Gem Diamonds finds sixth 100+ carat stone this year

Africa-focused miner Gem Diamonds (LSE: GEMD) has unearthed a 212.9-carat Type II white diamond at its prolific Letšeng mine in Lesotho, less than a month after a previous major find.

The diamond, recovered on May 28, is the sixth precious stone of more than 100 carats recovered this year at the operation, the company said.

Type IIa diamonds are the most valued and collectable precious gemstones as they contain either very little or no nitrogen atoms in their crystal structure. In contrast, boart diamonds are stones of low quality that are used in powder form as an abrasive.

The Letšeng mine is one of the world’s 10 largest diamond operations by revenue. At 3,100 metres above sea level, it is also one of the world’s most elevated diamond mines.

Shares in Gem Diamonds rose nearly 5% on Wednesday to close at 13.1 pence apiece, valuing the company at £18.3 million. 

Rough cuts

Diamond miners are going through a rough patch as American and Chinese demand for diamond jewellery continues to be weak and the popularity of cheaper laboratory grown diamonds continues to rise. 

In 2015, man-made diamonds had barely made an appearance as a competitor to natural diamonds. By last year, these stones  accounted for more than 10% of the global diamond jewelry market, according to industry specialist Paul Zimnisky.

The market values of small to medium diamond mining companies, including Canada’s Lucara (TSX: LUC), South Africa’s Petra (LON: PDL), and Gem Diamonds itself, are around $100 million or less. This is only about a third or a quarter of the price the large stones they aim to find may be worth.