July 16 (Reuters) - Gem Diamonds Ltd (GEMD.L) said first-half sales from its South African and Australian mines were lower due to strong currencies, and that it remained cautious about demand in the United States, but its cash position was strong with no debt.

Gems from Gem Diamonds Ltd operations in Ellendale, Australia - Photo: www.gemdiamonds.com

The company said of late, rough diamond prices were firming up in the second quarter.

Gem Diamonds said it had $118 million of cash as of June 30, with no outstanding debt.

Shares in the company rose as much as 8.4 percent in morning trade on the London Stock Exchange.

"The diamond market experienced further falls in prices of rough diamonds at the beginning of the first half of this year, however in recent months prices first stabilised and then strengthened," Gem Diamonds Chief Executive Clifford Elphick said in a statement.

The company said large diamonds from its flagship mine Letseng in Lesotho, in which it holds 70 percent, remained some of the most sought after, attracting high prices per carat.

The Letseng mine generated first-half sales of $74.1 million, down 18 percent from the year-ago period.

Ellendale's rough diamond sales for the period fell 48 percent to $30.8 million.

The Ellendale E9 operations in Australia and the Letseng mine in Lesotho in Africa are the only producing operations after a drop in diamond prices forced the company, and many of its rivals, to put a number of mines on care and maintenance and to mothball future projects.

Sharply stronger currencies in metals-producing nations is wiping out much of the benefit of higher prices for mining companies. Since commodities are sold in dollars, a stronger currency where they are mined boosts costs and hurts margins. Gem Diamonds shares rose 8.4 percent to a market high of 168 pence in early trade. They were up 5.25 percent at 160.25 pence at 0836 GMT.

(Reporting by Balachander Surianarayanan in Bangalore; Editing by Gopakumar Warrier)