Gem Diamonds, a diamond mining company, has recovered profitability from its stint in the red due to the struggling economy. The company reported a net loss of $55.2. million in 2008, but it reports a net profit of $25.4 million for 2009.
“2009 was an extremely challenging year for the diamond industry as a whole,” said Clifford Elphick, Gem Diamonds chief executive officer. “However, our ability to react swiftly to changing market conditions enabled us to weather the worst of the economic crisis and maintain production and profitability at our two key operations.” Those operations, the Letseng mine in Lesotho, and Ellendale mine, provided rough diamond sales that bolstered the company’s bottom line. They put all other locations on “care and maintenance” and severely cut corporate expenses by an impressive 33 percent.
Other factors assisting in Gem Diamonds’ recovery include a one-time royalty payment and sales of 206.6 carats of polished diamonds totaling $12.5 million. Their Letseng mine provided 700 diamonds of 10.8 carats or more. Sixty-eight of those stones sold for $20,000 per carat.
“The fact that 33 of these 68 diamonds were sold in the fourth quarter of 2009 alone is testimony to the remarkable increase in the prices of large diamonds toward the end of 2009,” said a Gem Diamonds representative.