Gemfields (LON:GEM) first quarter trading update has revealed an improved performance at the Kagem emerald mine and rising sales at the Fabergé jewellery business.
Chief executive Ian Harebottle described it as a “very positive start” to the new financial year.
Orders at Fabergé rose by 61% year-on-year for the September quarter, Gemfields said, while gross profit margins also improved significantly to 51% from 30%.
The Total number of items sold was up 241% versus the 2014 comparative, albeit the Total revenue figure from last year was skewed by the sale of a single high price exceptional item and as a result Total revenues from sales were actually 4% lower.
Increased advertising spend meant the operating costs at Fabergé increased by 6%.
At Kagem, in Zambia, production rose to 7.5mln carats of emerald and beryl in the three months to September 30, up from 6.3mln in the corresponding period of 2014. At the same time grades improved to 237 carats per tonne, versus 214 carats in the same quarter of last year.
Top line operating costs rose to US$11.1mln, compared with US$10.3mln, reflecting heightened mining activities but costs per tonne improved. Unit operating costs equated to US$1.48 per tonne, versus US$1.63 in 2014, while cash rock handling costs amounted to US$2.12 per tonne, from US$2.91.
September’s auction saw higher quality rough stones generate US$34.7mln, and the next auction (of predominantly lower quality rough stones) is scheduled to take place this month.
Harebottle highlighted that Gemfields is maintaining its 2016 production target of 25 to 30 million carats for rough emeralds and 8mln carats for rubies.
Ruby mining operations at the Montepuez site, Mozambique, meanwhile, was focused on delineating areas of higher quality alluvial resource and it saw the production of 0.5mln carats.
These operations saw a 96% increase in the recovery of higher quality rubies. It saw high quality, lower grade material processed; as such the company reports seven carats per tonne, compared to 41 carats in the same period of last year.
It was a larger operation than before and costs reflect that. Total operating costs amounted to US$6.1mln, versus US$4.3mln, while unit costs were US$12.2 per carat from US$1.48 reflecting the lower grade.
An auction of the higher quality rubies from Montepuez is anticipated in December.
The company also highlighted that in September it held an auction of rough amethyst that generated US$0.44mln and saw an average price of US$4.32 per carat, which is the best price seen to date at a Gemfields auction.
Harebottle added: “Demand for coloured gemstones continues to be firm as we look forward to our next lower quality rough emerald and beryl auction later this month and our next auction of predominantly higher quality rubies from Montepuez in December 2015."