Ltd is still looking to increase production of the precious stones at its Letšeng mine after it cancelled 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, GEM chief executive officer, said in an interview on Tuesday in London.

“There’s a constant review of what’s possible and how we can put more material through the plant,” he said.

Diamond producers are seeking to expand output to benefit from rising prices.
Rough-diamond prices gained 10 percent last year as the American 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 Letšeng 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 Letšeng 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 Letšeng 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 on Tuesday reported a US$21.2 million (about M212 million) profit for 2013 compared with a US$117.9 million about M117.9 billion) loss a year earlier.

Sales rose 5.3 percent to US$212.8 million (about M212.8 billion) 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, adding:
“The strength that started to emerge in the last quarter of last year has continued into the first quarter.” — Bloomberg

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