Gem Diamonds jumps 70% as cost cuts drive first-half profit swing

Gem Diamonds shares jumped 70% to 11p after the miner swung to a first-half profit on higher prices for its large Letšeng stones.

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

Revenue for the six months ended June 30 climbed 32% to $59.7 million, lifting underlying earnings before interest, taxes, depreciation and amortization to $8.6 million from a $2.6 million deficit a year earlier. Earnings per share turned to $0.005 from a loss of $0.084, while cash on hand reached $20.2 million and net debt fell to $0.5 million from $20.1 million at Dec. 31.

Panmure Liberum reiterated its 'buy' rating and 13p target price, above Thursday's 11p trade. The repaired balance sheet gives the miner leverage as it negotiates the renewal of $70 million in revolving credit facilities that expire in December.

The London-listed group treated 2.6 million tonnes of ore in the half, recovering 41,695 carats at an average realized price of $1,395 a carat, with its top white rough diamond fetching $32,908 a carat. Direct cash costs excluding waste fell 12% in local currency, defying the inflation pressure across the wider sector. Throughput stayed in line with Letšeng's plan to hold annual ore volumes near five million tonnes.

Letšeng's premium product mix has cushioned the group against a rough-diamond market that remains weak for smaller, lower-quality stones, where synthetic supply has weighed on prices. Management is also studying alternative underground mining methods to reach the higher-value Satellite Pipe ore before the financial year 2031 mine plan, while reiterating that the timing of any sustainable market recovery stays uncertain.

The swing to profit shows the July 2025 cost program is holding even as the diamond market stays soft. Investors will watch the December refinancing talks, where the stronger cash position and broker backing should support terms.