GEM Diamonds at a glance

Gem Diamonds is a leading producer of high-value diamonds. The Group owns the Letšeng mine in Lesotho, and the Ghaghoo mine in Botswana.

The Letšeng mine is renowned for its regular production of large, top colour, exceptional white diamonds, making it the highest average dollar per carat kimberlite diamond mine in the world. Since Gem Diamonds acquired the mine in 2006, Letšeng has produced four of the 20 largest white gem quality diamonds ever recovered.

Gem Diamonds has an organic growth strategy based on enhancing the operating efficiencies of the Letšeng mine and bringing the Ghaghoo mine into full production. Achieving operational excellence through cost reductions and enhancing current production is an essential focus.

Additional value is created through the Group’s expanded sales, marketing and manufacturing capabilities.

GEM Diamonds - Operations

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LetŠeng diamonds

Ownership

70% Gem Diamonds Limited
30% Government of the Kingdom of Lesotho

Acquired

July 2006

Description of operation
  • Mining and processing ore efficiently and safely from its two open pits (Main and Satellite pipes)
  • Optimising expansion projects to reduce diamond damage and diamond theft
  • Implementing life of mine extensions
Total resources

5.0 million carats
(as at 1 January 2015)

In-situ value

US$10.3 billion
(as at 1 January 2015)

Ghaghoo diamond mine

Ownership

100% Gem Diamonds Limited
 

Acquired

May 2007

Description of operation
  • Developing the underground mine safely
  • Managing production in line with the commodity cycle
Total resources

20.5 million carats
(as at 1 January 2014)

In-situ value

US$4.9 billion
(as at 1 January 2014)

GEM Diamonds marketing services (Belgium)

Ownership

100% Gem Diamonds Limited

Established

October 2010

GEM Diamonds marketing (Botswana)

Ownership

100% Gem Diamonds Limited

Established

August 2015

Description of operation

The Group’s diamond sorting, sales and marketing operation in Belgium and Botswana focus on:

  • Maximising the revenue achieved on diamond sales
  • Developing the Gem Diamonds brand in the market
  • Enhancing customer relationships

Baobab technologies

Ownership

100% Gem Diamonds Limited

Established

April 2012

Description of operation

The Group’s high-tech diamond analysis and manufacturing operation is tasked with:

  • Investing in state of the art diamond analysis technology
  • Understanding the value of exceptional rough diamonds through mapping and analysis
  • Manufacturing selected diamonds for sales

Our leadership

Roger Davis

Harry Kenyon-Slaney

Non-Executive Chairman
BSc Geology (Southampton University), International Executive Programme (INSEAD France)

Harry Kenyon-Slaney is currently a senior advisor to McKinsey & Co and has over 33 years of experience in the mining industry, principally with Rio Tinto. He is a geologist by training and his experience spans operations, marketing, projects, finance and business development. He has worked in South Africa, Australia and the UK. Harry is also a Partner at Audley Capital Advisors LLP, a member of the board of directors of Bridon Bekaert Ropes Group, and a non-executive director of several private companies. Until 2015, Harry was a member of the Group Executive committee of Rio Tinto where he held the roles of CEO of Energy, and before that CEO of Diamonds and Minerals. Prior to this he variously led Rio Tinto’s global titanium dioxide business, was CEO of Rio Tinto’s listed subsidiary, Energy Resources of Australia Ltd, was GM Operations at Palabora Mining Company in South Africa and held senior marketing roles in copper, uranium and industrial minerals. He began his career as an underground geologist with Anglo American on the gold mines in South Africa.

Appointed

Harry was appointed as Chairman of the Board in June 2017.

Key skills and experience

Commercial and capital markets. Leadership of large and complex global mining and processing businesses. Public company board governance and government stakeholder engagement.

Board committee membership

Remuneration and Nominations Committees.

Mike Salamon

Mike Salamon (60)

Senior Independent Director
BSc (Mining Engineering) (University of the Witwatersrand); MBA (London Business School)

Mike is a mining engineer with an MBA and has over 30 years’ experience in the mining sector. He was a founding Director of Billiton and was instrumental in Billiton’s IPO on the London Stock Exchange in 1997 and the subsequent merger with BHP in 2001. Mike retired from his position of Executive Director at BHP Billiton in 2006. Thereafter Mike was appointed Executive Chairman of New World Resources and led its IPO on the London Stock Exchange in 2008. He retired from this position in 2012 and is a non-Executive Director of Ferrexpo Plc.

Appointed

Mike was appointed to the Board in February 2008.

Key skills and experience

Operational mining, projects, health and safety, sustainability, corporate social responsibility and capital markets.

Board committee membership

Nominations, HSSE and Remuneration Committees.

Gavin Beevers

Gavin Beevers (66)

Non-Executive Director
BSc Hons (Mechanical Engineering) (Lancaster Polytechnic)

Gavin was the Director of Operations at De Beers from April 2000 until his retirement in 2004. He had joined De Beers in 1979 and was based in Botswana for 11 years. Thereafter he was appointed Assistant General Manager at De Beers Marine in Cape Town until 1994, whereafter he returned to Botswana as General Manager at the Orapa and Lethlakane Mines. From January 1996 to March 2000, Gavin held the position of Deputy Managing Director of Debswana Diamond Company.

Appointed

Gavin was appointed to the Board in February 2007.

Key skills and experience

Operational mining, health and safety, sustainability, corporate social responsibility.

Board committee membership

Audit and HSSE Committees.

Richard Williams

Michael Lynch-Bell (62)

Non-Executive Director
BA Hons Economics and Accountancy (University of Sheffield); FCA of the ICAEW

Michael spent a 38-year career with Ernst & Young (EY) having led its Global Oil and Gas, UK IPO and Global Oil and Gas and Mining transaction advisory practices. He was a member of the assurance practice from 1974 to 1996 when he transferred to the Transaction Advisory Practice. He was also UK Alumni sponsor and a member of the firm’s EMEIA and Global Advisory Councils. He retired from EY as a partner in 2012 and continued as a consultant to the firm until November 2013.Michael is currently Senior Independent non-Executive Director and Audit Committee Chair at Kaz Minerals Plc; Independent non-Executive Director, Remuneration Committee member and Audit Committee Chair at Lenta Limited; and Independent non-Executive Director, Compensation Committee Chair and Audit Committee Chair at Transocean Partners LLC. Michael is also currently honorary treasurer and board trustee of ActionAid International, a Human Rights campaigning NGO.

Appointed

Michael was appointed to the Board in December 2015.

Key skills and experience

Finance and capital markets; Oil and gas; Mining and metals.

Board committee membership

Audit and Remuneration Committees.

Clifford Elphick

Clifford Elphick (55)

Chief Executive Officer
BCom (University of Cape Town); BCompt Hons (University of South Africa)

Clifford joined Anglo American Corporation in 1986 and was seconded to E. Oppenheimer and Son as Harry Oppenheimer’s personal assistant in 1988. In 1990, he was appointed Managing Director of E. Oppenheimer and Son, a position he held until leaving in December 2004. During that time, Clifford was also a Director of Central Holdings, Anglo American and DB Investments. Following the privatisation of De Beers in 2000, Clifford served on the De Beers Executive Committee. Clifford is also the non-Executive Chairman of Zanaga Iron Ore Co. Limited and Jumelles Holdings Limited.

Appointed

Clifford formed Gem Diamonds in July 2005.

Key skills and experience

Diamond and mining industries; Commercial and capital markets.

Board committee membership

Nominations Committee.

Michael Michael

Michael Michael (45)

Chief Financial Officer
BCom Hons (Rand Afrikaans University); CA(SA)

Michael Michael has over 20 years’ experience in financial management. He joined RSM Betty & Dickson (Audit Firm) in Johannesburg South Africa in January 1993 and became audit partner at the firm in March 2000. From August 2006 to February 2008 Michael was seconded to Gem Diamonds Limited to assist with the financial aspects of the Main London Listing including the financial reporting, management accounting and tax relating to the Initial Public Offering. In March 2008 Michael joined Gem Diamonds on a full-time basis as the Group Financial Manager. On 2 April 2013 he was promoted to the position of Chief Financial Officer.

Appointed

Michael joined Gem Diamonds in March 2008 and was appointed to the Board in April 2013.

Key skills and experience

Finance and capital markets; Diamond industry.

Glenn Turner

Glenn Turner (55)

Chief Legal and Commercial Officer and Company Secretary
BA LLB (University of Cape Town); LLM (Cambridge)

Glenn was called to the Johannesburg Bar in 1987 where he spent 14 years practising as an advocate specialising in general commercial and competition law, and took silk in 2002. Glenn was appointed De Beers’ first General Counsel in 2002 and was also a member of the Executive Committee. Glenn was responsible for a number of key initiatives during his tenure, including overseeing De Beers’ re-entry into the USA.

Appointed

Glenn joined Gem Diamonds in May 2006 and was appointed to the Board in April 2008. Glenn was appointed as the Company Secretary in January 2015.

Key skills and experience

Diamond industry; Legal.

Board committee membership

HSSE Committee.

Our history

Click on a year for more information

2015

February

Commencement of Ghaghoo diamond sales.

April

Recovery of a 316.5ct white diamond which was sold into a partnership arrangement in May 2015.

July

Recovery of a 357ct white diamond, which was sold on tender in September 2015 for US$19.3 million.

August

Solid half year results announced. Zero lost time injuries at both Letsĕng and Ghaghoo were achieved.

December

Three 100+ carat diamonds sold for US$ 13.1 million.

2014

January

Recovery of two +160 carat diamonds from the Letšeng mine. A 162.02 carat Type II diamond and a 161.31 carat Type I diamond.

February

At Letšeng’s February tender, the 162.02 carat diamond sold for US$11.1 million (US$68 687 per carat) and the 161.31 carat sold for US$2.4 million (US$14 636 per carat).

March

Gem Diamonds’ Board announced its intention to pay a maiden dividend to shareholders based on the 2014 financial results.

Kimberlite was intersected in the first production tunnel on level one at Ghaghoo.

May

Updated Resource and Reserve statement released – approximately doubling Letšeng’s in situ value of the reserve to US$4.6 billion, with a life of mine of 21 years now fully contained in the Probable Reserve category.

July

Recovery of a 197.6 carat, white Type IIa diamond from the Letšeng mine. This was an exceptional white, high-quality diamond, displaying no fluorescence.

August

Strong half-year results announced, with revenue up 54% to US$148.9 million and EBITDA up 87% to US$62.2 million compared to previous half-year. The Group maintained its strong cash position with US$113.9 million as at 30 June 2014.

September

The 197.6 carat white diamond recovered in July achieved US$10.6 million.

Ghaghoo mine officially opened on 5 September by the President of Botswana, Seretse Khama Ian Khama.

October

Ghaghoo entered an important phase as it transitioned from a capital project to an operating mine.

December

Ghaghoo reported 10 167 carats recovered during commissioning up to the end of the year, including a 20 carat white diamond, a 17 carat white diamond, and a 3 carat orange diamond. Letšeng final tender achieves US$2 799 per carat.

2013

May

164ct white diamond was recovered at Letšeng and sold into a partnership arrangement for US$9 million.

2012

April

A 155ct white diamond was recovered at Letšeng.

November

Gem Diamonds formally exits its participation in the Chiri Project in Angola.

December

Gem Diamonds disposes of its Ellendale mine in Australia to Goodrich Resources for US$15.4 million.

2011

January

Gem Diamonds is awarded a mining licence for Gope diamond deposit in Botswana.

March

Gem Diamonds' Board approved a capital budget of US$85 million in March 2011, for the construction of Phase 1 of the Ghaghoo underground mine, with a production capacity of 720 000 tonnes per annum.

July

Gem Diamonds announces name changes in Botswana: Gope Exploration Company becomes Gem Diamonds Botswana (Pty) Limited; the Gope deposit becomes Ghaghoo Diamond Mine.

Construction of Phase 1 began mid 2011.

August

White 550 carat Letšeng Star is recovered at Letšeng and is currently ranked as the 14th largest white diamond ever recorded.

November

The Gem Diamonds' Board and the Board of Letšeng Diamonds approved Letšeng's expansion (Project Kholo).

2010

August

196 carat white diamond is recovered at Letšeng.

October

185 carat white diamond is recovered at Letšeng. Ultimately selling along with the 196 carat gem recovered in August for a total of US$22.7 million.

November

117 carat white diamond is recovered at Letšeng – the third exceptional find in as many months.

2009

April

Gem Diamonds raises circa US$100 million in a placing on the London Stock Exchange.

December

Gem Diamonds sells off its assets in the DRC.

Gem Diamonds and Tiffany & Co. subsidiary, Laurelton Diamonds, enter into formal supply agreement for Ellendale's fancy yellow diamonds.

2008

September

478 carat white Light of Letšeng is recovered, ultimately selling for US$18.4 million.

2007

February

Gem Diamonds lists on the main board of the London Stock Exchange in an IPO raising US$635 million.

May

Gem Diamonds acquires the Gope deposit in Botswana's Central Kalahari Game Reserve.

Gem Diamonds acquires BDI, including the Cempaka mine, in Indonesia.

September

Gem Diamonds enters the FTSE 250.

493 carat Letšeng Legacy is recovered, ultimately selling for US$10.4 million.

December

Gem Diamonds' acquisition of Kimberley Diamond Company in Australia is completed.

Further acquisitions in the DRC and CAR are completed in 2007 and a co-operation agreement is signed with Avantis for Chiri in Angola.

2006

July

Gem Diamonds gains operational control of Letšeng Diamonds.

August

603 carat Lesotho Promise is recovered, ultimately selling for US$12.4 million.

September

Completion of the acquisition of Letšeng Diamonds.

2005

July

Gem Diamonds is founded by current CEO, Clifford Elphick.

The diamond market

Despite a challenging year for the diamond industry as a whole, prices for the large, high-value rough production from Letšeng remained resilient during 2015, achieving an average of US$2 299 per carat for the year.

  1. The global economic backdrop
  2. The global diamond market
  3. Medium to long-term outlook
  4. Gem Diamonds’ market position
  5. Demand trends

Our customers

Gem Diamonds client base consists of prominent diamantaires and manufacturers from the world’s major diamond centres: New York, Belgium, Israel, India, China, South Africa, the United Kingdom, the Middle East and Switzerland.

1 2 3 4 5
1. The global economic backdrop
  • Continuing macro-economic uncertainty
  • Slow-down in the growth of the Chinese economy
  • Strengthening of the US dollar
  • Grim market conditions for all commodities
2. The global diamond market

The year was characterised by continuing global macro-economic volatility and uncertainty and the sentiment in the diamond market as a whole remained cautious. These conditions, together with continued liquidity constraints and high levels of stock (particularly in the manufacturing sector), plagued the diamond market throughout the year, placing downward pressure on both rough and polished diamond prices. Although these challenging market conditions continued impacting the price achieved for the Ghaghoo production, the prices achieved for the large high value rough production from Letšeng remained comparatively firm. The significant drivers of the diamond market included:


  • The continued US recovery

    The economic recovery in the US continued, resulting in a reported increase in personal disposable income. This positive trend is closely linked to spending on luxury goods, and had a positive impact on diamond sales in the US during the year.

    On the flip side the strengthening of the US economy resulted in a stronger US dollar which, due to diamond sales being US dollar denominated, had a negative impact on sales in countries whose currency was negatively impacted by the strengthening US dollar.

  • Weakened demand from China

    Retail demand for polished diamonds from China weakened as its economic growth slowed during the year.

  • Funding constraints

    The closure of the Antwerp Diamond Bank and tightening of lending criteria, particularly in India, resulted in continued liquidity constraints being experienced by diamantaires.

  • High levels of polished inventory

    The decrease in demand for polished diamonds seen mainly as a result of the slowdown in the Chinese economy resulted in high levels of polished inventory in the manufacturing sector of the diamond pipeline towards the end.

    Despite current market conditions, the medium to long-term outlook for the diamond demand/supply fundamentals are expected to remain favourable given rising consumer demand in developed and developing markets contrasted with a forecasted medium to long-term constrained supply.

3. Medium to long-term outlook

Demand is expected to outstrip supply in the medium to long term.

Global supply trends

Global diamond supply, in terms of volumes, is expected to increase marginally in the next four to five years and thereafter steadily decrease:

  • Rough diamond production has declined considerably since its peak in 2005 and has yet to recover to the pre-global financial crisis levels of about 168 million carats per annum.
  • Annual global diamond production is currently about 127 million carats and with the introduction of new mines is expected to peak at about 150 million carats in the next four to five years. Thereafter a steady decrease in supply from 2021 reduces annual production to about 100 million carats by 20301.
  • The aging and depletion of existing mines and the limited additional supply from new mines.
  • The projected supply from new mines is expected to add an additional 20 million carats a year until 2021 and thereafter output from these mines is expected to decrease to around five million carats by 20301. The additional supply from these new mines is not expected to compensate for the expected growth in demand during the same period.
Global demand trends

Diamond demand is expected to continue to grow in real value terms, due to:

  • The continued recovery in the US, the major diamond market.
  • The growing international trend to use diamonds across a wide range of luxury goods, from jewellery, watches and accessories to pens and digital devices.
  • The growing middle and upper classes and continued urbanisation in emerging markets – especially in India and China.
  • The continued growth in the number of high-net-worth individuals worldwide.
4. Gem Diamonds’ market position
  • The large, exceptional diamonds produced from the Letšeng mine makes it the highest average dollar per carat kimberlite diamond producer in the world.
  • Letšeng places the Group at the top end of the diamond market in terms of value and price with its greater than 10.8 carat production accounting for approximately 80% of its value.
  • The Ghaghoo mine in Botswana produces diamonds of a more commercial quality and colour, diversifying the product the Group offers to its customers.
5. Demand trends

In the short term, the downward pressure on both rough and polished prices in the diamond market remains a challenge, particularly for the more commercial Ghaghoo operation. The prices achieved for Letšeng’s large high value production has and is expected to remain resilient during a continued uncertain and difficult short-term period facing the global diamond market.

In the medium to long term, the Group expects robust diamond prices for its diamonds from both Letšeng and Ghaghoo, with favourable medium to long-term demand/supply fundamentals underpinned by continued growth in demand from Asia and the strengthening of the US markets contrasted with a limited future growth in supply.