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Gemfields (LON:GEM) said demand for coloured gemstones remains upbeat as the AIM-listed company announced a 137% jump in revenue for the six months to end December.
Revenue surged to US$65.7mln from US$27.7mln as EBITDA dipped to US$18.0mln from US$19.5mln.
“We have absorbed not only the increased cash requirements from our more recent growth projects, but also the fact that Kagem is now a fully tax paying entity and has distributed its first dividend to our partners in Kagem, the Government of the Republic of Zambia,” said chief executive Ian Harebottle.
In December 2013, Kagem paid its first ever dividend of US$8mln.
“Comparing the business year-on-year is not appropriate as Gemfields has undergone significant change in the time having taken on Fabergé last year and started trial mining at Montepuez, hence despite stronger revenue and gross profit, earnings are down year-on-year,” said analysts at Investec Securities.
Since the interim period, Gemfields received a record US$36.5mln last week from its predominantly higher quality rough emerald and beryl auction in Lusaka, Zambia. The average price received was 10% higher than the previous auction record set for gemstones from the Kagem emerald mine.
“Demand for coloured gemstones remained upbeat as is clearly indicated by the record per carat prices we continue to achieve,” said Harebottle.
An additional emerald auction, as well as the company’s first auction of rubies from the Montepuez deposit in Mozambique, are scheduled before end June.
Revenues at wholly owned Fabergé, derived from sales and sales orders agreed during January continued the trend experienced in December 2013, showing an increase of 198% year-on-year, Gemfields said.
“Production at our Kagem mine in Zambia performed to expectations and the inclusion of Fabergé into the Gemfields group has seen the levels of our inventory stock reach US$69mln,” said Harebottle.
Canaccord Genuity said Fabergé contribution accounted for the key difference in results versus its forecast.
“We were overly optimistic in its first full six months of operations post acquisition. But, we are encouraged by Fabergé’s prospects given the 89% year-on-year rise in sales in December,” Canaccord analysts said.
It maintained its ‘buy’ recommendation and 40p target price.
Shares in Gemfields were up 0.7% at 36.0p on Monday, outperforming a 1.2% decline in the FTSE AIM 100.