A Numis Securities representative returned from a visit to Gemfields’ (LON:GEM) flagship emerald mine impressed by the significant progress in the last 12 months.
“Our key takeaway is that given that underground is now not really part of the equation (also not in our model), we have renewed confidence in the open pit and future mine plan,” the analyst said after a return visit to Kagem, the world’s largest emerald mine.
Gemfields is confident of a 30-year lifespan for the open pit at Kagem, and following the visit Numis has acknowledged that the expansion and exploration potential is greater than it had previously figured.
Good progress had been made on-site evaluating potential satellite pits, Numis reported, with bulk sampling ongoing at Fibolele and Libwente.
The term bulk sampling is misleading, Numis reckons, as Fibolele and Libwente are more akin to small open pits. With a few million carats already mined, these projects are shaping up to provide future resources to complement the main pit, Numis said.
On other licences, bulk sampling is being prepared at Kamakanga, and a start-up mine plan is being prepared at Mbuva-Chibolele. With nearly 20 geologists on site there is a huge amount of science and resources being focused on production and exploration, and the Numis representative left with little doubt about the longevity of the operation.
“Mining is ticking along nicely at present, with the Kagem grade starting to bounce back. The reported grade has recently been suppressed by the inclusion of some dilution from material coming from the bulk sampling operations, i.e. it is currently a blended grade,” Numis reported.
“Emerald mining is a volatile game, but Gemfields appears to be getting closer to finding some stability in an unstable world,” the broker added.
“All in all, the visit increases and affirms our confidence in the operational side of the emerald business. This is reassuring because it all feeds through to the auction platform where Gemfields continues to have success in creating the market and driving the price of emeralds,” the report concluded.