Companies: GEMD   

Diamond miner Gem Diamonds warns recent diamond price falls ‘could result in a loss for the full year 2008’.

The fully listed company, whose chief executive officer David Elphick was a senior figure in the Oppenheimer diamond empire, warns its performance will be ‘significantly lower than our expectations in August’. Gem says average prices achieved from its Letseng mine in Lesotho have fallen from $2,512 a carat in the first half year to $1,557 in the fourth quarter.

Warning of a significant fall in revenues from gem sales in the fourth quarter, the company says it will continue both to run Letseng at full production and carry out its planned production increase at Ellendale in Australia. In Botswana, Gem says it will proceed with negotiations for a mining licence for its ‘exciting’ Gope project, but elsewhere the picture is different.

In Indonesia, Gem is to review its low-margin operation at Cempaka, which ‘may well’ be put on care and maintenance only, as will the company’s activities in the Congo. The company says bulk sampling in the Central African Republic will cease ‘with immediate effect’.

Gem shares, which hit £11.91p in May, have now plummeted to 212.75p. Elphick has a formidable reputation and in the long term Letseng and Gope should put the company in good stead or even attract bidders.

But those with shorter time horizons should consider cutting their losses.

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Gem Diamonds	LSE	£191.86m	305.00p	8.00p
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Gem Diamonds			17/11/2008