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Gemfields (LON:GEM) posted strong revenues in its latest quarter after a record emerald auction in Lusaka in November.
The coloured gemstone group has two more emerald auctions scheduled before the end of its financial year in June, with its first ruby auction also expected before then.
Revenues from auctions for the six months to December were US$59.9mln, compared to turnover of US$48.8mln for the whole of its previous financial year.
Gemfields’ Faberge arm also saw good trading, with sales over the final quarter rising by 26% and December seeing 89% growth year-on-year.
Production from the Kagem emerald mine in Zambia was lower over the quarter at 3.9mln carats against 6.6mln, reflecting lower grades, something that also pushed up production costs.
Even so, Ian Harebottle, Gemfields’ chief executive, said the final quarter had seen solid progress.
“While Kagem experienced reduced production this quarter - demonstrating the characteristic grade volatility in coloured gemstone mining - we are confident that this will improve in the near term.
"We were extremely pleased with the record-setting emerald auction held in Lusaka, Zambia in November 2013 and are buoyed by the ongoing increase in global demand for emeralds and other coloured gemstones - much of which is a direct result of Gemfields' concerted marketing efforts.
“With our first-half revenues comfortably exceeding our prior full year figure, we look forward to the two forthcoming emerald auctions and the first auction of rough rubies from Montepuez all to be held before the end of June this year."
City broker Canaccord kept its 'buy' recommendation on the stock following the results, noting that the Faberge numbers were very "robust".
"We note that out of our US$124m sales estimate for 2014FY Faberge accounts for circa 22%.
"Better than expected sales results at Faberge coupled with a robust gemstones market and the first proceeds from the ruby auction may well prove that our total sales estimate is conservative," said analyst Dmitry Kalachev, who targets a price of 40 pence on the shares.
The analyst also noted that the quarter-on-quarter variability in grade and tones mined at Kagem was normal due to the patchy nature of the deposit and should not be taken negatively.
"The company is confident that operating parameters will improve in the near term."
Gemfields shares eased 2.10% to stand at 35 pence each.