Panmure Gordon analyst Keiron Hodgson has reiterated a ‘buy’ rating and a 156p price target on Gem Diamonds PLC (LON:GEMD) following news today that the firm has recovered an exceptional 114 carat diamond from its Letšeng mine in Lesotho.
In a note to clients, the Panmure analyst said: “Given the paucity of large high value recoveries in recent months, we believe this recovery can precede a return to form for Gem as it migrates back towards areas of Letšeng known to historically produce large high value diamonds."
WATCH: Panmure analyst on Gem Diamonds ...
He added: “We would expect the shares to react positively to this news today.”
In lunchtime trading, Gem’s shares were 4.2%, or 3.75p higher at 93.0p.
Newsflow precursor …
Hodgson added: “We believe that today’s announcement can potentially be a precursor to further positive newsflow.
“We believe Gem can continue to work towards completing our three catalysts to regain investors’ confidence in 2017.
“To that point, we expect today’s announcement, following the recent details of the new mine plan, waste stripping profile and improved cash generation, to support the theory that an improvement in diamond recoveries can be achieved.”