Gem Diamonds rebounds as big stones lift profit

Gem Diamonds (LSE: GEMD) swung back to profit in the first half of the year as stronger prices for large diamonds from the Letšeng mine in Lesotho and cost reductions helped the miner withstand a difficult global market.

The Africa-focused producer reported a $600,000 profit for the six months ended June 30, reversing an $11.7-million loss a year earlier. Revenue rose 32% to $59.7 million, while the average rough diamond price climbed 38% to $1,395 per carat.

“The structural cost measures implemented in July 2025, as well as the extension of Letšeng’s royalty relief are delivering tangible results,” CEO Clifford Elphick said. “Together, these initiatives have materially reduced our cost base as we navigate the challenging global diamond market.”

The improvement underscores the advantage of Letšeng’s niche production of large, high-value stones at a time when synthetic diamonds and macroeconomic volatility continue to pressure prices for smaller and lower-quality natural diamonds.

Shares in Gem Diamonds surged as much as 70% to 11 pence in London following the results before easing to close on Thursday at 9.8 pence, £13.7 million ($18.6 million). Panmure Liberum maintained its “buy” recommendation and 13-pence price target.

Financial turnaround

Gem’s underlying earnings improved to $8.6 million from a $2.6-million deficit in the same period last year, helped by cost controls and extended royalty relief.

The company also cut net debt to $500,000 as of June 30 from $20.1 million at the end of December, strengthening its balance sheet during a prolonged downturn for the diamond industry.

The highest price achieved for a white rough diamond during the half was $32,908 per carat, illustrating the premium Letšeng can command for exceptional stones.

The broader market remained challenging, however. Rough and polished diamond prices continued to face pressure from macroeconomic volatility and competition from synthetic diamonds, particularly in smaller-size and lower-quality categories.

Gem Diamonds plans to source production exclusively from the Main Pipe for the remainder of the year while investigating alternative mining methods that could provide earlier access to Satellite Pipe ore, currently scheduled for 2031.

The strategy leaves the miner leaning on Letšeng’s most valuable stones and tighter costs as it navigates an industry still grappling with weak prices and growing synthetic competition.