Two workers die at Gem's Ghaghoo project, production delayed

FTSE 250 diamond producer Gem Diamonds has revealed that production at its Ghaghoo project in Botswana will commence later than originally expected, after 'adverse ground conditions' resulted in the death of two contractors on site.

The group said on Monday that the collapse of ground at the face of the tunnel development resulted in the two fatalities and while the incident has been fully investigated, the Department of MInes has given permission for operations at Ghaghoo to continue.

"The company again extends its condolences to the families of the two deceased and commits itself to continuing to strive for the highest safety standards for its employees and contractors at all of its operations," said Chief Executive Officer Clifford Elphick.

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Further and additional safety precautions have been put in place, the statement said.

However, in light of this incident, and in addition to the issues highlighted in the first-quarter trading update - that progress at Ghaghoo has been slow - diamond production is now not expected to start until the first half of 2014.

The group is currently constructing the treatment plant at the site but had previously forecasted production to begin in the second half of 2013.

Ghaghoo is still on budget with some $31m of the overall budget of $85m already spent. A full assessment of the likely impact upon the project timeline and overall project costs is ongoing.

"The construction of the plant and associated civils, as well as the infrastructure, on the Ghaghoo project is well advanced and is on time and on budget," the group assured.

BC