Gem Diamonds plans to lay off approximately 250 employees at its Letšeng mine in Lesotho and lower salaries for upper-level management to combat financial constraints stemming from the weak rough market.
The company needs to make cuts to the staff, which comprise 20% of the company’s total workforce, as it intends to scale back its mining operations, it said Wednesday. The miner will also temporarily reduce salaries for board members, executives and management personnel, but it is considering awarding those individuals company shares in lieu of salary, it explained.
Meanwhile, Gem Diamonds has revised down its guidance for the full year. It now expects to sell between 84,000 and 87,000 carats of rough compared with the 86,000 to 89,000 carats it initially predicted. It also intends to mine a greater portion of ore from the satellite pipe, which produces higher-value rough.
Rough sales for the first half fell 43% year on year to $44.7 million, while sales volume dropped 22% to 44,360 carats. The average price for the six months that ended June 30 slid 26% to $1,008 per carat.
The company sold a total of six diamonds for more than $1 million each, generating revenue of $9.3 million, it said. The highest price achieved was $26,441 per carat for a white diamond weighing 67.50 carats. During the period, the company recovered four rough stones greater than 100 carats, three of which it sold in the six months. That compared with the retrieval of eight diamonds of that caliber in the first half of 2024, of which the company sold six over that time.
Output from the site came to 47,125 carats, a 16% decrease from the same period a year ago. During the six months, the company received approval for its application to offload the Ghaghoo mine in Botswana. The site’s mining license was officially canceled, and Gem Diamonds formally handed the deposit back to the government.
After the end of the period, the miner unearthed a 250-carat, white, type II rough. However, it expects that stone, which is not of high quality, to yield a relatively low polished outcome, it said.
“Considering the prolonged weakness in global diamond prices, compounded by a weak US dollar and ongoing US tariff uncertainties, Gem Diamonds has implemented decisive measures to conserve cash and protect shareholder value,” the miner added. “While the company has met its production targets, it has not been immune to the sustained pressure on rough-diamond prices. Gem Diamonds remains committed to its long-term strategy of producing exceptional-quality diamonds and is confident that the measures being implemented will position the company for a strong recovery when market conditions improve.”
Image: The Letšeng mine. (Gem Diamonds)