Gemfields (LON:GEM) has confirmed more progress on the bulk sampling at the Montepuez ruby mine in Mozambique ahead of the coloured gemstone group’s first ruby auction next month.
Around 1.2 million carats of ruby and corundum were extracted in the first three months of 2014 from the 75%-owned mine as part of the ongoing bulk sampling operation, compared with 500,000 carats in the same quarter last year.
It takes the total extracted at Montepuez since the start of bulk sampling to 8.2mln carats.
Total rock handled was 534,000 tonnes, made up of 76,000 tonnes of ore and 458,000 tonnes of waste, with total cash operating costs of US$3mln.
Gemfields said ongoing fine-tuning of the grading and sorting framework for rough rubies is taking place, while various enhancement process are also being looked at, with “encouraging results”.
Its first ruby auction is set to take place in Singapore in mid-June.
The flagship Kagem emerald mine in Zambia endured a tough quarter due to unusually high levels of rainfall, which dragged production down to 3.6mln carats from 6.5mln carats last year.
Operations at the mine remain robust, the company insisted, with Kagem in a strong position to benefit from an anticipated improvement in grades, which were lower in the period.
An auction of rough emeralds in Jaipur, India finishes Friday.
Wholly-owned Fabergé saw revenues rise 134% in the quarter. Sales were boosted by its exhibits at Baselworld, the world’s biggest jewellery and watch fair, and at the Doha Jewellery & Watches Exhibition in Qatar.
Chief executive Ian Harebottle said: “Gemfields is pleased to report on another sound quarter which has seen further progress at the Montepuez ruby deposit, with the final preparations for our inaugural rough ruby auction in Singapore in June well underway.
“Underlying gemstone markets remain healthy, supported by the ongoing increase in global demand for emeralds and other coloured gemstones.
"Our concerted marketing efforts continue in earnest and we look forward to the results of this week's auction of traded rough emeralds.”
Broker Sanlam said Kagem’s production should revert to normal levels as weather conditions improve but Gemfields has a large inventory of emeralds and, as such, a lower than normal quarter of production should not affect revenues.
Sanlam also attaches significant value to the ruby business, which is 26% of the broker’s asset value estimate. Its target price is 46p and rating 'buy'.
Shares were unchanged at 39.75p.