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Gemfields’ (LON:GEM) said revenues from its latest auction of higher quality rough emeralds were US$13.5mln, taking the running total to almost US$110mln for the year – a new record.
This second standalone sale in Jaipur, India, delivered a 59% uplift compared with the first. This reflected strong demand for the stones, which were Zambian and Brazilian stones purchased on the open market.
It achieved US$50 a carat and while only 21 of 41 lots were sold, this represented 86% of the market value of the stones offered.
Chief executive Ian Harebottle said: "Gemfields' second standalone auction of traded rough emeralds, again held in Jaipur, demonstrates considerable growth in our vision of being able to deliver gems from various sources to our valued customers within the framework of our transparent and well proven auctions.”
In typically ebullient mood, Harebottle spoke to Proactive Investors and revealed he was particularly pleased at the response to the inclusion of Brazilian stones in the auction.
“We sold quite a lot of the Brazilian,” Harebottle said. “It is just like the Zambian [gems], the market has to learn our grading system, and that takes a bit of time,” he continued.
With the success of an auction of gems purchased by Gemfields on the open market, as opposed to mined from its own projects, Harebottle said he has “no doubt this is going to become an added [profit] silo”.
As well as owning mines in Zambia and Mozambique, the company also owns the Faberge brand and likes to think of itself as “more than just a mining company”.
Investors are eagerly awaiting Gemfields’ first ruby sales from its Montepuez operation in Mozambique, which are set to take place in June.
Harebottle said all preparations are on track for the auction to go ahead next month, and also outlined some of the work that goes on behind the scenes ahead of an auction, revealing it is less a case of drumming up interest and more a case of ensuring the right sort of bidders attend.
“We get a huge volume of dealers from around the world asking to attend, but then, what we do, we visit their factories to make sure they are conforming to certain standards; we don’t accept child labour, we don’t accept unsafe working practices,” he explained.
Its “mine to market” policy means that the company is concerned with every aspect of the coloured gems sector, and not just for the Gemfields brand, but for coloured gems as a whole, which are rapidly emerging from the shadow of diamonds – not that a good diamond would cast a shadow.
The shares, up a fifth year to date, added a further 3.3% after the auction and were changing hands at 39p each. Broker Sanlam restated its ‘buy’ and 46p price target after Tuesday’s news.
"If Gemfields can generate a profit from this activity it is a bonus, but it is a worthwhile activity to maintain its control of the market," it added.