--adds broker comments, share price--
An auction of higher quality gemstones in Lusaka has earned Zambian producer Gemfields (LON:GEM) US$31.5mln in its second most successful auction to date.
The auction, which was moved to Lusaka from Singapore at the request of the Zambian government, saw the average per carat price reach a new record of US$54, while all of the 583,448 carats on offer were snapped up.
Gemfields, which mines emeralds and beryls from the Kagem mine, had previously warned that revenues from auctions would be 46% lower than the year before as only two auctions were held in the 12-month period to June 30, compared with four in 2012.
The company is working with the Zambian Ministry of Mines, Energy and Water Development to stop a possible ban on auctions of Zambian gems being held outside the country.
Chief executive Ian Harebottle said: “Favourable market conditions and particularly strong demand from our customers have yielded excellent auction results and record per carat prices.
“All indications show that demand for coloured gemstones, and especially emeralds, will continue to increase at a steady pace over the coming year.”
He added: “We are delighted that this auction underscores Lusaka as a key hub in the international emerald trade and we would like to thank the Zambian Government for their support.”
City analysts suggested Lusaka could prove a successful hub for gemstone auctions.
“This looks like a strong auction result and could prove that Lusaka is just as capable of achieving good prices for high quality auctions which previously have been held in Singapore before the government ban,” said mining research house SP Angel.
Investec added that it shows buyers are willing to travel to secure high quality products.
“The result will likely reinforce the government’s desire to keep auctions in country, which although perhaps not ideal, the success of this auction indicates that interest is sufficiently strong to make local auctions of high quality stones successful,” the broker concluded.
Shares rose 6% to 21.75p each.