Gemfields Resources PLC warned that is performance in the current year will be significantly lower than forecast during 2008 and is expecting to make a loss for the period to end-June 2009.
It also plans to scale down operations at its key production asset, the Kagem emerald mine in Zambia, all in response to deteriorating markets for diamonds and other gemstones. The shares took a hammering on the news, trading nearly 30 percent lower in early deals.
In its statement, Gemfields said until the prospects for a recovery in the gemstone market become clearer, it will minimise all non-essential capital, project development and exploration expenditure.
Gemfields presently has US$16 million in cash and estimates the value of current inventory, comprising both rough and polished emeralds, at US$18 million.
“Gemfields has to date not made significant sales of either rough or polished stones, having favoured a policy of building sufficient inventory to provide customers with a reliable and consistent source of supply. The sale of polished stones will commence officially in Q2 2009, with some rough sales expected during Q1 2009,” the company said.