BUSINESS

GEMFIELDS RAISES RECORD US$16.4M IN LUSAKA LOWER GRADE EMERALD AUCTION

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MEDIA STATEMENT

Gemfields_logo

The following statement was issued by Gemfields plc via the London Stock Exchange’s Regulatory News Service on Monday 18th November:

 

Gemfields plc

(“Gemfields” or the “Company”)

Results – Lusaka Rough Emerald and Beryl Auction

18 November 2013

Gemfields plc (AIM: GEM) is pleased to announce the results of its auction of predominantly lower quality rough emerald and beryl held in Lusaka from 11 to 15 November 2013.

Highlights

  • Auction revenues of USD 16.4 million, a record for lower grade auctions;
  • Average per carat price of USD 3.32 per carat, a 27% increase on the previous record achieved at lower grade auctions;
  • Of the 5.6 million carats offered, 4.9 million carats were sold;
  • Market conditions remain robust, yielding sold increases in quality-for-quality per carat prices;
  • Fourteen auctions held since July 2009 have generated USD 224 million in total revenues; and
  • Financial year-to-date auction revenues (including one auction of traded material) stand at USD 56.4 million, surpassing the all-sources revenue of USD 48.4 million achieved in the full financial year to 30 June 2013.

 

A total of 21 companies attended the auction held in Lusaka, with 20 companies placing at least one bid. This auction, the second of gems mined by Gemfields at the Kagem emerald mine in the current financial year (which ends 30 June 2014), was held in Lusaka, Zambia at the request of the Zambian Ministry of Mines, Energy and Water Development.

The auction saw 5.6 million carats of emerald and beryl extracted from the Kagem Mine in Zambia placed on offer, with 19 of the 21 lots offered being sold, generating record (lower grade) auction revenues of USD 16.4 million. The Company’s fourteen auctions held since July 2009 have generated USD 224 million in aggregate revenues. In addition, the Company ran an auction of traded rough emeralds (emeralds obtained by Gemfields in the open market from various sources and excluding emerald or beryl mined, processed, graded and exported by, or belonging to, Kagem Mining Limited) in September 2013, yielding gross auction revenues of USD 8.5 million.

The most recent Lusaka auction yielded an overall average value of USD 3.32 per carat, a 27% increase on the previous highest unit value achieved at any auction of predominantly lower quality material. This auction did not include any of the lowest grade of beryl historically offered at auction (as advised in the Company’s quarterly update to 30 September 2013, Kagem agreed a USD 3.5 million direct sale in respect of 11,286 kilograms of Kagem’s lowest two grades of beryl).

The results of the six lower quality rough emerald auctions held to date are summarised below:

AUCTION RESULTS (LOWER QUALITY)

MAR ’10 AUCTION

MAR ’11 AUCTION

NOV ’11

AUCTION

JUN ’12

AUCTION

APR ’13

AUCTION

NOV ’13

AUCTION

Dates

11-15 Mar 2010

10-14 Mar 2011

21-25 Nov ‘11

9-13 Jun ‘12

15-19 Apr ‘13

11-15 Nov ‘13

Location

Jaipur, India

Jaipur, India

Jaipur, India

Jaipur, India

Lusaka, Zambia

Lusaka, Zambia

Type

Lower Quality

Lower Quality

Lower Quality

Lower Quality

Lower Quality

Lower Quality

Carats offered*

28.90 million

16.83 million

10.83 million

10.85 million

17.34 million

5.62 million

Carats Sold

22.80 million

12.98 million

9.82 million

3.47 million

6.30 million

4.94 million

No. of companies placing bids

25

44

27

20

25

20

Average no. of bids per lot

8

14

9

3

6

7

No. of lots offered

56

35

26

33

28

21

No. of lots sold

49

34

19

17

23

19

Percentage of lots sold

88%

97%

73%

52%

82%

90%

Percentage of lots sold by weight

79%

77%

91%

32%

36%

88%

Percentage of lots sold by value

89%

99%

80%

60%

76%

91%

Total sales realised at auction

USD 7.2 million

USD 10.0 million

USD 11.0 million

USD 9.0 million

USD 15.2 million

USD 16.4 million

Average per carat sales value

USD 0.31/carat

USD 0.77/carat

USD 1.12/carat

USD 2.61/carat

USD 2.42/carat

USD 3.32/carat

* A larger volume of material was placed on offer in March 2010 following Gemfields extensive inventory building exercise during 2008 and 2009.

 

The specific auction mix and the exact quality of the lots offered at each auction vary in characteristics such as size, colour and clarity on account of mined production and market demand. Each auction is thus made up of somewhat differing overall quality compositions.

For ease of reference, the results of the eight higher quality auctions held to date are summarised below:

AUCTION RESULTS (HIGHER QUALITY)

JUL ’09 AUCTION

NOV ’09 AUCTION

JUL ’10 AUCTION

DEC ’10 AUCTION

JUL ’11 AUCTION

MAR ‘ 12 AUCTION

NOV ’12 AUCTION

JUL ’13 AUCTION

Dates

20-24 Jul ‘09

23-27 Nov ‘09

19-23 Jul ‘10

6-10 Dec ‘10

11-15 Jul ‘11

19-23 Mar ‘12

29 Oct – 2 Nov ‘12

15-19 Jul ‘13

Location

London, UK

Johannesburg, SA

London, UK

Johannesburg, SA

Singapore

Singapore

Singapore

Lusaka

Type

Higher Quality

Higher Quality

Higher Quality

Higher Quality

Higher Quality

Higher Quality

Higher Quality

Higher Quality

Carats offered

1.36 million

1.12 million

0.85 million

0.87 million

1.07 million

0.77 million

0.93 million

0.58 million

Carats Sold

1.36 million

1.09 million

0.80 million

0.75 million

0.74 million

0.69 million

0.90 million

0.58 million

No. of companies placing bids

23

19

37

32

38

29

35

36

Average no. of bids per lot

10

13

18

16

16

11

11

8

No. of lots offered

27

19

27

19

25

23

19

18

No. of lots sold

26

14

24

18

18

20

16

18

Percentage of lots sold

96%

74%

89%

95%

72%

87%

84%

100%

Percentage of lots sold by weight

99.8%

97%

94%

86%

69%

89%

98%

100%

Percentage of lots sold by value

82%

76%

87%

99%

91%

94%

90%

100%

Total sales realised at auction

USD 5.9 million

USD 5.6 million

USD 7.5 million

USD 19.6 million

USD 31.6 million

USD 26.2 million

USD 26.8 million

USD 31.5 million

Average per carat sales value

USD 4.40/carat

USD 5.10/carat

USD 9.35/carat

USD 26.20/carat

USD 42.71/carat

USD 38.25/carat

USD 29.71/carat

USD 54.00/carat

 

Ian Harebottle, CEO of Gemfields, commented:

“Gemfields has now completed three successful auctions in Zambia, all during the last eight months. We have again set two records for auctions of predominantly lower-quality material – the highest total revenue and the highest average per carat price. We are delighted that this auction further demonstrates Lusaka to be a key hub on the international emerald auction circuit and, as always, we would like to thank the Zambian Government – our partners in Kagem – for their ongoing support and hospitality.

Taking into account the three auctions held thus far this financial year, being one auction of traded material and two of material mined at our Kagem mine, Gemfields’ year-to-date auction revenues now stand at USD 56.4 million. This compares very favourably with the all-sources revenue of USD 48.4 million achieved in the full financial year to 30 June 2013.

Our emerald efforts remain focussed on supporting the sustained increase in demand for Zambian emeralds as the globally favoured emeralds of choice, underpinned by our operational investments and international marketing efforts. The key is for Zambia to increasingly be recognised as a competitive, reliable and trusted source of ethically produced gemstones”.


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