Gem Diamonds has shortened the life of its Letšeng mine in Lesotho by four years following cost-cutting initiatives during the challenging market that will prevent it from working on new portions of the deposit.
The miner scaled back its waste mining at the main pipe’s cut 4 area, which would allow it to reach deeper portions of the site, in an effort to reduce costs, it said Thursday. That means the company plans to continue operating at the site through 2035, rather than the 2039 date the company previously targeted. However, it believes it could reconsider if the situation gets better.
“Should market conditions improve, the flexibility exists to again extend the life of mine,” it explained.
The cut comes amid sharp cost reduction initiatives implemented by the company to save money during the downturn. Those included lowering salaries and laying off 240 employees.
Revenue for the first half that ended June 30 fell 42% to $45.4 million, “significantly impacted” by the persistent lull in the market, which led to a drop in rough prices. The company also had fewer goods to sell, as it processed lower-grade ore and recovered a smaller number of large diamonds, it stated. Sales volume slid 22% to 44,360 carats, while the average price slipped 26% to $1,008 per carat.
Gem Diamonds reported a loss of $11.7 million for the six months, following a write-down of $10.7 million on the value of its assets amid poor pricing and demand. That compares to a profit of $2.1 million in the same period of 2024.
Output from Letšeng declined 16% to 47,125 carats, as the miner retrieved a higher proportion of lower-grade ore, which comprised 68% of production. During the period, the highest price achieved for a white diamond was $26,441 per carat, for a 67.50-carat stone. From January to June, the miner recovered only four rough diamonds over 100 carats, compared with eight of that magnitude the previous year. Since the end of the period, the company unearthed three additional diamonds over 100 carats.
“The industry continues to face significant challenges,” said Gem Diamonds CEO Clifford Elphick. “Sustained pricing pressure, softer demand in key markets, ongoing macroeconomic and geopolitical uncertainty, and tariff uncertainties in respect of India combine to create difficult trading conditions. In response, key decisions to adapt the mine plan to reduce costs necessitated the unfortunate retrenchment of 240 employees at Letšeng. While deeply regrettable, these actions position Letšeng to operate sustainably.”
Image: A rough diamond from Letšeng. (Gem Diamonds)