Gemfields’ (LON:GEM) recent trading update has prompted Panmure Gordon to nudge its price target up to 61p.
The coloured stones specialist beat the broker’s estimates on costs at emerald mine Kagem in Zambia. Production at ruby mine Montepuez in Mozambique also exceeded Panmure’s forecasts.
“Annual production reached 10.3Mcts, significantly higher than our 7.75Mcts target, albeit driven by a greater proportion of higher grade but lower value amphibolite ore being processed during the final quarter.”
Kagem’s next auctions are in September and November, while the next ruby auction is in December.
Panmure is a buyer and said the exposure to precious stone consumption growth through two world class mining operations, as well as the luxury goods segment via its Fabergé brand, makes it 'an unrivaled proposition investment'.
There are also other opportunities for growth through additional production sources in Zambia, Colombia and Ethiopia.
Shares have underperformed recently. but should rally in the coming months said Panmure, with its new target 61p from 57p.
“Our group NAV of 108p/share reflects our longer term emerald and ruby price assumptions and FX forecasts,” it added.
Shares today were 38.6p.