--ADDS ANALYST COMMENT AND SHARE PRICE---
Coloured gemstone specialist Gemfields (LON:GEM) reported a successful auction of high quality rough emerald and amethyst stones in Singapore, which produced revenues of over US$35mln.
The emerald sale from the Kagem mine in Zambia between Aug 31 and Sep 4 saw 0.6 million carats placed on offer, with 18 of the 19 lots offered sold, generating US$34.7 million, demonstrating that prices of emeralds remain robust, the firm said.
The average value realised was US$58.42 per carat - the third highest figure on record.
To compare, the last higher quality auction in Lusaka, Zambia in November last year realised US$34.9mln for 0.53m carats sold at US$65.89 per carat.
Meanwhile, the auction of rough amethyst from Kariba Minerals, in which Gemfields has a 50% interest, was the first to be held in Singapore - the previous two were in Jaipur in March 2011 and Lusaka in February 2015.
The amethyst sale generated revenues of US$0.44 million from 10.1 million carats sold.
The overall average value realised of 4.32 US cents per carat was an increase of a whopping 144% compared to the 1.77 US cents per carat realised in the February 2015 auction, Gemfields noted.
So far, Gemfields has hosted 19 auctions of emeralds and beryl mined at Kagem since July 2009, which have generated US$360 million.
The AIM firm's chief executive Ian Harebottle told investors the Singapore auction was another very strong result.
"With 98% of the emeralds sold, it is very pleasing indeed to see Zambian emeralds continuing to enjoy such firm demand, aided by our return to running an auction in Singapore.
"Despite severely depressed global commodity prices, well-documented difficulties in the diamond sector and recent volatility across international financial markets, emerald prices remain as robust as ever.
"The counter-cyclicality often associated with precious gemstones, and their reputation as a store of value in turbulent times, have shone through."
He added that it was also pleasing to see prices received for amethyst increase markedly since the last auction in February."
Shares in Gemfields nudged 0.4% higher on the day to 62.5p and analysts in the City were generally postive about the group's first auction held in Singapore since 2012 and since April 2013, when Zambia announced all emeralds from the country should be sold there.
Resource boutique SP Angel described the auction result as a "good", particularly given recent volatility in global markets concerning the health of the Chinese economy and the Chinese consumer.
Macquarie highlights the group's dominant position in an emerging niche market, where it has a strong 'first-mover advantage'.
"It has achieved a ten-fold increase in emerald pricing over the past five years by delivering a consistent and reliable supply to the market and believes 10% annual real price growth is achievable for the medium term," it said in a note.
Peel Hunt rates the share a 'buy' targeting 78p. It reckons the results "certainly could have been a lot worse" in the context of the recent weakness in the diamond market.
"With 98% of the stones up for auction sold (and 88% by value) the demand for stones remains in line with the last two higher quality auctions. It is also positive to see the average price received remaining robust."
Investec however suggests the auction indicates that the emerald market was not completely insulated from the pains the diamond industry has been going through.
"The long term value proposition remains intact in our view but near term earnings could come under pressure if this trend is not reversed."