Gem Diamonds moves into profit

16th Mar 2010 07:48

Cost cutting measures helped Gem Diamonds move into profit in the year to December 31 even as revenues slumped on lower diamond prices.Revenues fell to $244.4m from $296.9m the previous year, but Gem, which mines for the gemstones in Africa, Asia and Australia, posted a pre-tax profit of $37.1m compared with a loss of $367.4m previously.'2009 was an extremely challenging year for the diamond mining industry as a whole,' the company said. 'However, our ability to react swiftly to changing market conditions enabled us to weather the worst of the economic crisis and maintain production and profitably at our two key operations.'Gem produces diamonds at its Let?eng mine in Lesotho and Ellendale in Australia. It is developing projects in several other countries.From an average of $2,687 a carat in the second quarter of 2008, Let?eng achieved an average of only US$1,017 per carat in the first quarter of 2009, Gem said. Prices for diamonds from Ellendale also fell sharply.However, the market rebounded strongly towards the end of 2009.'Diamond prices have continued to improve in early 2010 following a better than expected 2009 Christmas season in the US, albeit relative to the post crisis fourth quarter sales in 2008,' the company said. 'In addition evidence suggests that demand for diamond jewellery in India and China continues to grow strongly, although not making up for the slowdown in US consumption of diamond jewellery.'