Thursday, 4 September 2025

Gem Diamonds Limited

Half Year 2025 Results

Gem Diamonds Limited (LSE: GEMD) ("Gem Diamonds", the "Company" or the "Group") announces its Half Year Results for the six months ended 30 June 2025 (the "Period").

FINANCIAL RESULTS:

OPERATIONAL RESULTS:

Letšeng

Goodwill impairment

Taking into account the prevailing market conditions, current diamond prices and exchange rates, the recoverable amount of Letšeng was assessed at Period end and an impairment of US$10.7 million was recorded to bring the carrying value in line with the recoverable amount. The impairment was allocated to goodwill which is now fully impaired.

Safety performance

Letšeng recorded zero LTIs during the Period (H1 2024: three), resulting in a zero LTIFR (2024: 0.18) and an AIFR of 0.51 (2024: 0.61), respectively.

Response to market conditions

As reported in the trading update published on 23 July 2025, Gem Diamonds has implemented decisive measures to conserve cash and protect shareholder value in response to the prolonged weakness in global diamond prices, compounded by a weak US dollar and ongoing US tariff uncertainties. While the Company has met its production targets in H1 2025, it has not been immune to the sustained pressure on rough diamond prices.

Key short-term cashflow optimisation measures implemented include the short-term reduction of waste and access to additional Satellite Pipe ore to be treated, workforce rationalisation due to the scaled-back activities and a reduction in corporate costs.

Letšeng's long-term mine plan

Further waste mining reduction initiatives were implemented at Letšeng. Consequently, the life of mine has reduced from 2039 to 2035 using current pricing assumptions and costs. Annual throughput of approximately 5.0 million ore tonnes has been maintained. Should market conditions improve, the flexibility exists to again extend the life of mine.

Gem Diamonds remains committed to its long-term strategy of producing exceptional quality diamonds and is confident that the measures implemented will position the Group for a strong recovery when market conditions improve.

The Company's production and cost forecasts for FY2025 remain in line with the revised guidance as published in the trading update on 23 July 2025.

Commenting on the results today, Clifford Elphick, Chief Executive Officer of Gem Diamonds, said:

"The industry continues to face significant challenges. Sustained pricing pressure, softer demand in key markets, ongoing macroeconomic and geopolitical uncertainty, and tariff uncertainties in respect of India, combine to create difficult trading conditions.

H1 2025 production targets were achieved, however, revenue decreased significantly. In response, key decisions to adapt the mine plan to reduce costs, necessitated the unfortunate retrenchment of 240 employees at Letšeng. While deeply regrettable, these actions position Letšeng to operate sustainably."

The Company will host a live audio webcast presentation of the half year results today, 4 September 2025, at 9:30 BST. This can be viewed by registering on the Company's website using the following link: https://gemdiamonds.zoom.us/webinar/register/WN_50gMcwzXTmOr37OU3-ARkQ.

The page references in this announcement refer to the Half Year Report 2025, which can be found on the Company's website: www.gemdiamonds.com.

The Gem Diamonds Limited LEI number is 213800RC2PGGMZQG8L67

FOR FURTHER INFORMATION:

Gem Diamonds Limited

Kiki Constantopoulos, Company Secretary

ir@gemdiamonds.com

Celicourt Communications

Mark Antelme / Felicity Winkles

Tel: +44 (0) 207 777 6424

ABOUT GEM DIAMONDS:

Gem Diamonds is a leading global diamond producer of high value diamonds. The Company owns 70% of the Letšeng mine in Lesotho. The Letšeng mine is famous for the production of large, exceptional white diamonds, making it the highest dollar per carat kimberlite diamond mine in the world.

INTERIM BUSINESS REVIEW

OVERVIEW

The Group presents its results for the six months ended 30 June 2025 (the Period) reflecting the ongoing challenging conditions in the diamond market. These headwinds are driven by a volatile global economic landscape, persistent geopolitical tensions, uncertainty surrounding US tariffs, a weaker US dollar and the remaining impact from synthetic diamonds. Despite a modest price recovery reported in January, downward pressure on both rough and polished diamond prices has persisted into 2025.

Letšeng's production volumes for the Period were in line with the planned output, in accordance with the mine plan implemented in December 2024. Operating costs were well-managed and reflected the benefit of the insourcing of treatment activities at the end of 2024.

Revenue was significantly impacted by the persistent challenging market conditions and low diamond prices achieved during the Period. Revenue decreased by 42% to US$45.4 million compared to US$78.0 million in H1 2024. An average price of US$1 008 per carat was achieved from the sale of 44 360 carats (H1 2024: US$1 366 per carat from the sale of 56 994 carats) from Letšeng. Revenue was lower compared to H1 2024 due to pricing achieved under current diamond market conditions and reduced carat volumes, driven by the planned processing of lower volumes of higher-value, higher-grade Satellite Pipe ore during the Period.

This resulted in the Group incurring a negative underlying EBITDA before discontinued operations of US$2.6 million and after a consumable stock obsolescence and stockpile write-down of US$1.7 million (H1 2024: positive underlying EBITDA of US$19.1 million). An attributable loss of US$11.7 million was recorded after a goodwill impairment of US$10.7 million (H1 2024: attributable profit of US$2.1 million).

The Group ended the Period with a cash balance of US$6.8 million (31 December 2024: US$12.9 million) and drawn down facilities of US$34.9 million (31 December 2024: US$20.2 million), resulting in a net debt position of US$28.2 million (31 December 2024: US$7.3 million) and unutilised available facilities of US$55.8 million (31 December 2024: US$69.0 million).

Waste tonnes mined during the Period were reduced to 1.7 million tonnes (H1 2024: 3.2 million) in line with the mine plan. Further waste mining reduction initiatives were implemented at Letšeng, following an optimised smaller cutback in Main Pipe Cut 4 West (MC4W) and isolated steeper pit design opportunities. As a result, the life of mine has been revised from 2039 to 2035, while sustaining annual ore throughput of approximately 5.0 million tonnes. The original MC4W design remains intact and under review, and may be reinstated should market conditions improve, which would again extend the life of mine.

Ore tonnes treated were 2.5 million tonnes (H1 2024: 2.5 million) from which 47 125 carats were recovered (H1 2024: 55 873). The decrease in carats recovered is primarily due to the higher proportion of lower-grade Main Pipe ore, which made up 68% of the treated ore during the Period (H1 2024: 56%).

The safety of the Group's workforce remains a top priority. The critical control management strategy initiated in 2021 to enhance the maturity of Letšeng's organisational safety culture has been fully implemented and the safety performance during the Period remained solid, with an all injury frequency rate (AIFR) of 0.51 (H1 2024: 0.61) and no recorded lost time injuries (LTIs).

The Group remains focused on achieving its decarbonisation target of reducing its 2021 Scope 1 and 2 carbon emissions by 30% by 2030. The Group achieved a 3.0% reduction in carbon emissions compared to H1 2024, the details of which are briefly discussed in the Operations Review on page 2.

Letšeng has unfortunately not been immune to the sustained pressure on rough diamond prices and adverse foreign exchange movements, despite having met its production targets during the Period. In response, shortly after Period end, the Group implemented decisive measures to conserve cash and protect shareholder value.

Implementation of the following key short-term cash flow optimisation initiatives have commenced:

The above initiatives are expected to be fully implemented by the end of September 2025. The Group remains committed to its long-term strategy of producing exceptional quality diamonds and is confident that the actions taken will position the Group well for recovery when market conditions improve. Market developments will continue to be closely monitored, with operational adjustments made as necessary.

The key focus for the remainder of 2025 is to responsibly implement the identified cost saving initiatives in order to conserve cash and protect shareholder value during this challenging time in the diamond industry.

OPERATIONS REVIEW

The Group remains firmly committed to upholding the highest standards of health and safety across the organisation, guided by a zero harm and zero tolerance approach. Since 2021, a culture of accountable, proactive safety leadership - underpinned by disciplined, yet supportive practices - has contributed to meaningful and sustained improvements in safety performance.

The Group maintained a strong safety performance during the Period, achieving an AIFR of 0.51 with zero LTIs recorded.

No major or significant environmental incidents occurred at any of the Group's operations during the Period.

In H1 2025, the Group remained focused on executing its CSRI strategy and initiatives to support its project-affected communities, maintain its social license to operate, and advance the Group's commitment to the UN Sustainable Development Goals. The five-year CSRI strategy (2022 - 2026) remains on track, aligning with both community needs and Group objectives. No major stakeholder complaints were received during the Period.

The Group is working towards its decarbonisation target of reducing its Scope 1 and 2 carbon emissions by 30% by 2030 (measured against 2021). The Group's immediate priorities are improving energy efficiencies and reducing diesel and electricity consumption, while it continues to assess suitable low-carbon and renewable energy alternatives.

In H1 2025, the Group's total carbon footprint (Scope 1, 2 and 3) was 50 717 tCO₂e, a 3.0% reduction compared to H1 2024 of 52 283 tCO₂e, mainly due to the reduction in waste mining activities. The aggregate Scope 1 and 2 emissions for H1 2025 are similar to H1 2024 (decreased by 2%) while the individual emissions for Scope 1 and Scope 2 inversely fluctuated due to reduced load shedding by Eskom during the Period.

The Group's RSF management policy and standards are aligned to the Global Industry Standard on Tailings Management (GISTM). Robust management and governance structures are in place at both operational and Group levels to ensure effective management, oversight and assurance. Letšeng's RSFs remain in good condition, supported by a focused and well-executed operations, management and control strategy.

An updated life-of-mine plan for Letšeng was implemented in December 2024, as announced to the market at the time and outlined in the Annual Report and Accounts 2024 (page 43). This mine plan included ore from the following open-pit cutbacks: Main Pipe Cut 4 East (MC4E), Main Pipe Cut 4 West (MC4W), Satellite Pipe Cut 5 West (SC5W) and a redesigned Satellite Pipe Cut 6 West (SC6W) incorporating steeper slopes in the competent basalt rock. A life-of-mine plant throughput of c. 5.0 million tonnes per annum was maintained to 2039. Waste stripping of the redesigned SC6W cutback was scheduled to commence in H2 2025, with ore from SC6W scheduled to be available for processing from the end of 2029.

Letšeng's long-term mine plan remains under continuous review to identify optimisation opportunities and to ensure the viability of each cutback, considering current and foreseeable diamond market and economic conditions, as well as the respective impact that each cutback has on the overall value of the mine, under prevailing conditions.

In line with this strategy, the mine plan was further optimised during the Period, with a specific focus on accessing additional ore from SC5W, and reducing waste mining and associated costs in the short to medium term. These initiatives have been implemented as part of the Group's focus on enhancing short-term cash flows and long-term value, and include:

Under the revised mine plan, the life of mine has been reduced from 2039 to 2035, with the treatment of approximately 1.5 million tonnes in the final year. The mine plan remains under ongoing review to ensure continued value optimisation in response to prevailing economic conditions.

Production volumes at Letšeng for the Period were aligned with the mine plan implemented in December 2024, with a deliberate and responsible reduction of waste mining to manage and contain costs in the prevailing market conditions.

Waste mining decreased by 46% to 1.7 million tonnes compared to 3.2 million tonnes in H1 2024. Waste mining will be further reduced over the short to medium term to preserve cash resources until market conditions improve, as discussed above.

Ore tonnes treated in H1 2025 of 2.5 million was very similar to H1 2024, in line with the planned treatment throughput rate of c. 5.0 million tonnes per annum. The immediate reduction in waste mining, as outlined above, will not adversely affect ore accessibility required to meet the treatment volumes set out in the life-of-mine plan discussed above.

Letšeng recovered 47 125 carats compared to 55 873 carats in H1 2024. The 16% decrease in carats recovered during the Period is primarily due to the lower-grade Main Pipe contributing 68% (H1 2024: 56%) to the treated ore in the Period. Several initiatives are being implemented to access c. 1.0 million tonnes of higher-value and higher-grade Satellite Pipe ore over the next 12 months, which is expected to improve both the volume of carats recovered and average price per carat achieved.

The overall grade for H1 2025 was 1.88 cpht (H1 2024: 2.20 cpht), representing a decrease of 15% due primarily to a lower contribution of higher-grade Satellite Pipe ore, which accounted for 32% (H1 2024: 44%) of ore treated during the Period.

Three additional diamonds larger than 100 carats were recovered after Period end, resulting in seven diamonds larger than 100 carats being recovered year to date, compared to the full year average of eight for the period from 2008 to 2024.

The average price achieved during the Period was US$1 008 per carat (H1 2024: US$1 366 per carat). 44 360 carats were sold during the Period, generating rough diamond revenue of US$44.7 million (H1 2024: 56 994 carats generating revenue of US$77.9 million). Revenue was lower compared to H1 2024 due to pricing achieved under current diamond market conditions and reduced carat volumes, driven by the planned processing of lower volumes of higher-value, higher-grade Satellite Pipe ore during the Period. This also resulted in a decrease in both the number and quality of high-value larger than 100 carat diamonds being recovered.

The highest price achieved was US$26 441 per carat for a 67.50 carat white diamond. Six diamonds sold for more than US$1.0 million each, generating revenue of US$9.3 million (H1 2024: 11 diamonds sold for more than US$1.0 million each, generating revenue of US$29.5 million). Three of the four larger than 100 carat diamonds recovered were sold in the Period.

Following the completion of agreed safety and remedial activities, including the removal of the processing plant and civil infrastructure, the Ghaghoo mine site was formally handed back to the Botswana Ministry of Minerals and Energy, through the Department of Mines. As of 1 June 2025, the Department of Mines has assumed full responsibility for the mine and the Group has no further obligations or commitments related to the license or the mine.

GROUP FINANCIAL PERFORMANCE

Refer to the financial statements on page 10.

The Group incurred a negative underlying EBITDA² of US$2.6 million (H1 2024: positive underlying EBITDA US$19.1 million) after a consumable stock obsolescence and stockpile write-down of US$1.7 million. The loss attributable to shareholders from continuing operations was US$13.3 million after recording a goodwill impairment of US$10.7 million (H1 2024*: profit of US$2.7 million). This equated to a loss per share of 9.5 US cents (H1 2024: profit per share of 1.9 US cents) on a weighted average number of shares in issue of 139.7 million (H1 2024: 139.7 million shares).

The Group's revenue of US$45.4 million was mainly generated by the sale of 44 360 carats at an average price of US$1 008 per carat. Additional revenue is generated through an arrangement with two diamond manufacturing customers to supply polished diamonds to some of the world's most premium luxury brands, and other partnership arrangements. These agreements allow the Group to share in a margin uplift on the sale of polished diamonds. In H1 2025, additional revenue of US$0.3 million (H1 2024: US$0.6 million) was generated from these arrangements.

The Group closely manages its costs to preserve cash resources and maintain appropriate liquidity. Operating expenses continue to be negatively impacted by higher inflation. The insourcing of mining, treatment and certain other activities at Letšeng had a positive impact on costs, significantly reducing operating expenses in H1 2025 compared to H1 2024.

OPERATING EXPENSES

Total direct cash costs at Letšeng (including waste costs) decreased 14% to LSL699.0 million (US$38.0 million) in H1 2025 from LSL809.5 million (US$43.2 million) in H1 2024. This is due to the 46% decrease in waste tonnes mined, cost savings realised through the insourcing of treatment activities at the end of 2024 and the ongoing review of all operational areas with a focus on cost reduction.

Direct cash costs (excluding waste costs) per tonne treated decreased by 5% in local currency to LSL232.48 (US$12.65) in H1 2025 compared to LSL243.84 (US$13.01) in H1 2024 mainly due to the above-mentioned cost savings realised.

Non-cash accounting charges per tonne treated decreased by 40% mainly due to waste amortisation that decreased to US$13.6 million (H1 2024: US$17.8 million) due to the higher contribution of Main Pipe ore that has a lower stripping ratio. A further decrease in the unit cost was driven by movements in stockpile and diamond inventory.

Total waste cash costs decreased by 38% to LSL116.8 million (US$6.4 million) compared to LSL189.6 million (US$10.1 million) in H1 2024 due to the 46% decrease in waste tonnes mined and other cost savings realised. The waste cash cost per waste tonne mined, however, increased by 15% primarily reflecting the fixed cost component allocated over lower volumes of waste tonnes.

Corporate office costs are incurred to provide expertise in all areas of the business to realise maximum value from the Group's assets. These costs are incurred by the Group through its technical and administrative offices in South Africa (in South African rand) and head office in the UK (in British pounds).

Corporate costs are closely managed and ongoing rationalisation has resulted in a 23% decrease in costs to US$3.1 million compared to US$4.0 million in H1 2024.

Taking into account the prevailing market conditions, current diamond prices and exchange rates, the recoverable amount of Letšeng was assessed at Period end and an impairment of US$10.7 million (US$7.5 million after tax and non-controlling interest) was recorded to bring the carrying value in line with the recoverable amount. The impairment was allocated to goodwill which is now fully impaired. Refer Note 11, Intangible assets for further details.

The Ghaghoo Diamond Mine in Botswana site was formally handed back to the Botswana Ministry of Minerals and Energy, through the Department of Mines. As of 1 June 2025, the Department of Mines has assumed full responsibility for the mine and the Group has no further obligations or commitments related to the license or the mine. This supported the release of the rehabilitation provision in the Period.

The above resulted in Gem Diamonds Botswana being classified as a discontinued operation in the Period, refer Note 14, Discontinued operation and the comparative figures for H1 2024 have therefore also been re-presented. The profit from discontinued operation in the Period amounted to US$1.6 million (H1 2024: loss of US$0.6 million in the re-presented figures) after the reversal of the rehabilitation provision of US$2.3 million.

While revenue is generated in US dollars, the majority of operational expenses are incurred in the relevant local currency of the operational jurisdictions. Local currency rates for the Lesotho loti (LSL) (pegged to the South African rand) and Botswana pula (BWP) strengthened slightly against the US dollar compared to H1 2024, which increased the Group's US dollar reported costs and decreased local currency cash flow generation.

Selected totals of the Interim Consolidated Statement of Financial Position and key asset drivers are tabled below.

Waste cost capitalised decreased due to the 46% decrease in waste tonnes mined. The waste stripping cost amortised decreased to US$13.6 million (H1 2024: US$17.8 million) due to the higher contribution of Main Pipe ore of 68% that has a lower stripping ratio, compared to the 56% contribution of Main Pipe ore in H1 2024. Depreciation and mining asset amortisation increased marginally to US$6.1 million (H1 2024: US$6.0 million).

During the Period, the majority of capital spent related to the purchase of front-loading earthmoving machinery to improve ore feed into the plants and a new drill, totalling US$1.5 million. A further US$0.3 million was spent on geotechnical monitoring equipment and licenses and pit slope lateral support studies. The balance of the capital was spent on enhancements to the recovery areas for improved workflow and security, and improvements to the bioremediation plant.

The Group ended the Period with cash on hand of US$6.8 million (31 December 2024: US$12.9 million), of which US$5.4 million is attributable to Gem Diamonds. The Group generated cash from its operating activities of US$14.9 million (H1 2024: US$39.7 million) before investing US$11.9 million in working capital, incurring net finance costs of US$2.2 million and paying income taxes of US$9.1 million at Letšeng (mainly relating to the 2024 financial year end).

At Period end, the Group had utilised facilities of US$34.9 million (31 December 2024: US$20.2 million), resulting in a net debt position of US$28.2 million (31 December 2024: US$7.3 million) and available facilities of US$55.8 million, comprising US$22.0 million at Gem Diamonds and US$33.8 million at Letšeng. The increase in net debt is mainly due to lower revenue generated, investment in working capital and waste stripping and tax payments.

The Group-wide revolving credit facilities at Letšeng (LSL450.0 million and ZAR300.0 million) (US$42.2 million) (and Gem Diamonds (US$30.0 million) expire in December 2026.

Letšeng has a LSL100.0 million general banking facility that is reviewed annually. The Group engages regularly with lenders and credit providers to ensure access to funding and to manage the Group's cash flow requirements.

The Group applies all relevant principles in accordance with prevailing legislation when assessing its tax obligations. The Group's forecast effective tax rate for the full year is 13.1% (31 December 2024: 29.4%) and has been applied to the actual results, resulting in a tax benefit being recognised for the Period. Most of the Group's taxes are incurred in Lesotho, which has a corporate tax rate of 25%. The effective tax rate is forecast below the Lesotho statutory tax rate mainly due to permanent differences arising from the impairment of goodwill which is not deductible for tax purposes and the impact of deferred tax assets not recognised on losses incurred in other operations. Refer Note 8, Income tax benefit/(charge) for more detail.

The Group continues to pursue a long-standing legal matter relating to an amended tax assessment that was issued to Letšeng by the Revenue Services Lesotho in December 2019, contradicting the application of certain tax treatments in the current Lesotho Income Tax Act, 1993. The Group expects to pursue this matter in the courts in H2 2025. The Group has sought senior legal counsel and their advice indicates good prospects for success.

The projections of the Group's current and expected profitability, considering reasonable possible changes in operations, key assumptions and inputs, indicate that the Group will be able to operate as a going concern for the foreseeable future. Refer to the financial statements on page 10.

Due to the prolonged weakness in global diamond prices, compounded by a weak US dollar and ongoing US tariff uncertainties, the Group has implemented further decisive measures to preserve cash resources and protect shareholder value.

The short-term cash flow optimisation initiatives discussed in the Interim Business Review are expected to be completed by the end of September 2025 and will result in an estimated LSL30.0 million (US$1.7 million) cost saving per month at Letšeng. The once-off implementation costs, consisting mainly of employee retrenchment payments, is estimated at LSL15.0 million (US$0.8 million).

PRINCIPAL RISKS AND UNCERTAINTIES

The Group's principal risks and uncertainties, both current and emerging, that could have a material financial, operational and compliance impact on its performance and long-term growth, are presented in the Annual Report and Accounts 2024 (pages 21 to 26). The Group's risk management strategy has been implemented to manage Group risk so as to minimise threats and maximise opportunities.

The Group's principal risks as presented in the Annual Report and Accounts 2024 remain unchanged in the medium to long term and take into consideration current market and operational conditions of the Group's operations and global markets to determine whether any changes occurred in the perceived risk level associated with each principal risk.

The assessed risk levels for (i) rough diamond demand and prices and (ii) variability in cash generation, as presented in the Annual Report and Accounts 2024, have increased from the previous year. The increase in the level of risk is attributed primarily to macro-economic and geopolitical uncertainty, increasing inflationary pressures, US tariff uncertainty, a weak US dollar and the prolonged weakness in global diamond prices.

Chief Executive Officer

3 September 2025

HALF-YEAR FINANCIAL STATEMENTS

The Directors confirm that, to the best of their knowledge, this condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting and that the Half-Year Report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

(a) an indication of important events that have occurred during the first six months of the financial year and their impact on this condensed set of financial statements; and

(b) material related-party transactions in the first six months of the year and any material changes in the related-party transactions described in the Gem Diamonds Limited Annual Report 2024.

On 31 March 2025, Michael Lynch-Bell, the Senior Independent Non-Executive Director retired from the Board following his nine-year tenure and in line with UK Corporate Governance principles. With effect from 1 April 2025, Janet Blas was appointed to the Board as a Non-Executive Director, the Audit Committee Chair and a member of the Remuneration Committee; and Non-Executive Director, Rosalind Kainyah, was appointed as the Senior Independent Director and Chair of the Remuneration Committee. The names and functions of the other Directors of Gem Diamonds Limited are listed in the Annual Report for the year ended 31 December 2024.

For and on behalf of the Board

Chief Financial Officer

3 September 2025