www.gemfields.co.uk
Gemfields is one of the world´s leading coloured gemstone companies. With a strong focus on Zambian emeralds, Gemfields mines, processes and markets both rough and polished gemstones internationally. Gemfields prides itself on its unique ability to bring ethically produced, conflict-free gemstones of certified provenance directly from mine to market on an integrated basis.
In order to support and influence the entire channel from mine to market, Gemfields is in the process of setting up state-of-the-art Cutting and Polishing facilities with cutting-edge technologies and will offer consumers vast quantities of emeralds in calibrated sizes, high precision and special cuts and large collections of Suites, Pairs, matching earring sets. We will also venture into co-branding projects with large, reputed retailers, most notably the company has acquired a worldwide exclusive 15 year licence to use the Fabergé brand name for coloured Gemstones
Gemfields has turned the corner, more good things to come
A sparkling set of prelims from Gemfields (LON:GEM) seems to have lit the blue touch-paper under the share price, which is up a quarter in the month since the company posted a maiden profit.
The emerald producer’s turnaround has been masterminded by chief executive Ian Harebottle, who has put the company on a very sound financial footing.
As at the end of June it had US$2.8 million in the bank and stock of stones conservatively worth US$16.5 million.
The last update revealed July had been record month with the company’s Kagem mine in Zambia producing 3.9 million carats. And it is understood the momentum continued.
“Considering the extent of the challenges that we have faced over the past year, the vast number of new projects and the strategic changes that we have implemented across all divisions within the group, I am rather pleased with what has been achieved,” Harebottle told Proactive Investors recently.
“We are now well on our way to positioning Gemfields as a market leader within the premium coloured gemstone sector.
"This is attested to by the recognition and respect that we have received from our colleagues within our industry and the number of exciting opportunities that we are now faced with.
“I look forward to embracing the year ahead supported by my team and in conjunction with our industry partners."
Broker Canaccord Genuity calls the company a “hidden gem” and is predicting it will post EBITDA of US$9.5 million in 2011.
This gave rise to a valuation of 10p a share (current price 13p) based on a discounted cashflow driven net asset at a 12 per cent discount rate.
However analyst Tyler Broda recognised this was a conservative price target as he said: “We have not included any value beyond the current operations and holdings, nor from the impact of potential expansions or changes in mining method. Each of these should provide material catalysts over the coming year.”
There are a number of value creation triggers. Of course cost cutting could come into play, while profits would obviously be boosted by a rise in the price of emeralds.
Tom Bulford, in a very positive round-up of the company’s prospects in Red Hot Penny Shares, reckons Gemfields’ mining programme could be extended, while pointing out there are also some exciting new licences coming up.
“New management is fast restoring the fortunes of the Kagem emerald mine,” Bulford told subscribers to his newsletter in which he sets a 20p a share price target.
“But the big story here is the revival of interest in this fabulous precious stone.
“The next auction, in December, will show the extent to which emeralds have returned to popularity.”
