--ADDS CEO COMMENTS--
Gemfields (LON:GEM) said it received a record US$36.5mln from its predominantly higher quality rough emerald and beryl auction in Lusaka, Zambia.
The average price of US$59.31 per carat was also a 10% increase on the previous auction record set for gemstones from the Kagem emerald mine.
Chief executive Ian Harebottle called the emerald market “very encouraging”. He told Proactive Investors that the perception among experts is that demand is now stronger than it has been for a long time.
“Market conditions for higher qualities remain robust, yielding solid increases in quality-for-quality per carat prices,” the company said in a statement.
Gemfields has generated US$96.4mln in revenue so far this financial year, exceeding its previous annual revenue record set in the year to end June 2012, with four months of its financial year remaining.
“We are very encouraged by the price and revenue achieved,” said Dmitry Kalachev, analyst at Canaccord Genuity. “We were looking for US$36mln in H2/14FY delivered in two high quality auctions.”
The company plans to hold another emerald auction as well as an inaugural auction of rough rubies from the Montepuez deposit in Mozambique before the end of its financial year. The ruby auction, which could be held early in June, is likely to be a tester for future auctions, Harebottle said.
Shares in Gemfields rose as much as 3.9% to a three-month high on Wednesday.
The auction, which was attended by 34 companies, was held on February 21-25.
One of the auctions this year was due to have taken place the previous fiscal year but was delayed while Gemfieldsand the Zambian government discussed the state’s proposed ban on the auctioning of emeralds outside of the country.
“The auction is a good result for Gemfields highlighting strong demand for high value emeralds despite organising auctions in-country in response to proposed government policy,” said Investec Securities. “The results of the Montepuez ruby auction could be a significant value driver for the company and a major milestone.”
Harebottle said the company would continue to focus on developing its emerald and ruby businesses for at least the next year, but would also considering a move into sapphires at a later date.
