This was in line with the increase in revenue and the increase in royalties from October 2019 from 8 percent to 10 percent.
The increase in royalties means the government collected more revenue from Letšeng than it did in the previous financial year.
A revenue increase of 4 percent was registered at Letšeng in the financial year 2020.
Revenue increased to US$189.6 million from US$182.0 million in 2019, translating to underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$53.2 million against US$41.0 in the previous year.
The increase in revenue was mainly driven by achievement of a higher average price per carat and increased large diamond recoveries.
Profit attributable to shareholders was US$13.6 million, which translates to 9.8 US cents per share based on a weighted average number of shares in issue of 139.3 million.
As a result of the group’s disciplined capital and cash management and its strong cash generation during the year in a challenging environment, the board has recommended the payment of an ordinary cash dividend of 2.5 US cents in respect of the 2020 financial year.
The dividend is however, subject to shareholder approval at the scheduled Annual General Meeting to be held in June.
The group revealed that cash flow was a key focus given the crisis conditions prevalent for most of the year. Cash flow from operations increased by 73 percent to US96.2 million for the year, allowing the group to move from a net debt position of US$10.2 million at the start of the year to a net cash position of US$34.6 million at the end of 2020.
The group ended the year with a cash balance of US$ 49.8 million and drawdown facilities of US$ 15.2 million. All scheduled debt repayments during the year were made, totaling US$13.5 million.
“The group optimised the capital structure to ensure Letšeng debts were fully repaid at the end of the year, even under the COVID-19 circumstances to ensure lower overall gearing in the medium term should the pandemic have extended implications,” Gem Diamonds stated in a financial statement released last week.
While there was a significant uncertainty regarding the impact of the pandemic on the diamond market, demand for diamonds returned and prices achieved remained relatively strong.
Letšeng was able to produce solid results that included the recovery of 16 diamonds greater than 100 carats in 2020.