Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gem Diamonds Ltd (GMDMF, Financial) achieved a dollar per carat of $1,366, maintaining a stable price despite industry pressures.
- The company reported a 9% increase in overall revenue, reaching $78 million for the period.
- Operational efficiencies and cost containment efforts led to a significant reduction in operating costs, contributing to a doubling of EBITDA to $19.1 million.
- The company successfully reduced its net debt from $21 million to $8.4 million, improving its financial position.
- Gem Diamonds Ltd (GMDMF) is on track to meet its decarbonization targets, with a 25% reduction in carbon emissions compared to its 2021 baseline.
Negative Points
- The diamond market is under significant pressure due to high interest rates, geopolitical tensions, and competition from lab-grown diamonds.
- The all injury frequency rate increased to 0.6, with three lost time injuries reported in the first half of 2024.
- The company faces challenges in the lower-end diamond market, with goods priced at $200 per carat and less struggling.
- Depreciation costs have nearly doubled due to the purchase of a new mining fleet, impacting overall expenses.
- The effective tax rate remains high due to limited tax benefits from other operating divisions, affecting net profitability.
Q & A Highlights
Q: Can you advise how CapEx changes are impacting the company?
A: Brandon de Bruin, Chief Operating Officer, explained that the company has very low CapEx this year, with major projects completed last year. The primary focus is on the tailings facilities extension project, with some smaller projects aimed at improving recovery. Michael Michael, Chief Financial Officer, added that the total capital spend guidance is $5 million to $7 million, with hopes to trend towards the lower end.
Q: With shares trading below cash from operations, is the company considering a buyback?
A: Clifford Elphick, CEO, acknowledged the logical nature of the question but emphasized the current stormy conditions in the diamond industry. The company prefers to wait and see how the market develops in September and towards the end of the year before making any decisions on buybacks or dividends.
Q: Are there plans for directors to buy shares?
A: Clifford Elphick, CEO, mentioned that this is a good question and he will raise the point with all directors, hoping they see value and consider purchasing shares in the near future.
Q: What is the company's outlook on the diamond market?
A: Clifford Elphick, CEO, noted that the diamond market is under pressure due to high interest rates, geopolitical tensions, and competition from lab-grown diamonds. However, there are bright spots, particularly in the ultra high-end brands, and the company remains optimistic about future demand.
Q: How is the company managing operational efficiencies and cost containment?
A: Brandon de Bruin, COO, highlighted the focus on operational efficiencies and cost containment, with benefits seen from insourcing mining operations and reducing waste mining. The company has also improved plant utilization and diamond recoveries through strategic changes in blasting and crushing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
