Gem Diamonds Share Discussion Threads

[haywards26] 17/8/2017 12:58

The fact no offer price was muted would make me think the offer is low and no where near the cost invested into it...

[ukgeorge] 17/8/2017 11:13

Gem Diamonds (GEMD LN) H1 results delivers EBITDA of US$43.5m down 70% yoy. Revenues were down 14.8% yoy. The company has seen lower mining and grades in the period with lower value per carat realised e.g. US$1,779/ct vs US$1,899/ct a year ago, although the latest figure is up from US$1,480/ct realised in H2 2016. Gem’s second mine that was placed on care and maintenance, Ghagoo, is currently subject to an offer. The company’s transformation programme is underway to deliver US$15mpa of savings from October. The company ended the period with net debt of US$14.2m. Source: Company

Investec View: A tough set of results, but the possible sale of Ghagoo is welcome news, although we doubt a sale price will come close to how much the company invested.

[resourceful] 17/8/2017 09:35

are they in real trouble
losing money and cash

[ukgeorge] 14/8/2017 17:13

This company do have a history of buying and now building an uneconomic diamond mines. They rely on the Lesotho mine to prop up the managements f ups.

[eastbourne1982] 09/8/2017 15:39

Have to wonder why this isn't a serious candidate for a takeover by either another producer or private equity, the market cap is relative peanuts now when you consider the potential this business has.

[thomasthetank1] 25/7/2017 09:27

Positive note from finnCap

Gem Diamonds

H1 Trading Update BUY

Gem Diamonds has announced a trading update for the first half of 2017, including Q2 operating results. The Letšeng mine in Lesotho continued to operate well, with diamond production steady at 24,599 carats in the period. The company achieved average diamond prices of US$1,779 per carat, up 20% from the same period last year. The most recent tender achieved a particularly encouraging US$2,385 per carat. Production guidance for the year is maintained, albeit towards the lower end of the range. We retain our 150p price target and Buy recommendation.

*Four diamonds larger than 100 carats were recovered during the half year, with additional high quality stones being recovered that were slightly smaller. Post period end an exceptional 126.75 carat D-colour Type IIa diamond was recovered, bringing the total greater than 100 carat diamond recoveries in 2017 to five.

*The Group had US$ 20.0m cash on hand at the end of June 2017, of which US$16.1m is attributable to Gem Diamonds. US$34.2m of the available facilities have been drawn down, of which US$25.0m relates to the Ghaghoo facility, resulting in a net debt position of US$14.2m at the end of the half year.

*Post period end, the US$35.0m Revolving Credit Facility was successfully restructured into a new US$45.0m facility.

[dickbush] 17/7/2017 14:42

The Idex Index of wholesale prices for better quality diamonds is down form 137 to 118 over the past three years. Rough prices, you can bet, are down worse than this. The industry has problems of final demand and squeezed credit lines to cutters and polishers. GEMD's saving grace is its production of big, high quality individual diamonds where pricing is still OK. GEMD has to keep churning these out. Those companies not producing such rough diamonds are going to find it increasingly difficult to make a buck.

[haywards26] 06/7/2017 12:43

GEMD did advise last year that the stones would be smaller and lower value due to the area of mine being worked on. This year they are back into more lucrative areas....hopefully the share price will start to reflect this over the coming months.

[ukgeorge] 06/7/2017 11:07

Just bought a few of these, looks like the mine is back into the part of the kimberlite with the high value stones, fingers crossed

[woodpeckers] 06/7/2017 07:46

They appear to be hitting that target now of one a month that you suggest they need super.

[noujay] 05/7/2017 21:35

Nice little touch for the directors for having delivered so spectacularly!!

[superg1] 23/5/2017 15:24

They need 10-15 of those to get back to the good old days. 1 or 2 found as pointed out months ago would see the share price keep going down and it did.

The issue is CPHT, Letseng needs double figure 100+ carat stones per year to keep the earnings going in the right direction.

EG $1700 per carat average on a 1.7 cpht rate gives a per tonne return of $17.

So you need a costs per tonne under $17 all in.

It's not about big sparkly stones but how many. CPHT is very poor at Letseng.

Firestone have something like 25 cpht and something like $100 per carat.

$25 per tonne returns.

I don't hold either but studied all the Lesotho mines so passing on the key figures to check.

In short ore cost per tonnes v ore value per tonne. Sort that and you know which has the best prospects compared to their current situation share price or market cap.

[haywards26] 23/5/2017 13:28

Better update. Higher carat and more valuable stones being found as they previously expected.

[haywards26] 07/4/2017 12:58

Nice large diamond find announced this morning :)

[guy88] 05/4/2017 16:41

mmm was interested in Gem Diamonds but looks riskier bet at the moment. Any suggestions for other resources stock perhaps less risky?

[haywards26] 16/2/2017 13:22

Whilst disappointing today's update on the Ghaghoo mine is sensible...

[alex1621] 06/2/2017 14:24

Yes, not looking good currently. Do they have an estimate of the value of the deposit in Letseng? I guess they have some idea of the commercially recoverable value of the mine? I've done okay with this one over the last few years buying at low points ... for now I'll wait.

[eastbourne1982] 06/2/2017 14:21

A year ago GEMD had net cash of 55 million USD

It now has net cash of just under 4 million USD.

That is extremely worrying.

[superg1] 06/2/2017 14:03

Alex

They had a good big stone run on 2015 which meant in Q4 16 they needed around 10 or more 100 carat plus in the last quarter which was never going to happen( as in previous posts)

As I have posted before sales in 2016 included earlier found stones and unless they hit big stones that factor would affect things too as sales move to the current finds which are not good. So on paper if they don't hit big stones q1 17 the $1440 per carat is going to drop futher.

The easy maths is cost to process ore per tonne v ore value per tonne. That recent carat value rate is $22.50 per tonne. What are the costs.
I note waste is climbing so that pushes opex up.

Nothing to invest in here right now as it's totally reliant on luck for them to hit big stones again.

High risk as it stands as it's all going the wrong way

[eastbourne1982] 06/2/2017 12:40

Financial position continues to worsen with cash seemingly being eaten up, I have held these in the past and always done relatively well however my previous buy in price of sub £1 is certainly under review, not sure the risk / reward is good enough now.

A year from now GEMD could be riddled with debt, they really need to arrest this now, the special dividend last year looks like a poor decision now, this isn't really hindsight either as the company should have been able to forecast everything that has happened, in many ways they did which makes the pay out even more irresponsible.

[alex1621] 06/2/2017 12:03

Letseng diamond finds disappointing to say the least ... is this just bad luck?

[salpara111] 06/2/2017 08:41

It is very sad that after all the money pumped into Ghagoo it looks like it will end up being closed.
I invested here twice, lost money once made some the second time but the reason I didn't stay was due to the fact that they were very heavily reliant on finding big stones and the number was continually dropping.
Not sure what the long term future is for them.

[superg1] 06/2/2017 07:31

Didn't seem right it was too early.

1.56 cpht ore value from that $22.52 per tonne so costs all in need to below that figure.