City broker Charles Stanley repeated its 'buy' stance on gemstones group Gemfields (LON:GEM), noting the firm's decision to ensure open cast mining can continue at Kagem until at least 2018.
Analyst Kieron Hodgson said in light of the declining grades at the mine in Zambia, management "promptly" kicked off a new high wall push back programme at the mine on April 1. The programme is expected to last 17 months.
Half year results last month showed grades at Kagem of 267 carats per tonne compared to 271 carats per tonne in the same period of 2012.
That was on production of 10.4mln carats of emerald and beryl compared to 14.5mln carats in 2012.
"This decision ensures that whilst operations will eventually migrate underground, the transition will not be rushed," said Hodgson.
He estimates there will now be a period between full year 2018 and full year 2020 where open cast production declines and underground ramps up, before completely moving underground in full year 2021.
As a result the broker has adjusted its price target to 39 pence a share, from 41p previously.
That excludes any upside from the ruby operation in Mozambique and gives no value to the Kariba amethyst mine in Zambia, it noted.
"We believe Gemfields offers an unrivalled proposition for investors, providing exposure to the growing precious stone industry through a world class emerald mining operation, an emerging ruby operation and exposure to the prestigious luxury goods retail segment, through the Fabergé brand," said the analyst.
Gemfields shares edged up 1.36% to 37.25p.