Gem Diamonds Limited · LSE:GEMD
Gem Diamonds — Investor Presentation (February 2016)
33 slides from Gem Diamonds's investor presentation, February 2016
Slide 1: High-End Diamonds Continue to Sparkle
High-End Diamonds Continue to Sparkle Investor Presentation February 2016
Slide 2: Disclaimer
Disclaimer The following presentations are confidential and are being made only to, and are only directed at, persons to whom such presentations may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on these presentations or any of their co
Slide 3: Agenda
Agenda Gem Diamonds at a Glance Diamond Market Financial Highlights Operations Overview Light of Letšeng 478ct (recovered in 2008) Investment Proposition Investor presentation February 2016 3
Slide 4: Background
Background Gem Diamonds is a leading global producer of high value diamonds The Company owns the Letšeng Mine in Lesotho and is bringing the Ghaghoo Mine in Botswana into production Letšeng is famous for the production of large, top colour, exceptional white diamonds, making it the highest ave
Slide 5: Major recoveries from Letšeng
Major recoveries from Letšeng Letšeng Legacy 493ct Letšeng Star 550ct Letšeng Destiny 314ct 2007 2011 2015 2006 2008 2014 2015 Lesotho Promise 603ct Leseli La Letšeng 478ct Yellow 299ct Letšeng Dynasty 357ct Investor presentation February 2016 5
Slide 6: Operational Footprint
Operational Footprint Gem Diamonds Limited UK, BVI 2 employees Gem Diamonds Sales, Marketing and Manufacturing Belgium 16 employees Ghaghoo Mine Botswana 361 employees/contractors Letšeng Mine Lesotho Gem Diamond Technical Services 1 299 employees/contractors South Africa 24 employees Investor prese
Slide 7: Diamond Market
Diamond Market Letšeng’s sparkle remains
Slide 8: Diamond Market
Diamond Market Diamond Price Indices 1.80 Diamond market for Letšeng’s high end diamonds remained stable but overall market subdued in 2015 1.60 Slow down in Chinese retail demand 1.40 Inventory and liquidity concerns 1.20 Medium to long term market outlook remains strong 1.00 Reduced sale
Slide 9: Diamond Market: Polished Diamond Sales by Geography
Diamond Market Polished Diamond Sales by Geography The US remains the most important market for diamonds (over 40% of demand) and continues to grow strongly China has been a strong growth engine for diamonds (2009-2014 CAGR of 18%). Longer term, the shift in the economy from construction to cons
Slide 10: Diamond Pricing
Diamond Pricing Letšeng 6 and 12 Month Rolling $/carat 6 month 12 month 3 000 Letšeng 2 500 Price levels maintained due to resilience in +10.8 carat Type II diamonds 2 000 1 500 Ghaghoo Weaker market impacts Ghaghoo production 1 000 Third sale at $150 per carat, down from $210 500 (February 20
Slide 11: Financial Highlights
Financial Highlights Continued cash generation in challenging markets
Slide 12: Financial Highlights
Financial Highlights * 2015 figures are due to be released in March 2016. The 2015 figures below represent current market consensus Revenue EBITDA 271 104 USD Millions USD Millions 77 213 65 202 2012 2013 2014 2015* 2012 2013 2014 2015* EPS Attributable profit 24 30 US Cents 15 USD Millions 21 12 17
Slide 13: Operations - Letšeng
Operations - Letšeng Ahead of target on all fronts
Slide 14: Letšeng Overview
Letšeng Overview Ownership 70% 30% Gem Diamonds Government of Limited Lesotho Letšeng Mine Lesotho Located in the Maluti mountains of Lesotho Two kimberlite pipes: Main pipe 17.0ha; and Satellite pipe 5.2ha Highest average US$ per carat globally Satellite Pipe – higher grade / higher $ per c
Slide 15: 2015 Operational Performance
2015 Operational Performance Letšeng Waste mined (tonnes millions) Strong end to 2015 – production targets achieved 24.0 19.1 19.9 17.4 • Waste mined – 24.0 million tonnes • Ore treated – 6.7 millions tonnes • Carats recovered – 108 579 2012 2013 2014 2015 • 1.9 million tonnes of Satellite pipe co
Slide 16: Letšeng Large Diamond Recoveries
Letšeng Large Diamond Recoveries Frequency of +100 carat recoveries +100 cts per tender Annual Frequency of +100cts 4 14 12 100 carat diamonds per tender 100 carat diamonds annually 3 10 8 2 6 4 1 2 0 0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7
Slide 17: Letšeng Resource and Reserve
Letšeng Resource and Reserve Ore Carats Grade In-situ value As at 1 January 2014 US$/ct (mT) (millions) (cpht) (US$ billions) Letšeng Indicated Resource 293.9 3.23 1.73 2 086 6.7 Letšeng Reserve 131.9 2.26 1.71 2 045 4.6 Reserve Reserve Investor presentation February 2016 17
Slide 18: Letšeng Open Pit Life of Mine
Letšeng Open Pit LoM Optimised Life of Mine Plan • Increased Satellite pipe contribution - (1.65 mt to 2019; 2.0 mt from 2020 to 2031) • Optimal waste profile – (peak of 36 mtpa in 2024) • Steeper slope angles (resulting in less waste) • Improved NPV Optimised Life of Mine plan: Optimised Life of
Slide 19: Operations - Ghaghoo
Operations - Ghaghoo Steady progress in challenging climate
Slide 20: Ghaghoo Overview
Ghaghoo Overview Ownership 100% Gem Diamonds Limited Ghaghoo Mine Botswana Located in the South-East portion of the Central Phase 1 Objectives – Proving Up: Kalahari Game Reserve • Grade – potential upside Kimberlite pipe 10.4ha in size • Diamond prices • Milling Technology 25 year mining li
Slide 21: 2015 Operational Performance - Ghaghoo
2015 Operational Performance Ghaghoo Phase 1 objectives completed Grade remains steady and ahead of Reserve • Recovered grade of 28.0 cpht in 2015 • Reserve grade of 27.8 cpht Surge bin successfully commissioned in January 2016 – daily throughput of 2 000 tonnes achieved Water fissure • Leve
Slide 22: Ghaghoo Resources
Ghaghoo Resources Ore Carats Grade In-situ value As at 1 January 2014 (mT) (millions) (cpht) US$/ct (US$ billions) Ghaghoo Indicated Resource 108.2 15.49 19.51 242 3.7 Ghaghoo Reserve (VKSE Phase Only) 7.5 2.08 27.81 267 0.5 Investor presentation February 2016 22
Slide 23: Ghaghoo Current Status
Ghaghoo Current Status Phase 1 objectives achieved Depressed diamond market – impacting Ghaghoo type production Prudent to downsize in current market conditions Optimising production levels to: • Reduce cash burn • Targeting approx. 300 000 tonnes for 2016 Ghaghoo remains an important asse
Slide 24: HSSE Overview
HSSE Overview
Slide 25: HSSE Performance
HSSE Performance Group – Zero Lost Time Injuries for the full year 2015 • Letšeng – 430 consecutive days LTI free to 31 December 2015 • Ghaghoo – 418 consecutive days LTI free to 31 December 2015 Group – AIFR 2.75 for the full year 2015 (2014 - AIFR 2.93) Zero stakeholder or environment incide
Slide 26: HSSE Overview - Group CSI initiatives
HSSE Overview - Group CSI initiatives Lesotho Classrooms and office donated to Pae la itlhatsoa School in Lesotho Butha Buthe vegetable project in Lesotho Lesotho community health workers Botswana Educational School tours at Ghaghoo New Xade Primary School donation ceremony in Botswana Kaudwane Prim
Slide 27: Sales, Marketing and Manufacturing
Sales, Marketing and Manufacturing Adding value throughout the pipeline
Slide 28: Sales, Marketing and Manufacturing Overview
Sales, Marketing and Manufacturing Overview Sales and marketing 357ct white diamond which was sold for US$ 19.3 million Robust prices achieved for Letšeng's high quality production - average of US$2 299 per carat in 2015 35 rough diamonds achieved a value of greater than US$1.0 million each Tw
Slide 29: Investment Proposition
Investment Proposition Adding value and returning cash
Slide 30: Investment Proposition
Investment Proposition Gem Diamonds has a unique set of diamond assets and a strong Balance Sheet Long term fundamentals for diamonds strong (driven by US GDP growth and demographic trends in China and India) Letšeng Letšengis Mine a world– class Longdiamond mineEBITDA life, Proven Ghaghoo Letšengmi
Slide 31: Thank you
Thank you Mining Indaba 2016
Slide 32: Annexure - Corporate Profile
Annexure 1 - Corporate Profile Gem Diamonds share price performance since 1 January 2015 Gem Diamonds Limited is listed on the Main Board of the Volume (000s) Price London Stock Exchange LSE : GEMD 200 2 500 Thousands 180 Daily average trading volume across all 160 2 000 platforms (last 6 months) 11
Slide 33: Annexure - Global Diamond Producers
Annexure 2 - Global Diamond Producers As of February1, 2016 Est. production in 2016 Mine Location Carats US$ Millions Jwaneng Botswana 10,500,000 ∧$2,408 Jubilee Russia 9,200,000 $966 Diavik Canada 7,000,000 $805 Orapa Botswana 8,000,000 $760 Debmarine Namibia Namibia (Offshore) 1,400,000 $700 Catoc