Coloured gemstones specialist Gemfields (LON:GEM) is generating strong demand from its innovative emerald marketing strategy, says research house Edison.
Revenue in the current year to date is US$42.6 million (£27 million) with a high-quality auction scheduled for 19-24 March and the probability of a further auction in June.
Edison adds that the miner’s current focus is to identify resources to support long-term production at its producing Kagem emerald mine together with assessment of both underground exploitation and new open pits.
But with Gemfields established as a benchmark in emeralds, management is confident it can develop further identified opportunities in the coloured gemstone sector, says Edison.
These include extensive emerald targets in Zambia, Montepeuz, a major ruby deposit in Mozambique where production is anticipated by year-end, and coloured gem prospects in Madagascar.
Other interests and prospects are constantly under review said the research house.
Edison values Gemfields at 38p, based on an NPV 10 per cent on emerald production and price projections from current operations, but says there is considerable upside potential from any potential new developments.
For the first half of the current year, underlying earnings were US$32.2m with cash at US$32.4m and an at-cost inventory of US$22m.
For the full year to June, Edison is projecting revenues of US $77.5 million, profits of US$40.6 million and earnings of 6.2p.
Shares rose 1 per cent to 35.6 pence.