Repeating its ‘overweight’ recommendation, the broker bumped its valuation up to 44 pence a share from 38 pence previously.

At 11.15 am the stock was changing hands at 35.56 pence, down 0.31 pence. However in the past year it has more than doubled in value.

In a note to clients analyst Alexander Mees said: “Gemfields is consolidating its position as the leading supplier of rough emeralds to the global luxury goods market. 

“As demand intensifies for the gemstone, complemented by increased marketing, we believe the company will deliver significantly enhanced returns.” 

Gemfields raised US$26.2 million in the rough emerald auction it held last week in Singapore, bringing the cumulative total for the financial year so far (which runs to June 30) to US$68.9 million.

Of the 32 companies attending the auction of predominantly medium to higher quality rough emeralds, 29 placed bids. 

It sold 690,000 carats of the 770,000 placed on offer at an average of US$38 per carat.

“Gemfields’ recent auction achieved considerably higher returns than we had expected and reinforces our confidence in the long to medium-term sustainability of sales prices above $20 per carat for higher quality gems,” JP Morgan Cazenove’s Mees.

The company's principal asset is the 75 per cent-owned Kagem emerald mine in Zambia, the world's largest emerald mine. 

In addition to the Kagem emerald mine, Gemfields has a 50 per cent interest in the Kariba amethyst mine in Zambia.

It also owns controlling stakes in a highly prospective ruby deposit in Mozambique and licences in Madagascar including ruby, emerald and sapphires deposits.

Revenue in the current year to date is US$42.6 million (£27 million) with a high-quality auction scheduled for 19-24 March and the probability of a further auction in June. 

Edison adds that the miner’s current focus is to identify resources to support long-term production at its producing Kagem emerald mine together with assessment of both underground exploitation and new open pits. 

But with Gemfields established as a benchmark in emeralds, management is confident it can develop further identified opportunities in the coloured gemstone sector, says Edison.

These include extensive emerald targets in Zambia, Montepeuz, a major ruby deposit in Mozambique  where production is anticipated by year-end, and coloured gem prospects in Madagascar. 

Other interests and prospects are constantly under review said the research house.

Edison values Gemfields at 38p, based on an NPV 10 per cent on emerald production and price projections from current operations, but says there is considerable upside potential from any potential new developments.  

For the first half of the current year, underlying earnings were US$32.2m with cash at US$32.4m and an at-cost inventory of US$22m. 

For the full year to June, Edison is projecting revenues of US $77.5 million, profits of US$40.6 million and earnings of 6.2p. 

Shares rose 1 per cent to 35.6 pence.

Gemfields (LON:GEM) said today it expects first production from its newly acquired ruby deposit in Mozambique later this year.

The company has completed its acquisition of a controlling interest of the deposit based in the Montepuez district of the Cabo Delgado province.

The licences for a period of 25 years were formally issued by the Mozambican government on 23 February to a new company, Montepuez Ruby Mining Limitada, in which Gemfields holds a 75% interest.

Gemfields said it intends to initiate additional bulk sampling and diamond drilling of the area with first production expected later this year.   

The new project comprises mining and exploration rights covering approximately 34,000 hectares and is believed to be potentially one of the largest ruby concessions in private hands in the world.

Gemfields said that mining had previously taken place on a relatively small and informal scale and activities will now be expanded considerably.

The total consideration payable is US$2.5 million, of which the final stage payment will now be made.

Ian Harebottle, Gemfields chief executive, said: "This is a particularly exciting development for Gemfields and we're thrilled to add rubies to our emerald and amethyst portfolio.

“A project team is already on site, assorted items of capital equipment have arrived and more are on the way. We will now initiate additional bulk sampling and diamond drilling of the area and expect our first production later this year."

Shares added 0.5p to 23.9p.

Gemfields’ (LON:GEM) decision to embark on a significant waste movement programme was reflected this morning in a rather subdued quarter.

The group, which owns the Kagem emerald mine in Zambia, said the initiative will enhance the performance and efficiency of the operation.

As such it is predicting “significantly increased production” in the final two quarters of its financial year.

With around US$32 million in the bank the group is in a financially comfortable position to carry out the work to develop the operation.

An update for the three months ended September 30 revealed production was 4.9 million carats compared with 10.8 million in the previous quarter. 

The grade was 205 carats, down from 500 carats and unsurprisingly production costs rose to 79 cents a carat from 32 cents. 

Chief executive Ian Harebottle said: "Gemfields' mine to market strategy continues to reap benefits for Gemfields, its products and its partners. 

“This is clearly evidenced in the firm demand for coloured gemstones stemming from both developed and emerging markets alike. 

“Gemfields' healthy cash position has supported the company's decision to actively pursue the development of other assets in its portfolio and to increase the scale of operations at its Kagem mine, where operational performance will continue to improve post the current high wall pushback project. 

“Significantly increased production outputs are anticipated in the last two financial quarters."

Results from Gemfields (LON:GEM) were hailed as “sparkling” by research boutique Edison Investment Research.

Analyst Julian Emery, who reckons the shares are worth 36 pence each, says that the results confirmed a successful year with massive improvements in production, grade and costs. This, he says, has fuelled a strong balance sheet and underpinning management plans to pursue growth, market share and build out resource. 

“This was an outstanding year, and markets in the current year will be more unpredictable. 

Nonetheless Gemfields reports that pricing and demand is holding up well. 

“Although the current year will likely see lower carat production (after last year’s record level), as the company undertakes a major high wall push-back project at Kagem, this will, on completion, enhance open pit resource, add scope for underground development and augment production and quality.” 

The analyst’s 36 pence valuation implies that the group’s shares could rise more than 76 per cent from the current market price of 21 pence.

Emery’s said his valuation is based on production and price projections from current operations and underpinned by a strong balance sheet, and beyond that he continues to see potential upside from exploration and operating initiatives.

Earlier this week, in Gemfields’ results statement, chief executive Ian Harebottle said: The past financial year has been an outstanding one for Gemfields.” 

“We have doubled revenues, improved our profit eightfold and, following our record rough emerald auction in July, we have started the new financial year strongly. 

“Production is up, costs are well contained and increasing demand from both the trade and consumer markets alike confirms the success of our various marketing and promotional efforts. We look forward to the prospect of continued growth and expansion throughout the coming year.”

Zambia and Madagascar-focused coloured gemstone producer Gemfields (LON:GEM) delivered an eightfold increase in profits and more than doubled its revenues during the year to June 30.

Revenue from sales of the firm’s emerald and beryl gems increased to US$40.2 million from US$19.9 million in 2010, while profit after tax came in at US$21.4 million (2010: US$2.6 million), driven by record annual production of 33 million carats (2010: 17.4 million carats).

The estimated cost of Gemfields’ cost of emerald inventory was slightly greater at US$18.7 million, compared with US$16.6 million in 2010. Meanwhile, the average monthly operating costs at the firm’s Kagem mine were contained at approximately US$1.1 million.

Since the end of June, Gemfields said it completed a successful rough emerald auction that yielded record sales of US$31.6 million. The firm has also recently begun various expansion, exploration and other growth projects within its Zambian and Madagascan licence areas.

“The past financial year has been an outstanding one for Gemfields,” said Ian Harebottle. “We have doubled revenues, improved our profit eightfold and, following our record rough emerald auction in July, we have started the new financial year strongly. Production is up, costs are well contained and increasing demand from both the trade and consumer markets alike confirms the success of our various marketing and promotional efforts. We look forward to the prospect of continued growth and expansion throughout the coming year.”

The company operates the 75 percent owned Kagem mine in Zambia which is the largest emerald mine in the world.

In December Gemfields had its most successful gemstone auction to date. It generated US$19.6 million from the auction, which is almost as much as a whole year's worth of revenue - revenues were 19.9 million in the twelve months ended 30 June 2010.

Similarly Gemfields’ production followed a similar pattern with 18.7 million carats being produced in the first six months - it produced 17.4 million carats in the 12 months ended 30 June 2010.

In the final three months period, ended 31 December 2010, it produced 5.9 million carats, achieving grades of 369 carats per tonne. It had unit production costs of US$0.56 per carat - compared to an historic average of US$0.64 per carat.

"Kagem has delivered a phenomenal quarter in terms of sales and enjoyed another robust production quarter,” chief executive Ian Harebottle said. 

“We look forward to the forthcoming auction in Jaipur and the encouraging outlook for the company and our partners in the coloured gemstone sector.” 

At the end of the quarter Gemfields had US$15.6 million in cash, and its 75 percent owned subsidiary Kagem Mining Ltd paid off all its bank loans and leases and it is now debt free.