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: Primed and geared for growth following Kagem’s auction success
Gemfields (LON:GEM) is primed and “geared for growth”, according to City research boutique Edison, which has placed a 36 pence a share price target on the stock.
The comments come in the wake of a highly successful auction of high-grade emeralds, which generated a very healthy US$31.6 million.
Analyst Julian Emery said: “Gemfields’ innovative marketing strategy has rapidly established the company as a benchmark in the emerald market.
“The focus now is to provide a reliable long-term production profile based on resource definition and further improved operating efficiencies.
“Recent diversification, through a ruby asset in Mozambique, could provide an important addition to Gemfields’ longer-term growth in the coloured gemstone sector.”
Edison is predicting the company will post sales of US$40 million this year with pre-tax profits of US$15.8 million.
The following year’s sales are forecast to grow to US$77.5 million, giving profits of US$44.4 million.
Emery believes financial success will allow Gemfields to invest heavily in developing and exploring the company’s flagship Kagem mine in Zambia and its other projects.
“Gemfields can now embark on capital programmes to establish operational longevity,” he said.
“This includes a major pit high-wall pushback, which will support production from the existing pit and, in the longer term, the development of new open pits and underground production.
“The erratic, fluid nature of emerald deposits (as is the case with all coloured gemstone deposits), can affect the predictability of production, but may be mitigated by inventory management, improved operating and geological techniques.”
In a recent interview with Proactive Investors, chief executive Ian Harebottle revealed the company’s plans to go underground at Kagem. And having compiled an initial feasibility study, it is now developing a mine plan.
Drilling is also underway on the site, with an updated resource statement expected by the end of the year.
“There are at least six known deposits on our area, but we want to move our open-cast feet to the right one,” Harebottle said.
“If we can do that in a couple of years we will have an opencast pit and an underground mine. And that is where we are looking to go at Kagem in the not too distant future.”
Gemfields also wants to invest in the Kariba amethyst mine, its other Zambian asset, but not before it has acquired a controlling interest in the project.
Harebottle said: “We are in talks with the government to buy an additional 25 per cent stake in this mine so we can have 75 per cent and justify increasing our level of investment into this project.
“(Kariba) needs a bit more cash, which we are happy to supply, but we want a bit more influence over the cash in order to justify that.
The market and the demand (for amethyst) is picking up which is exciting.”
The eye-catching announcement recently was the option to acquire a 75 per cent share of a ruby deposit in the Cabo Delgado province of Mozambique, which takes it into a totally new arena.
The Gemfields chief said last month there was “still a bit of work to do” on the US$2.5 million deal.
“We are not quite there yet, but we are working on it,” he added. “We are very fortunate. Without a doubt we have the world’s single largest producing emerald deposit in Kagem.
“In Kariba we have the world’s single greatest producing amethyst deposit. And I have every confidence we will soon have the world’s largest single ruby deposit up and operational. They are great rubies.”
The market for gemstones, meanwhile, goes from strength to strength.
Demand from China and India is driving the market, while the US is slowly emerging from recession and starting to spend.
The Kagem mine is shrewdly touted as the home of the ethically produced, carbon neutral and ecologically “green” emerald. However the Kagem name is also synonymous with quality in the market.
Gemfields’ auctions are becoming a magnet for suppliers who trust it as a source of the best stones. They are now being sourced not just from its own operation, but other Zambia mines and as far afield as Brazil, the idea being that cutters and polishers go to just one buyer to acquire their products.
