Gemfields Revenue and Profit Soar

Miners hold a rough emerald from the Kagem mine in Zambia.

Colored gemstone mining and marketing company, Gemfields, reported that revenue from sales increased 108 percent to $83.7 million, year-over-year, for the year ended June 20. Pre-tax profit for the same period increased 140 percent to $47.8 million.

“They certainly are great numbers,” said Ian Harebottle, CEO of the London (AIM)-listed company, which specializes in emeralds from the Kagem mine in Zambia.

Harebottle, speaking in a video from ProactiveInvestors, said the company spent the first six months of the year focusing on waste removal on the Kagem mine, the company's largest asset and one of the world's major sources of emeralds, in order to expand production at the mine. The last six months of the year was focused on emerald production.

“We had pleasing results but our decision to remove waste and look for long term is paying off,” he said.

The company also has been working hard in diversifying its product base. It owns a 75 percent stake in the Montepuez ruby mine in Mozambique. The company also owns the Kariba amethyst mine in Zambia that it plans to continue to invest in.

Alexandra Mor ring with Gemfields' emerald.

In addition to its mines, the company has been involved in an international advertising campaign focusing on Zambian emeralds and, last month, launched its emerald-focused campaign in the U.S. by having a number of jewelry designers make pieces with its Zambian emeralds.

The company’s cash balance nearly tripled to $36.7 million. Harebottle said that money will not be used for stock dividends but instead will be invested in the growth and diversification plans of the company.

“I believe right now if we could use it within the business, we’ll put it to much better use in terms of shareholder return,” he said.

Below is a video of Harebottle's interview with ProactiveInvestors:

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Gemfields Kagem Emerald Mine Showed Solid Annual Growth Despite Conflict With Zambian Government

Coomi 20K yellow gold with Gemfields’ Zambian emeralds, 120.34 carats and diamonds, 5.21 carats.

Production at the Gemfields Kagem emerald mine in Zambia increased 42 percent to 29.99 million carats for the 12-month period ended in June.

The average grade for the year increased 38 percent to 283 carats per ton, the company said Monday through the Proactive Investors website. Meanwhile, production costs fell 26 percent in the year.

Gemfields is a colored gemstone exploration, mining and marketing company. The Kagem mine is the London-listed company’s biggest asset and it provides nearly all of its revenue, even though it has interest in other colored gemstone mines. It owns a 75-percent share of the Kagem mine with the Zambian government owning the remaining 25 percent.

One of Gemfields other mines is the Montepuez ruby deposit in Mozambique. The company said it is on track to hold its first auction of rough rubies in the first quarter of 2014.

Gemfields also owns Fabergé, which it fully acquired in January. The company said the luxury jewelry brand achieved a record number of unit sales for the year.

A sale of lower quality emeralds in April netted $15.2 million, Gemfields said. Not included in the annual results was its latest auction of higher quality emeralds, held in the Zambian capital of Lusaka. This brought in revenues of $31.5 million, the second highest total ever for an auction of its kind.

The auction was originally scheduled in June in Singapore but pressure from the Zambian government to move the auction to Zambia caused the auction to be postponed until July, after the reporting period. Where to hold auctions has been a source of debate since April when the government of Zambia, Gemfields business partner, issued a directive for Gemfields to hold its auction within the country’s borders, citing capital flight.

Ian Harebottle, Gemfields CEO, said through Proactive Investors that communication between the two parties is now “much, much better” and more interactive.

However, Harebottle said the company continues “to seek guidance and to interact with the Government of Zambia.” Gemfields argues that it needs to sell Kagem emeralds at places that will likely get the most interest and the best price.

“While the two auctions held in Lusaka this year have certainly been successful, the key question, of course, remains what they would have generated had they been held abroad (where competing and undermining sources of supply, frequently illegal, are not readily available to our customers) and their potential impact on the long term growth of this sector,” he said.

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Gemfields Kagem Mine Posts Stong Gains

Miners at the Kagem emerald mine in Zambia. Photo credit: Gemfields

Mining company Gemfields has reported record annual production from its emerald mine in Zambia with a jump in grades per ton and a cut in production costs.

In an operational update for its fourth quarter and full year to June 2011, the company says annual production increased 90 percent to 33 million carats versus the previous year, as reported by the Proactiveinvestors financial news service. Gemfield's 75 percent owned Kagem mine in Zambia—the single largest emerald mine in the world. It is currently the company’s only operating emerald mine. The mine debt free, the company said.

Grade for the year came in at 478 carats per ton versus 286 in prior year, and per carat production costs were reduced by 41 percent to 43 cents per carat, according to the report. Rock handling costs for the year fell 25 percent to $3.70 per ton.

The final quarter of the year alone produced 10.8 million carats at a grade of 500 carats per ton and a unit cost of 32 cents per carat.

At its recent July auction of high quality rough emeralds, the company placed 1.07 million carats and successfully sold 740,000 carats to generate record sales of $31.6 million. Per carat prices at the July 2011 sale improved by 63 percent to 42.71 per carat, compared with its December 2010 auction.

So far, the company said it has completed seven auctions in the past two years, generating total revenue of $87.5 million.