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Gemfields (LON:GEM) first ruby auction contributed to a spectacular rise in revenues last year for the coloured gems specialist.
A tremendous performance from the core emeralds business, where revenues hit a record high, was augmented by the receipts from the inaugural auction of Gemfields' Mozambican rubies.
Revenue in the year ended 30 June more than tripled to US%160.1mln from US$48.4mln, propelling the company into the black, with profit before tax of US$37.0mln versus a loss the year before of US$19.8mln.
Underlying earnings (EBITDA) rose to US$59.3mln from positive EBITDA of US$1.2mln the year before.
At the end of the reporting period the company had US$36.8mln in cash at the bank, up from US$11.2mln the year before, while the estimated net cost of inventory on hand was US$86.3mln, up from US$76.3mln at the end of June 2013.
Annual production at the company's 75%-owned Kagem Mining operation in Zambia totalled 20.2 million carats of emerald and beryl, versus 30.0 million carats the year before. The average grade was 253 carats per tonne, compared to 283 the previous year.
Three auctions of emerald and beryl mined at Kagem (two of higher quality and one of lower quality) were held in Lusaka, Zambia, generating revenues of US$84.4 million.
Since the end of the reporting period, the company has generated another US$15.5mln in revenues from an auction of lower quality rough emerald and beryl held in Lusaka.
At the 75%-owned Montepuez Ruby Mining operation in Mozambique, around 6.5mln carats of ruby and corundum were extracted (2013: 1.9 million carats), taking the total ruby and corundum extracted to 8.4 million carats.
The first auction of rough ruby and corundum generated revenues of US$33.5 million at an average realised price of US$18.43 per carat.
The company's wholly-owned Fabergé unit saw increased unit sales and a 12% relative increase in gross profit margins derived from sales and sales orders agreed during the period.
Gemfields' chief executive officer, Ian Harebottle, described the company's year as "stellar".
"The consistent price increases achieved in our emerald business demonstrate our ongoing commitment to supporting the competitiveness of Zambian emeralds on the international market and affirm that our global marketing strategies, including our Fabergé business, are successfully driving demand for coloured gemstones," he claimed.
Broker finnCap retained its ‘buy’ recommendation and reiterated its 60p price target as revenue of US$160.1mln came in ahead of its forecast of US$143.4mln, and EBITDA of US61.2mln was ahead of the broker’s estimate of US$59.3mln.
“The emerald and ruby businesses had a good year and Fabergé appears to be continuing to recover although remains unprofitable,” the broker noted.
Investec described the results as “strong” and said the Fabergé business appears to be turning the corner, with the company indicating higher volumes and improving margins.
“A good result from the diverse portfolio of assets that appears to be improving on numerous fronts although note that activities outside of primary production remain opaque and challenging to forecast,” the broker said.
“We are, however, particularly encouraged by the positive commentary on the Faberge business and hope to get a better indication of the breakdown of earnings within the group in due course to better assess this,” it added.
Shares in Gemfields were up 5.6% at 51.75p in lunchtime trading, and are up 56% year-to-date.