Gem Diamonds Ltd (GMDMF) (H1 2024) Earnings Call Highlights: Strong Revenue Growth and Debt ...

GuruFocus News
3 min read

In This Article:

  • Revenue: $78 million for the period, a 9% increase from the prior year.

  • EBITDA: $19 million, more than doubled from $8.4 million last year.

  • Net Debt: $8.4 million, reduced from $21.3 million.

  • Cash on Hand: $30 million, up from $16.5 million.

  • Carats Sold: 56,994 carats, up from 52,163 carats in the prior year.

  • Dollar per Carat: $1,366, similar to the prior period's $1,373.

  • Operating Costs: Reduced by 18%, with a 15% reduction in overall costs.

  • Depreciation: Increased due to the purchase of a mining fleet.

  • Net Finance Costs: $3.5 million, higher due to increased debt utilization.

  • Profit: $2 million, compared to a loss of $1 million in the prior period.

  • Guidance Update: Carats recovered increased to 98,000-101,000 from 88,000-92,000.

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) 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.

Recommended Stories