Gem Diamonds aims to double Lesotho diamond quality

The board of Africa-focused Gem Diamonds has given the go-ahead for an expansion of its Leteng mine in Lesotho.

'Project Kholo' will begin in January 2012, and will ramp up to full production by July 2014, the company said.

It aims to increase the annual treatment capacity of the Leteng mine to 10m tonnes per annum, from the current level of 5.6m tonnes a year.

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Carat output will increase to around 200,000 carats per annum, from 100,000 carats a year currently.

The total project capital expenditure for Project Kholo is estimated at $280m and will be funded out of existing and future cash flows, Gem said.

"[With] the expansion project at the Letseng mine, the number of carats of the remarkable diamonds which it produces will effectively be doubled," said chief executive Clifford Elphick.

"Given the industry consensus around the extremely positive supply/demand dynamics for high end diamonds, it is an investment which signals Gem Diamonds' confidence in its future growth," he added.