UPDATE - Gem Diamonds looks to cut costs as profits slump

--adds share price and analyst comment-- Gem Diamonds (LON:GEMD) has vowed to cut costs as it faced tough diamond markets and a slower-than-expected ramp-up of its Ghaghoo mine in Botswana. The miner said cost control and operational efficiency would be its "ultimate focus" for the second half of 2015 as it faces lower demand for the precious stones. "In the current depressed diamond market and due to the slower-than-expected ramp up at Ghaghoo, capital and cash management discipline will be of high priority in the short-term.” the company said. In the six months to the end of June, the company posted a pre-tax profit of US$40mln, down from US$56.2mln a year before, as revenue declined to US$118mln from US$148.9mln. Chief executive Clifford Elphick said: “The development of the Ghaghoo mine is progressing slower than planned due to difficult ground conditions which have hampered slot development in the first five production tunnels and constrained production ramp-up.” Gem sold its first parcel of commissioning diamonds from Ghaghoo in February for US$2.1mln, and in July sold a second parcel for US$4.9mln. The company owns 70% of the Letšeng mine in Lesotho and 100% of the Ghaghoo mine. Meanwhile, analysts were not as concerned with Shore Capital noting the results were “unsurprising” after the company had warned of a tough first half back in July. FinnCap was more bullish on the company, saying the figures were “broadly in line” with forecasts as it reiterated a ‘Buy’ recommendation. “In particular, diamond sales and prices held up well during the period, in contrast to the results from some of the mass-market diamond producers” the broker said. Investec added: "The key to the business remains Letseng. Nevertheless the balance sheet remains strong so the company isn’t in any significant distress." Gem Diamonds shares added 1.17% to stand at 130p each on Wednesday.