Gemfields (AIM: GEM) reported on its performance over the past three months, highlighting the most recent auction that raised US$7.2 million to take the total revenues from 3 auctions in 9 months to US$18.7 million. The company reported a cash balance of US$7 million as at March 31, exclusive of gemstone inventory internally estimated to be worth more than US$10 million.
The company called the results achieved from the past three auctions a solid performance amid the economic downturn and a sign of encouragement for the future as the markets for diamonds and gemstones continued showing signs of recovery.
The company’s production from the Kagem mine for the quarter to 31 March was dominated by a lower average grade of 277 cpt (carats per tonne) compared to 365 cpt achieved in the quarter to 31 December 2009, which included the discovery of a 6,225 carat Zambian emerald dubbed Insofu. The mine produced a total of 3.5 million carats of emerald and beryls after 12,500 tonnes of ore were mined. Production for the nine months to 31 March amounted to 11.3 million carats with 42,000 tonnes mined with a grade of 269 cpt.
Kagem's unaudited total operating costs for the three quarters ending 31 March 2010 totalled US$9.4 million, implying an average production cost of US$0.83 per carat of emerald and beryl. Unaudited unit production costs for the quarter were US$0.84 per carat.
This market the lowest quarterly production cost since the commencement of Gemfields’ management of Kagem.
Meanwhile, the underground mining project continued to make progress with a total of 59 metres having been developed by the end of the quarter. The first congruent pegmatite and its associated reaction zone ore was intersected at 33 metres on dip. The first production at the project, which still has a trial status, was achieved in February this year.
“Our operating costs are satisfactory, our trial underground mining project is progressing to expectation and our marketing initiatives are moving forward apace. I thus believe that we're making tangible progress in delivering on our vision of bringing a regular and reliable supply of emeralds and beryl, from a responsible source, to the market,” said chief executive of Gemfields Ian Harebottle.
The company’s debt stands at US$3.4, which is repayable by December this year.
Gemfield's 75% owned Kagem mine is presently Gemfields' only operating emerald mine.