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 completes first auction of emeralds, fetching US$5.9 million
Gemfields (AIM: GEM) reported significant progress this morning in its drive to become a leading, reliable supplier of gemstone coloured stones.
Over the past 12 months or so, Gemfields has certainly been an interesting story to follow. The company completed the acquisition of a 75% stake in the Kagem emerald and beryl mine in Zambia, failed an attempt to acquire fellow AIM company, Tanzanite One (AIM: TZN), and shortly afterwards, rejected an approach from its two largest shareholders – Rox Limited and Pallinghurst Resources Limited. Early this year Ian Harebottle stepped into the role of CEO, replacing Sean Gilbertson.
The M&A activity occurred at a time when all diamond and gemstone operations globally were reeling from a significant drop in demand for rough gemstones as the global credit crunch hit demand and eroded cash flow for producers.
Despite all of this, Gemfields reported noteworthy progress at its operations in Zambia. Gemfields’ ambition since acquiring Kagem was to create a reliable source of coloured gemstones for its customers.
This ambition came partially to fruition this morning when the company announced that it had sold 26 of 27 parcels of rough emeralds in London (between 20-24 July 2009) for US$5.9 million, an average of US$4.37 per carat. The 1.36 million carats offered in the auction represented the higher quality stones produced at Kagem, but only 5% of total production by volume. The only parcel that failed to reach its reserve price contained just over 3,000 carats for which Gemfields wanted US$300/carat. The unsold stones will be split up and auctioned again later this year with additional material.
Gemfields managed the sale independently, with Product Director Adrian Banks organising the event, and was attended by 30 companies.
On the operational front, Gemfields also reported encouraging progress. Annual gemstone production increased to 349 carats per tonne (28 million carats from 800,000 tonnes) compared to an average of 340 carats per tonne over the past four years, while the stripping ratio fell approximately 58.5% to 50, though the stripping ratio is expected to rise again in the second half.
“Gemfields has been successful in achieving a significant increase in annual gemstone production while cost-reduction measures have continued to deliver material improvements during the last nine month,” the company stated. “It should, however, be noted that the stripping ratio is anticipated to rise toward the end of this calendar year, and is expected to have a commensurate impact on mining costs. This increase in stripping ratio is partly a result of the company having held back on some stripping over the past few months.”
As part of the companies ambition to cut costs and focus on cashflow, a previously opened cutting and polishing facility in Jaipur, India, has been scaled down for the time being.
Overall, Gemfields’ new CEO was pleased with progress at the company, "Gemfields continues to concentrate on reducing unit production costs and improving efficiencies. Our key focus now is to mine efficiently and to sell our rough gemstones to selected customers on a regular and reliable basis. This will be supported by targeted marketing and promotional initiatives, so as to build a sustainable supply chain and an increase in the demand for emeralds. While the uncertainty in gemstone markets prevails, the successful delivery of our London auction and the positive response we received from the various participants demonstrates that we certainly are ‘in the game and on the playing field’."
