Gem Diamonds has broken production records at Ellendale in Western Australia, with June’s output up 58 per cent.

The fully listed company, headed by former Oppenheimer luminary Clifford Elphick, says Ellendale produced 57,814 carats in June from 697,000 tonnes of ore, as against 36,565 carats from 557,091 tonnes in the previous June. On 7 and 8 July, Ellendale broke two successive daily records, with production of 2,566 carats and 3,310 carats.

Elphick says this is the result of the turnaround strategy adopted by Gem when it bought Ellendale’s former owner, Kimberley Diamonds, for £131 million a year ago. The company, which has the rich Letseng mine in Lesotho and operations in Cohngo, Angola, Botswana and Indonesia, ended 2007 with £92 million cash and now says it expects Ellendale to produce 600,000 carats for the whole of 2008, with 730,000 carats on the cards for 2009.

Gem shares, which have fluctuated between £8 and £12.16 over the past 12 months, are 33p up today at £10.28, valuing the company at nearly £647 million. They should outperform several sector peers.

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