Gem Diamonds (LON:GEMD) has revised downwards its full year 2013 production guidance for its Letseng mine in Lesotho.
It moves to 95 -105,000 carats from 115-130,000 carats because of initiatives taken during the first half to address diamond damage and other mining issues.
For the six months to end June, the miner processed 3.03mln tonnes of ore from the mine at average grade of 1.39cpht (H1, 2012: 3.17mln/t at 1.80 cpht).
However, the firm noted Letšeng continued to show its quality as three diamonds weighing in excess of 100 carats each were recovered in the period.
"We are now focused on moving mining operations to the higher value, higher grade satellite pipe, which should positively impact revenues during H2 2013," chief executive Clifford Elphick told investors.
City broker Panmure, which keeps it 'buy' stance, noted that the "disappointing" first half numbers did mask a significant quarter-on-quarter improvement.
Tonnes processed were up 6% here, while the grade was up 18% to 1.5cpht.
"That suggests that performance is improving, albeit slightly more slowly than hoped. Whilst we will need to understand issues around grade a little better, we do not believe the disappointing short term performance alters the long term value proposition," said analyst Alison Turner.
Elsewhere, broker Westhouse said: "While the lower production is disappointing, the effect on our overall valuation of the company is slight, so we maintain our 'Add' recommendation and 150p target price".
Shares dipped 3.68% to 137.25p.