Gem Diamonds returns to profit as large stone premiums offset market weakness

Gem Diamonds has returned to profitability for the first half of the year, reporting a net profit of $600,000 for the six months ended 30 June. This result marks a significant reversal from an $11.7 million loss recorded in the same period last year. The improvement was driven by stronger pricing for large diamonds from the Letšeng mine and successful cost reduction measures, allowing the company to withstand a difficult global market environment.

Revenue increased by 32% to $59.7 million, while the average rough diamond price rose 38% to $1,395 per carat. Underlying earnings improved to $8.6 million from a deficit of $2.6 million in the prior year. CEO Clifford Elphick attributed the positive outcome to structural cost measures implemented in July 2025 and the extension of royalty relief at Letšeng. He noted that these initiatives have materially reduced the cost base, helping the company navigate the challenging conditions in the diamond sector.

The company’s financial position has also strengthened, with net debt reduced to $500,000 as of 30 June, down from $20.1 million at the end of December. The highest price achieved for a white rough diamond during the period was $32,908 per carat, highlighting the premium value of exceptional stones from the Lesotho mine. This niche production of large, high-value diamonds provides a competitive advantage while synthetic diamonds and macroeconomic volatility continue to pressure prices for smaller and lower-quality natural stones.

Following the results, Gem Diamonds shares surged as much as 70% to 11p. Panmure Liberum maintained its buy recommendation and a 13p price target. The shares were trading at approximately 9.9p on Thursday afternoon, valuing the company at roughly £12.95 million. The miner plans to source production exclusively from the Main Pipe for the remainder of the year while investigating methods to access Satellite Pipe ore earlier than the current 2031 schedule.