Gem Diamonds (GEMD) has risen by 20% since the 20th December, clawing back some of the falls suffered since last years peak of 165p in June. The rise comes despite the continuing weakness in the diamond market and is partly due to the Letseng mine, the jewel in GEMD’S crown and which specialises in producing high grade diamonds.
Decembers low for the shares was 98p and the recovery has taken the price up to today’s 117p.
Letseng is 70% owned by GEMD and 2015 production came in above guidance. 9 diamonds valued at more than $1m each were mined during the year, together with a further 3 stones of more than 100 carats each. The high quality of Letseng diamonds meant that the company enjoyed what it claims to have been a robust quarter 4, despite a further drop in average prices.
Overall the number of Letseng carats sold in 2015 was down by 6% but their value was down by a much higher 15%.
The damage done by the weakness of the diamond market is well illustrated by the fact that in the first half of the year the average price per carat for Letseng was $2264 but by quarter 4 this had fallen to $2117, despite a surge in the third quarter to $2578
GEMD is also making slightly optimistic noises about prospects for 2016.
It is interesting to note that Petra Diamonds PDL which we commented on in January has also made a recovery of about 20% despite 2015 revenue being down by 28%.
From a low of 69p on the 26th January Petra’s shares rose to 88p before falling back again to today’s 82p
Maybe those diamonds will continue to be the naughty girl’s best friend.