Gem Diamonds returned to profit in 2017 as it recovered seven diamonds over 100 carats, but the miner's prospects are looking even better for the year ahead.
The firm's share price rose more than five per cent in morning trading.
Gem swung to profit for the year to December, recording a profit before tax of $33.9m (£24.3m), up from a loss the previous year of $124.1m.
Revenues in 2017 totalled $214.3m, up from $189.8m the previous year, but underlying earnings before interest, tax, depreciation and amortisation (Ebitda) fell to $45m from $62.8m in 2016 due to higher costs.
Gem recovered 111,811 carats from its Letseng mine in southern Africa, up from 108,206 carats in 2016, including seven diamonds larger than 100 carats, up from five the previous year.
So far in 2018, Gem has already recovered seven diamonds of more than 100 carats (including one announced today). The firm's so-called Lesotho Legend, a 910 carat diamond, earlier this week sold for $40m.
Why it's interesting
Gem Diamonds focused on strengthening the firm's foundation in 2017 following a painful year in 2016.
Chief executive Clifford Elphick said the company began to benefit from operational improvements in the second half of the year, with a "significant" improvement in the recovery of large diamonds from Letseng.
"The market for the mine’s large, high quality white rough diamonds remained strong over the course of 2017, a trend which has continued into early 2018," he said.
"As expected, Gem’s 2017 financials were improved over 2016, albeit not nearly as much as we had originally hoped," said Yuen Low, an analyst at Shore Capital Markets.
"In contrast, 2018 is shaping up to be much better."
What Gem Diamonds said
The focus on enhancing the efficiency of our operations identified a potential of $20m of annualised and once-off efficiency and cost reduction initiatives at the end of last year. A target has now been set of obtaining $100m of cash savings by the end of 2021, with an ongoing target of $30m per year thereafter.
With the benefits of the efficiency programme bearing fruit, a positive market outlook, and an investment case underpinned by the proven quality of the Letšeng mine, we look to the future with confidence.