Gem Diamonds defers plant development at Lesotho mine

Gem Diamonds said it will place on hold the development of a plant at its Letšeng mine in Lesotho to preserve cash given the challenging global economic conditions as well as the associated impact on the rough, polished and retail diamond markets.
The diamond junior said in a statement emailed to Rough&Polished that the main elements of Project Kholo at Letšeng would still be pursued in order to provide growth within the company, but would be executed in the most appropriate manner given the current financial climate, with a view to reducing cash outflow in the short term.
“In order to achieve this, and based on the work already undertaken in the feasibility study, the company is in the process of re-evaluating how best the various sub-components of Project Kholo can be deployed to produce a more appropriate implementation plan for the next 2 to 3 years,” it said.
“This process has already commenced, with the approval for the replacement by the end of Q2 2013 of the secondary and tertiary crushers in the current Plants No 1 and 2 with more diamond friendly technology, in order to reduce diamond damage.”
Meanwhile, Gem Diamonds said that it would sell its Ellendale mine in Australia to Goodrich Resources for A$14.3-million ($14.9 million).
The sale of the mine was expected to be completed in January 2013.
The Ellendale mine produces about half the world's supply of rare yellow diamonds and contributed $3.1 million in profit last year to Gem Diamonds.
"The sale of Ellendale, at a value that we feel is appropriate given the relatively short life of mine of the E9 pipe, is consistent with our aim of refocusing our management and capital resources on our core assets and long term growth projects,” said company chief executive Clifford Elphick.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished