Coloured gemstone producer Gemfields (AIM: GEM) reported revenues of US$12 million for the six months ended 31 December 2009 compared to just US$0.34 million in H1 2008 after two successful emerald auctions in July and November 2009 that raised the company US$11.5 million.
The higher revenues were achieved despite lower levels of emerald and beryl production, which amounted to US$7.82 million carats compared to last year’s 14.7 million carats as ore grades declined 28% from 367 cpt (carats per tonne) to 264 cpt. The amount of ore mined also declined 28%, though the mining costs per tonne of ore rose 29%, while the costs per carat improved 12%.
The company slashed its interim loss to US$6.35 million compared to US$186.6 million in H1 2008 - the latter having been the result of the writedown of the Kagem mine.
The post-period progress included the discovery of an exceptional 6,225 carat emerald at the Kagem mine, first production form the trial underground mining project and what the company called encouraging signs of a sustainable increase in demand and interest for emeralds across all key markets, including India, China and the Middle East.
Gemfields intends to look into expanding activities at the Kagem mine, while targeting higher grades and further cost reduction. The next low grade emerald auction is currently scheduled for March 2010, with the company reporting high level of interest and demand, which it hopes will help it achieve higher prices for the gems on offer.
The objectives for the current year include the expansion of the underground mining project and open cast mining activities to include new target sites within the Kagem license area, the opening of a rough gemstone trading business in Kitwe, Zambia, to purchase rough emeralds from locals and the establishments of a trial cutting facility on the mine to establish the feasibility of local beneficiation.
Gemstone garnered some public attention during this year’s Oscar ceremony, which was attended by Hollywood star Morgan Freeman, who wore a Nelson Mandela themed bangle that featured Gemfields produced emeralds.