A trip to Gemfields’ (LON:GEM) two mines had analysts waxing lyrical about the potential of the younger of its two coloured gemstone projects.
The AIM-listed group is set to start selling rubies from the Montepuez mine in Mozambique by the end of June, according to finnCap’s Martin Potts, one of the mining analysts who attended the visit.
Potts, who stuck to his ‘buy’ recommendation and 44p target price, said: “We will not be changing any of our numbers at this time, but note that the first sale of rubies from Montepuez, expected in mid to late June, has the potential to generate more cash than we are currently allocating for our valuation of that entire project.
“This should create the opportunity for a re-rating of the stock,” the analyst added.
Hunter Hillcoat at Investec also spoke highly of the ruby project, pointing to its potential to add value to the company in addition to its flagship Kagem emerald mine in Zambia.
“Whilst the Kagem emerald mine remains the backbone of the company’s coloured gemstone assets we see enormous potential at Montepuez,” he said.
Hillcoat said the deposit seems likely to be one of the most important discoveries made in Africa in recent times and could produce rubies for at least the next 30 years.
“Given the success of Gemfields’ “mining company that markets” strategy in emeralds, we remain confident that the company will be successful at the Montepuez mine and in their strategy of adding value to their new business in the ruby market,” he added.
Meanwhile, a film made about Fabergé, which Gemfields bought for £89mln at the end of 2012, won Best Documentary Feature at the Palm Beach International Film Festival over the weekend.
‘Faberge: A Life of its Own’, made by Mark Stewart Productions, was among the winners at the Florida festival.