Gem Diamonds disappointed shareholders today as the firm withheld dividend payments despite a jump in profits in a year when it sold history’s fifth largest gem-quality diamond.
Shares in the diamond-miner closed down 6.9 per cent to 89.4p, despite a 141 per cent surge in profit before tax to $73m (£55m).
The company was helped by a record find of 15 large diamonds, including the massive 910 carat Lesotho Legend, the fifth largest in history, which it found at the Letseng mine.
Meanwhile, 80 per cent of the company’s $267m revenue came from diamonds bigger than 10 carats.
However, Gem has also faced challenges as global supply boomed and artificial diamonds made inroads, chairman Harry Kenyon-Slaney said.
“While pricing for Letseng’s high value goods remained resilient, prices for smaller goods struggled due to a combination of ample new production over the last two years and the emergence of more competition from the man-made diamond sector.”
Last year De Beers surprised the sector by announcing it would start using lab-grown diamonds in jewellery.
The firm sold the Lesotho Legend for $40m in March last year, and has pledged to use part of the proceeds to build a chicken farm in a local community.
The board said it would not propose a dividend to shareholders in 2018, citing a review of the global diamond market, as it tries to strengthen the company’s balance sheet.
“It remains the policy of the board to pay a dividend to shareholders when the financial position of the company permits,” Kenyon-Slaney said.