Gem Diamonds Limited in its trading update detailing the Group’s operational and sales performance for the quarter ended March 31, 2020 (Q1 2020), reported a revenue of US$47.3 million for the period as compared to a revenue of US$51.3 million for Q4 2019.
The Company reported the sale of 29,298 carats (Q4 2019: 29,945) carats for an average price for the period of US$1,615 per carat (Q4 2019: US$1,713 per carat).
Gem Diamonds reported that 11 diamonds sold for more than US$1.0 million each, generating revenue of US$20.7 million during the period.
“A successful flexible tender sale process was conducted generating US$18.8 million of revenue,” the Company reported. “This revenue was in addition to the quarterly Letšeng small diamond tender that closed on 18 March 2020, achieving US$7.8 million.”
Further, Gem Diamonds noted that the Group ended the period with US$21.7 million as cash on hand, of which US$16.7 million is attributable to Gem Diamonds. Utilised facilities amounted to US$43.2 million resulting in a net debt position of US$21.5 million (Q4 2019: US$10.1 million). This excludes tender receipts of US$12.9 million which had not been received at the Period end.
The Group has available additional facilities of US$33.6 million, the Company stated.
“The Group has performed extensive cash flow planning for the lockdown period, including a period to facilitate ramp-up to full production,” Gem Diamonds said. “This has confirmed that the Group’s cash on hand, together with its available facilities, flexible tender sale process and implemented cost-cutting measures are sufficient to withstand the lockdown period and the anticipated ramp-up to full production.”
Salary reductions for management levels have been introduced across the Group ranging from 20% for the Chairman of the Company’s Board, all Board Directors and senior executives, down to 15% and 10% across various management salary bands, the Company said, in order “to assist with the cash flows” during the lockdown. “In addition, scheduled salary increases for Directors and executive management at Group level have been postponed,” the Company confirmed.
Gem Diamonds’ CEO, Clifford Elphick, commented: “One of Gem Diamonds’ key priorities is the welfare of its employees, contractors, and customers around its operations and office sites, and we continue to ensure all relevant and necessary safety protocols relating to COVID-19 are adhered to. Gem Diamonds is proud to be playing its part in the fight against the COVID-19 disease by providing a mobile office and testing facility for use by the Department of Health in Maseru in order to carry out crucial testing and various prevention and testing initiatives in the surrounding communities.”
Gem Diamonds reported that several operating and capital cost reduction measures are being implemented during this lockdown and care and maintenance period and that a restart and ramp-up plan is being finalised to commence operations “as soon as it is permissible and safe to do so”.
Turning to its work on the COVID-19 front, the Company said the Group has not only implemented a wide range of necessary precautions to protect its people but that it has been engaging “extensively” with the Lesotho Government and medical services providers in order to assist with the provision of testing facilities. “The Company has also commenced work with the Department of Health to provide PPE to local communities as well as mobile testing units for the mine site and surrounding communities,” Gem Diamonds said.