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Coloured stones specialist Gemfields (LON:GEM) gave another positive update on trading as it revealed the integration of the Fabergé jewellery brand is going to plan.
Output from its Kagem emerald mine in Zambia rose 33% to 6.5mln carats in the three months to March 31, the average grade increased 29 carats to 265 carats per tonne and production costs fell 34% 56 cents per carat.
Revenues from the recent Lusaka emerald auction were US$15.2mln, a record for a sale of lower quality stones, it has cash at hand of US$22mln and is owed a further US$11mln.
Sampling activities at the Montepuez ruby deposit in Mozambique continue, with the first auction of rough rubies likely to take place in the first quarter of next year.
The acquisition of the iconic Fabergé brand, completed in January, “enables Gemfields to take its vision for coloured gemstones to the next level”, said chief executive Ian Harebottle.
Separately, the group said it is seeking to address a possible ban on foreign auctions in Zambia.
“In that light, we are delighted to be hosting the first-of-its-kind '2013 Zambian Emerald Summit in Lusaka at the end of this month to facilitate discussion among all of the key emerald sector stakeholders,” the CEO added.
Broker Canaccord kept its 'buy' stance on the shares and 39p net present value derived price target of 39p.
The Kagem emerald mine accounts for the majority of the broker's valuation at US$193mln, says analyst Jeremy Dibb.
"We still hold no valuation for the Montepuez ruby mine in Mozambique: though we view the advanced stage exploration as very promising, we are awaiting further operational and financial estimates."
Shares rose 6.52% to 24.50p.