FULL YEAR RESULTS 2020 - 11 March 2021 - Gem Diamonds
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FULL YEAR RESULTS 2020
11 March 2021
The Letšeng Icon (439 carat)
DISCLAIMER This presentation is confidential and is being made only to, and is only directed at, persons to whom this presentation may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in this presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Gem Diamonds Group (the “Group”). Neither this document nor the fact of its distribution nor the making of the presentation constitute a recommendation regarding any securities. This presentation is for information purposes only and accordingly, no Company within the Group, nor any of their respective directors, employees, agents or advisors make any representation or warranty in respect of the contents of this presentation or otherwise in relation to the Group or any of its businesses. This presentation contains forward-looking statements which are subject to risks and uncertainties because they relate to future events. These forward-looking statements include, without limitation, statements in relation to the Group’s projected growth opportunities. Some of the factors which may cause actual results to differ from these forward-looking statements are discussed in certain slides of this presentation and others can be found by referring to the information contained under the heading “Principal risks and uncertainties” in our Annual Report for the year ended 31 December 2020 which can be found on our website (www.gemdiamonds.com). The forward-looking information contained in this presentation is expressly qualified by this cautionary statement. The information contained in this presentation is subject to amendment, revision and updating, and such information may change materially. No person is under any obligation to update, or keep current, the information contained in this presentation, and any opinions expressed in relation thereto are subject to change without notice. This presentation has not been independently verified and no representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information or opinions contained herein. No statement in this presentation is intended as a profit forecast or profit estimate and no statement in this presentation should be interpreted to mean that earnings per share for the current or future financial years would necessarily match or exceed the historical published earnings. This presentation also contains certain non-IFRS financial information. The Group’s management believes these measures provide valuable additional information in understanding the performance of the Group or the Group’s businesses because they provide measures used by the Group to assess performance. However, this additional information presented is not uniformly defined by all companies, including those in the Group’s industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, although these measures are important in the management of the business, they should not be viewed in isolation or as replacements for or alternatives to, but rather as complementary to, the comparable IFRS measures such as revenue and other items reported in the consolidated financial statements. The distribution of this presentation or any information contained in it may be restricted by law in certain jurisdictions, and any person into whose possession any document containing this presentation or any part of it should inform themselves about, and observe such restrictions on information contained in this presentation. Any securities mentioned herein have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States without registration or exemption. The information contained herein is correct as at 10 March 2021. GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 2
2020 IN REVIEW
Revenue EBITDA
US$190 million US$53 million
Basic EPS All Injury Frequency Rate
(pre-exceptional items) Historical low
9.8 US cents 0.76
Business Transformation
Cumulative to date Carats recovered
US$79 million 100 780
US$ per carat achieved Dividend per share Net cash position
US$1 908 2.5 US cents US$35 million
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 3
KEY STRATEGIC PRIORITIES
UNEARTHING UNIQUE POSSIBILITIES
EXTRACTING MAXIMUM WORKING RESPONSIBLY PREPARING FOR OUR
VALUE FROM OPERATIONS AND MAINTAINING FUTURE
SOCIAL LICENSE
Operating model: Promoting a culture of zero Advancing innovative
harm and responsible care technologies focusing on
• Stringent cost control and
reducing diamond damage
cash preservation Building long-term and costs
• Capital discipline relationships with stakeholders
• Short term mine planning Assessing external growth
and surrounding communities
optimisation opportunities
Adopting UN Sustainable
Reduce diamond damage: Long term mine planning
Development Goals (SDGs)
• Slower feed rates to ensure and optimization
plant stability Participating in the GIA
Climate change adaption plan
• Adjusting blasting patterns Diamond Origin Report
adopted
BT transition to Continuous blockchain initiative
Improvement
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 4
2020 DIAMOND MARKET
GLOBAL ECONOMIC DIAMOND MARKET GEM DIAMONDS’ MARKET
BACKDROP POSITION
Global economic growth, Strong 2020 holiday retail Remains highest US$ per carat
particularly China, US, India season kimberlite producer
and Australia showing strong China and India consumer
recovery market continued strong Record 16 +100 carat diamonds
growth trends recovered in 2020
US stock market performed
well in H2 2020, supporting Diamond manufacturing Strong demand for Letšeng's
a positive outlook in India emerging from large, high-value goods
COVID-19-related challenges
Inflation? Strong recovery of diamond
Midstream inventory and debt prices in H2 2020
levels decreased substantially
Trials to capture additional
Synthetic diamonds not
value from downstream
impacting large, high-value
diamond demand or prices high-end luxury brands
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 5
ZERO HARM & RESPONSIBLE CARE GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 6
COVID-19: PROTECTING OUR PEOPLE
• Protecting our people in a COVID-19 environment in order to
safely and responsibly continue operations
• Immediately established and equipped a laboratory on site to
effectively test for COVID-19 (Polymerase Chain Reaction (PCR)
testing)
• Implemented strategy of identification, isolation and safe
evacuation
• The workforce is tested through rapid antibody and antigen
testing:
- At point of transport to site (before boarding buses)
Clinic staff member at Letšeng
- On arrival at site (including visitors)
• To date 18 174 PCR and rapid antibody and antigen tests have been conducted
• Strict adherence to implemented COVID-19 protocols allowed us to promptly restart and continue
operations in a safe and responsible manner
• 99.2% recovery rate and currently only 2 active cases in the workforce
• Focused initiative to procure vaccines for our employees and communities
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 7
COVID-19: PROTECTING OUR COMMUNITIES
• Aid provided to surrounding communities
- Four-room mobile structure donated
to Ministry of Health to use as a
COVID-19 testing lab
- Distribution of PPE, sanitiser and
“tippy-taps” (contactless hand wash
system) Distribution of food parcels
- Training of 48 community healthcare
workers to lead COVID-19 awareness
programmes
- Distribution of food parcels to most in
need
- Vaccine initiative
Distribution of PPE and education om mask-wearing
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 8
ZERO HARM REMAINS A PRIORITY
• AIFR at 0.76 the lowest in a decade
• Zero fatalities and one LTI during the year
• No major or significant environmental incidents
• No major or significant social incidents
All injury frequency rate (AIFR) Lost time injury frequency rate (LTIFR)
0.28
1.93 2.02
1.45 0.18
0.15
0.93
0.76
0.04 0.04
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 9
SUSTAINABILITY
• Focused tailings and water storage facilities
management:
- Stringent safety management system
- Comprehensive emergency management
and early warning system in place and tested
- Global Industry Standard on Tailings
Management issued in August 2020
- Group has implemented processes
to proactively assess conformance
UN SDGs adopted
to the standard and develop action plans as
appropriate
• Adoption of six UN Sustainability Development
Goals (SDGs)
• Retained our ISO 14001 certification at Letšeng
• Task force on Climate-related Financial
Disclosures (TCFD) to be included in 2021
reporting The endangered Maluti Stream frog at Letšeng
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 10LETŠENG GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 11
BUSINESS TRANSFORMATION
• Initiatives embedded and will continue to deliver value
• US$79 million benefit achieved to date
• On track to deliver US$100 million by end 2021
• Transition to Continuous Improvement continues
US$100 million implemented initiatives
$34m
13 Mining
$24m
6 $20m $21m
Processing
46
% Working capital and $1m
overheads
35 Corporate activities 2017A 2018A 2019A 2020A 2021E
Delivered Forecast
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 12CONTINUOUS IMPROVEMENT EXAMPLES
Improved drilling depth accuracy
# of holes
140 June 2019 # of holes 140 October 2020
120 120
100 100
80 80
60 60
40 40
20 20
0 0
more…
more…
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
0
1
-0.9
-0.8
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
-1
Less than -1
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
0
1
-0.9
-0.8
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
-1
more than 1
Improved stemming
# of holes
80 # of holes
October 2019 October 2020
80
70
70
60
60
50
50
40
40
30 30
20 20
10 10
0 0
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 13OPERATIONAL REVIEW
• 30-day complete shutdown period in April
Carats recovered (thousands)
• Modified 2020 mine plan in reaction to
126
COVID-19 implemented
112 114
108
• Restart and phased (50%) ramp-up in May 101
• Less tonnes treated resulted in lower waste
mining required
• Focused contractor engagement and 2016 2017 2018 2019 2020
collaboration during COVID-19 crisis
Waste tonnes mined (millions) Ore tonnes treated (millions)
6.6 6.5 6.7
30 30 6.4
26
24
5.4
16
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 14OPERATIONAL REVIEW
• Reduced processing throughput to improve plant stability and diamond recoveries
• Significant contribution from Satellite pipe material in H2 2020
• Record recoveries of large diamonds in 2020*
Frequency of large diamond recoveries
Average
Weight category 2008 – 2019 2019 2020
>100 carats 8 11 16*
60 – 100 carats 18 20 29*
30 – 60 carats 74 82 102*
20 – 30 carats 114 139 115
10 – 20 carats 427 472 500*
Total diamonds >10 carats 641 724 762
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 15SALES & MARKETING
• 2020 sales highlights:
- Achieved US$1 908 per carat
- Sold 16 diamonds greater than 100 carats
- Sold 34 diamonds for more than US$1 million
- Sold 44 diamonds for more than US$20 000 per carat
- >10.8 carat diamonds contributed 81% of revenue
• Tender processes were adapted for diamond sales during lockdown and imposed travel restrictions
• Analysis of selected large, high-value diamonds were provided to clients
• Further recovery of the diamond market expected in 2021
Average US$ per carat Revenue per size fraction
2 299
2 131
1 930 1 908 9
1 695 1 637 +10.8 cts
10
5–10 cts
%SIGNIFICANT DIAMOND RECOVERIES IN 2020
439 carat Letšeng Icon 233 carat white diamond 183 carat white diamond
166 carat white diamond 114 carat white diamond 112 carat yellow diamond 104 carat white diamond
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 17FINANCIAL RESULTS GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 18
INCOME STATEMENT
%
US$ million 2020 2019 Variance
Revenue 189.6 182.0 4
Royalty and selling costs (19.8) (16.9)
Cost of sales (104.7) (114.7)
COVID-19 standing costs (3.9) –
Corporate expenses (8.0) (9.4)
Underlying EBITDA from continuing operations 53.2 41.0 30
Depreciation and mining asset amortisation (9.1) (14.7)
Other income - 4.7
Net finance costs (4.4) (5.8)
Non-cash items (1.5) (1.1)
Profit before tax from continuing operations 38.2 24.1 59
Income tax expense (10.7) (9.0)
Profit after tax from continuing operations 27.5 15.1 82
Attributable profit from continuing operations 16.9 7.1
Loss from discontinued operations (3.3) (4.5)
Attributable net profit 13.6 2.6 423
Earnings per share (US cents) from continuing operations 12.1 5.1 137
Dividends per share (US cents) 2.5 - -
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 19LETŠENG COST ANALYSIS
%
2020 2019 Variance
Ore tonnes treated (millions) 5.4 6.7 (19)
Direct cash costs¹ 183.94 150.61
Operating Costs
Plant 3 operator costs 15.73 20.40
Sub-total 199.67 171.01 17
BT & CI associated costs 1.79 10.15
Total direct cash costs (before waste) per tonne treated 201.46 181.16 11
Non-cash accounting charges² 118.74 64.76
Total operating cost per tonne treated – LSL 320.20 245.92 30
Average foreign exchange rate 14.69 14.45
Total operating cost per tonne treated – US$ 21.83 17.02 28
Waste tonnes mined (millions) 15.6 24.0 (35)
Total waste cash costs per waste tonne mined – LSL 43.70 38.62 13
Average foreign exchange rate 14.69 14.45
Total waste cash costs per waste tonne mined – US$ 2.65 2.67 -
1 Direct mine cash costs represent all operating costs, excluding royalty and selling costs.
2 Non-cash accounting charges include waste stripping cost amortised, inventory and ore stockpile adjustments, and the impact of adopting IFRS 16 Leases, and excludes depreciation and mining asset
amortisation.
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 20FINANCIAL POSITION
%
US$ million 2020 2019 Variance
Non-current assets 323.5 337.5
IFRS 16 Right of use assets 4.8 8.5
Current assets 32.4 38.8
Income tax receivable 0.1 8.2
Cash 49.8 11.3
Total assets 410.6 404.3 2
Equity attributable to the parent company 163.1 158.7
Non-controlling interest 84.4 85.4
Total equity 247.5 244.2 1
Interest-bearing loans and borrowings (long and short term) 16.1 22.3
IFRS 16 lease liabilities (long and short term) 6.7 10.5
Non-current liabilities 14.4 17.5
Deferred tax liabilities 84.5 83.1
Current liabilities 28.8 26.4
Income tax payable 11.9 –
Liabilities associated with assets held for sale 0.7 0.3
Total liabilities 163.1 160.1 2
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 21CASH MANAGEMENT
• Group cash of US$50 million Corporate costs
11.0
10.0 9.4
9.2
• Net cash of US$35 million 8.0
US$ millions
• Capital debt repayments of US$14 million in 2020
• Three available facilities totaling US$61 million 2016 2017 2018 2019 2020
105 6 47
61
US$ millions
8
8
5
3 3 4
2
70
50
11
Cash and Letšeng - Net income tax Letšeng - Net Financial Corporate Dividends to Net finance Ghaghoo costs Investment in FCTR Cash and
facilities cash generated received waste costs liabilities repaid costs NCIs costs PPE facilities
December 2019 capitalised (incl. IFRS 16) December 2020
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 22DIVIDEND
• Cash dividend of 2.5 US cents per share
• Last date of registration: 13 May
• Record date: 14 May
• Subject to AGM approval on 2 June
• Payment on 15 June
• Looking forward:
- Annual cash dividend review based on cash resources, free cash flow and earnings generated,
and capital projects
- Special dividends with significant diamond recoveries
- Consider share buyback programme when appropriate
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 23LETŠENG 2021 GUIDANCE
2021
Guidance
Waste stripped (Mt) 19 – 21
Ore treated (Mt) 6.3 – 6.5
Satellite pipe ore contribution (Mt)¹ 2.6 – 2.7
Carats recovered (Kct) 123 – 127
Carats sold (Kct) 119 – 123
Direct cash costs (before waste) per tonne treated² (Maloti) 195 – 205
Operating costs per tonne treated³ (Maloti) 275 – 285
Mining waste cash costs per tonne of waste mined (Maloti) 40 – 42
Total capital (US$ million) 14 – 15
1 The contribution from satellite pipe material is evenly spread throughout the year.
2 Direct cash costs excludes royalty and selling costs.
3 Operating costs comprise direct cash costs, waste stripping cost amortised, inventory and ore stockpile adjustments, depreciation and mining asset amortisation and the adoption of IFRS 16 - Leases.
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 242021 FOCUS AREAS GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 25
2021 FOCUS AREAS
SOCIAL LICENSE TO OPERATE OPERATIONAL
Safe operating environment Pit slope angles
Support our surrounding communities Letšeng’s Resource and Reserve Statement
COVID-19 vaccinations Continuous Improvement at Letšeng
FINANCIAL STRATEGIC
Comprehensive debt restructuring Growth opportunities
US$100 million BT target Downstream value add
Advancing technology
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 26CONTACT US Gem Diamonds Limited Glenn Turner / Susan Wallace T: +44 (0) 203 043 0280 IR@gemdiamonds.com Celicourt Communications Mark Antelme/ Ollie Mills T: +44 (0) 207 520 9565 GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 27
APPENDIX A: MARKET INFORMATION
2020 Annual share performance Gem Diamonds Limited is listed on the Main Board of the London
Stock Exchange LSE: GEMD
7 0.8 Daily average trading volume across all
6 0.7 219k
platforms in 2020
5 0.6
0.5 Shares in issue 139 889 139
GBP Millions
4
0.4
3 Free float
0.3
2 0.2 (excl. holders above 5%, ESOP and Directors 32.63%
1 0.1 holdings)
0 0.0
Share price (9 March 2021) £0.53
Market capitalisation (millions) £74/US$103
Volume Price (GBP)
As at
15 February Company officers
Major shareholders 2021
Clifford Elphick Chief Executive Officer
Sustainable Capital Limited 20.1%
Graff Investments Limited 14.9%
Lansdowne Partners Limited 13.8% Glenn Turner Chief Legal and Commercial Officer
Aberforth Partners LLP 9.9%
Gem Diamonds Holdings Limited 6.7% Michael Michael Chief Financial Officer
Hosking Partners 5.0%
Hargreaves Lansdown Asset Management 2.5% Operations and Business Transformation
Brandon de Bruin
Executive
UBS AG 2.3%
GEM DIAMONDS LIMITED FULL YEAR RESULTS 2020 282nd Floor, Coastal Building, Wickham’s Cay II, PO Box 2221, Road Town,
Tortola, British Virgin Islands, Registration number: 669758
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