GEM is not interested in buying ‘nice’ assets from Petra Diamonds after kicking the tires

Clifford Elphick, CEO, GEM Diamonds

GEM According to company CEO Clifford Elphick, Diamonds was unlikely to make an offer on Petra Diamonds or any of its assets.

Asked about his views on potential consolidation in the diamond sector, Elphick said, “There is nothing too overwhelming that would cause us to do our best.”

Petra announced in June that she was looking for a buyer, or sell some of her assets, in order to pay off around $ 650 million in debt.

“Petra is in a process, it’s no secret about it,” Elphick said. “We took a look because we were approached. They are great assets but there is a huge debt and everyone looks at it the same… We are near the end of it all.

It was difficult to understand the “value” of the diamond market due to a number of shocks that had kept it moving, he said. “The problem is, the price of diamonds has undermined consolidation. There is no price clarity.

Elphick was commenting on questions after the release of the company’s interim results ended June 30, which showed signs of strain following the Covid-19 shutdowns.

The company reported an attributable loss of $ 1.7 million for the year, compared to profit of $ 4.2 million in the six months to June 2019. Earnings before taxes, interest, depreciation and amortization (EBITDA ) was $ 11.3 million (2019: $ 25.3 million).

GEM has adjusted its production forecast for the full year to 96,000 to 100,000 carats from its Letseng mine in Lesotho, from a previous estimate of 118,000 to 122,000 carats. Sales are now expected to reach 92,000 to 96,000 carats, from 115,000 to 119,000 carats.

Elphick said, however, that he detected an upward change in market sentiment. “Over the past 10 days there has been a bit of buoyancy and life. We look forward to our call for tenders in September, ”he said.

GEM had been able to withdraw its “small” and some of its large diamonds in March and April despite the Covid-19 blockages. In the large stone tender, GEM Diamonds was able to estimate a transparent polished price on uncut gemstones that its buyers were willing to accept.

Lucara Diamonds, a Toronto-listed diamond rival who, like GEM Diamonds, tends to sell products in the upper middle range on average, had agreed to supply the remainder of this year’s large diamond production through a only diamond dealer. Elphick said this would create opportunities: “Customers could pursue our goods a little more aggressively,” he said.

De Beers sold $ 300 million in rough diamonds last week and Alrosa, the Russian producer, sold an additional $ 200 million in goods, a sign that the market was recovering. Tenders for diamonds require in-person inspection, which has been virtually prevented by the border closures.

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