Gemfields' Q1 ruby production rises, but emerald falls

1st Nov 2016 09:19

(ShareCast News) - Coloured gem stone miner Gemfields' first quarter ruby and corundum production had risen due to increased capacity and efficiency, while emerald production fell. In an update for the quarter ended 30 September, the AIM-listed company said plans remain on schedule to meet annual target production of 40m carats of rough emeralds from the Kagem mine and 20m carats of rough rubies from the Montepuez mine within the next three years.At the end of September the company had $24.1m in cash and total debt stood at $49.4m.At the 75%-owned Montepuez mine in Mozambique ruby and corundum production soared to 4.5m carats per tonne, compared to 500,000 last year, as it processed higher grade, but lower value, amphibolite resources.Operating costs fell 5% to $5.8m, while unit operating costs was $1.29 per carat down from $12.20 last year as a result of the increase in carats produced.The next auction of rough rubies will take place in December 2016 in Singapore.However, at the 75%-owned Kagem mine in Zambia, production of emerald and beryl fell 20% to 6m carats with an average grade of 174 carats per tonne, compared to the same quarter order, due to the varied nature of the mineralisation and that a higher-grade zone was last year.Operating costs fell 10.5% to $10.2m, while unit operating costs was $1.70 per carat, up from $1.52 last year.About $10.7m was generated from an emerald auction in September in Jaipur, India, at an average value of $3.28 per carat and the next auction is also scheduled for December in Singapore.A September auction of amethysts in Singapore generated revenues of $400,000 and second highest average realised price of 3.73 cents per carat achieved at a Gemfields' amethyst auction.Meanwhile, for fabergé the value of sales orders agreed decreased by 23% due to the opening of two wholesale partners in July 2015.The number of sales transactions increased by 67% and the average selling price per fabergé piece was up 2%. Operating costs were down 1%.Chief executive Ian Harebottle said: "At Kagem production remains consistent and operating costs saw a reduction on the corresponding period last year. In addition, I am pleased to report the quarter saw the completion of two new exciting community projects in the form of new Chapula high school and Nkana health clinic."These new facilities have been incredibly well received and the local communities are already reaping the rewards. This achievement is as a strong endorsement of the company's corporate social responsibility strategy that seeks to engage local stakeholders to conceive and co-develop projects that will have a long-lasting and positive impact in our local neighbourhoods."Shares in Gemfields were down 0.41% to 48.30p at 0947 GMT.