Gem Diamonds has recovered high quality 117 and 110 carat, D colour Type IIa diamonds from the Letšeng mine in Lesotho.
RBC Capital Markets said that based on typical values for Letseng goods, the stones could fetch anywhere between $8m and $12m in total as an initial estimate.

"This will also be supported by still-robust market conditions for large stones. This is a good start to the year for Gem, which, over the last couple of years, has struggled with the recovery of larger stones from Letseng, and averaged $1,695/ct in 2016 (we forecast US$1,940/ct in FY17E, with a Q1-Q3 average of $1,806/ct).

"We believe that this morning's announcement will be supportive for the share price, with additional funds from large stone sales helping to offset the impact of a still-high waste stripping charge (we believe that the company will look to once again revise the mine plan to reduce waste stripping in 2018 in a bid to turn cash breakeven). Overall positive."

Shore Capital said this was a "promising start to 2018".

"In 2017, Letšeng yielded a total of seven diamonds of over 100ct, versus 2016's five and 2015's eleven. As a result of the relative 'paucity' of such stones, 2016 revenues took a 25% hit. We expect 2017 revenues to be better than 2016's, and are hopeful that 2018 will prove still better."

At 0820 GMT, the shares were up 6.5% to 81.50p.

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