Gemfields said one key focus for 2009 will be establishing sales programs for both rough and polished gemstones particularly during prevailing adverse market conditions, as it reported results for the six months ended December 31 2008.
Result for the period were affected by a US$246 million impairment charge against the value of the Kagem emerald mine in Zambia and a US$ 12.3 million depreciation, resulting in a pretax loss of 276.1 million, compared to US$3 million previously.
It reported revenue of US$344,000 against nil a year earlier. Cash at the end of the first half was higher at US$19.7 million from 5 million a year earlier. Inventory was valued at US$17.6 million, up from US$3.1 million at the end of the previous first half.
No emerald sales of any significance took place during the period with the directors favouring inventory building with a view to establishing the base from which to provide customers with a reliable and consistent source of supply in the future.
With the current economic climate and deteriorating markets for diamonds and other gemstones in mind, Gemfields has reduced the scale of mining at Kagem. Until the prospects for a recovery in the gemstone market become clearer, Gemfields is also minimising all non-essential capital, project development and exploration expenditure, it said.
“Gemfields has also opted to take a conservative approach in estimating the emerald prices achievable for the remainder of 2009. Gemfields' performance has been and will thus likely continue to be significantly lower than projected at the time of readmission to AIM in June 2008, and will result in an operating loss for the financial year ending June 30 2009,” the company added.