Good Diamonds Are Hard to Find at World's Richest Gem Mine

(Bloomberg) -- The Letseng diamond mine in Lesotho is renowned for unearthing some of the world's most valuable gems, but it didn't find many last quarter.

The average price of diamonds found was just $1,259 per carat in the fourth quarter, almost half the value for the full year, according to Gem Diamonds Ltd., which runs the mine. While that's still the highest in the industry, it shows that the mine had a significant drop in finding the most precious stones.

Producing diamonds that are profitable to mine is a problem throughout the industry. Prices for the smallest and cheapest gems are falling because of too much supply and that's shrinking profits for mining companies. At the same time, several producers from Petra Diamonds Ltd. to Mountain Province Diamonds Inc. are finding stones worth less than they expected.

Gem shares slid 2.8 percent to 105.50 pence in London trading after the results.

In the company's most recent tender, the average price was back above $2,000, showing the drop in price was from finding smaller diamonds.

The bad news comes after a strong year for Gem. After struggling with failed growth plans and problems recovering big diamonds without breaking them, it successfully unearthed a record number of 100-carat-plus stones in 2018. That included the 910-carat Lesotho Legend found in January 2018 that was the fifth-biggest in history and sold for $40 million at a tender in Antwerp.

To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin

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