With diamond stocks coming back into favour, Gem Diamonds (LON:GEMD) has delivered a timely increase in estimated resources at its Letšeng diamond mine in Lesotho.
The indicated resource category at its 70%-owned Letšeng asset has been extended in depth from around 100 metres beneath the current pit bottoms to a new depth of about 350 metres below them on both the Satellite and Main pipe ore bodies.
This follows an infill drilling campaign that has increased confidence in the geological model.
The indicated resource base has increased in tonnage by 132%, to a total of 187.1mln tonnes, from a previous total of 80.8mln tonnes.
The indicated reserve base has increased in carat terms by 127%, to a total of 3.23mln carats, from a previous total of 1.42mln carats.
The extension has also prompted a significant 67% increase in tonnage terms in probable reserves to 131mln tonnes from 78.9mln tonnes previously, with the entire 22 year life of mine plan now classified as reserve.
In carat terms, the reserves have been upped by 64% to 2.26mln carats, while the average diamond price for its probable reserves has been hiked by 19% to US$2,045 per carat, from US$1,715 per carat.
The increase in valuation reflects increased market prices and better recovery of large stones. The shift in market prices has also seen a 9% increase in the average diamond price for the probable reserve at the company’s wholly-owned Ghaghoo asset in Botswana.
SP Angel said the update was “positive” while finnCap said it has its price target under review as a result of the update.
Shares in Gem were up 3.7% at 181.51p in lunchtime trading.