Gem Diamonds Releases Q4 2017 Trading Update

Letšeng:

• On 15 January 2018 the Company announced the landmark recovery of an exceptional quality 910 carat, D Colour Type IIa diamond. This is the largest diamond to be mined to date at Letšeng and also believed to be the fifth largest gem quality diamond ever recovered.
• Also in January, post Period end, four diamonds greater than 100 carats, weighing 149.43, 117.67, 116.98 and 110.63 carats were recovered, as well as a high quality 8.53 carat pink diamond
• Achieved an average price of US$ 2 217 per carat for the Period, up 19% from US$ 1 858 per carat in Q3 2017
• Sold 31 476 carats during the Period, up 21% from 25 909 carats in Q3 2017
• Recovered seven gem quality diamonds greater than 100 carats during 2017 of which the largest was a 202.16 carat Type IIa diamond, recovered in November
• 38 Diamonds sold for more than US$ 1.0 million each, generating revenue of US$ 94.8 million during 2017. This is an improvement on 2016 where 34 diamonds sold for more than US$ 1.0 million each, generating revenue of US$ 73.7 million.
• One Lost Time Injury (LTI) occurred during the Period

Financial:

• At the end of the Period, the Group had a net cash position of US$ 1.4 million, a US$ 13.2 million improvement from the Q3 2017 net debt position of US$ 11.8 million
• The Group had US$ 47.7 million cash on hand at the end of the Period of which US$ 35.2 million is attributable to Gem Diamonds
• At Period end, US$ 46.3 million of available facilities had been drawn down with undrawn and available facilities of US$ 36.2 million

The recovery of the 910 carat diamond is a landmark for all of Gem Diamonds’ stakeholders, including our employees, shareholders and the Government of Lesotho, our partner in the Letšeng mine. It is also encouraging to see that the improvement in the recovery of greater than 100 carat diamonds is continuing into 2018, with five greater than 100 carat diamonds recovered in the first month of 2018. This is largely attributable to the ongoing technical improvements made at the Letšeng mine.

It is also pleasing to see carats sold during the Period up by 21% over the previous period. The market for Letšeng’s high-quality diamonds remained robust over the Period, achieving an average price of US$ 2 217 per carat, up 19% from the previous quarter. Significant progress has also been made on the business efficiency and optimisation programme. Further details will be released in the Full Year 2017 results on 14 March 2018.