BUSINESS

GEMFIELDS RAISES RECORD US$31.5M IN LUSAKA EMERALD AUCTION

By  | 
First Lady Dr Christine Kaseba-Sata admires a Kagem emerald, watched by Gemfields and Kagem Chief Executive Officer Ian Harebottle (left), Kagem chairman William B Nyirenda and director Dr Sixtus Mulenga

First Lady Dr Christine Kaseba-Sata admires a Kagem emerald, watched by Gemfields and Kagem Chief Executive Officer Ian Harebottle (left), Kagem chairman William B Nyirenda and director Dr Sixtus Mulenga

 

The following statement was issued by Gemfields plc via the London Stock Exchange’s Regulatory News Service in the morning of Monday 22nd July 2013:

Gemfields plc

(“Gemfields” or the “Company”)

Results – Lusaka Rough Emerald and Beryl Auction

22 July 2013

Gemfields plc (AIM: GEM) is pleased to announce the results of its auction of predominantly higher quality rough emerald and beryl held in Lusaka from 15 July to 19 July 2013.

Highlights

  • Auction revenues of USD 31.5 million, the second highest achieved to date;
  • Average per carat price of USD 54.00 per carat – a new auction record;
  • All of the 583,448 carats placed on offer were sold;
  • An exceptional 54 carat rough gem achieves a new per carat record for a Gemfields auction;
  • Upbeat market conditions underpinned robust increases in quality-for-quality per carat prices; and
  • Thirteen auctions held since July 2009 have generated USD 207.3 million in total revenues.

A total of 40 companies were invited to the auction held in Lusaka and 37 attended, with 36 attendees placing at least one bid. This auction, the first of 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 583,448 carats of emerald extracted from the Kagem Mine in Zambia placed on offer, with all lots offered being sold, generating auction revenues of USD 31.5 million. The Company’s thirteen auctions held since July 2009 have generated USD 207.3 million in aggregate revenues.

The Lusaka auction yielded an overall average value of USD 54.00 per carat, the highest unit value achieved at any auction. This represents a 26 per cent increase over the previous highest value of USD 42.71 per carat (achieved in the July 2011 Singapore auction). In addition, an exceptional 54 carat rough gem, offered as a single lot at the auction, set a new per carat record for prices achieved at a Gemfields auction.

 

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

 

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 five 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

Dates

11-15 Mar 2010

10-14 Mar 2011

21-25 Nov ‘11

9-13 Jun ‘12

15-19 Apr ‘13

Location

Jaipur, India

Jaipur, India

Jaipur, India

Jaipur, India

Lusaka, Zambia

Type

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

Carats Sold

22.80 million

12.98 million

9.82 million

3.47 million

6.30 million

No. of companies placing bids

25

44

27

20

25

Average no. of bids per lot

8

14

9

3

6

No. of lots offered

56

35

26

33

28

No. of lots sold

49

34

19

17

23

Percentage of lots sold

88%

97%

73%

52%

82%

Percentage of lots sold by weight

79%

77%

91%

32%

36%

Percentage of lots sold by value

89%

99%

80%

60%

76%

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

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

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

Ian Harebottle, CEO of Gemfields, commented:

“Favourable market conditions and particularly strong demand from our customers have yielded excellent auction results and record per carat prices. All indications show that demand for coloured gemstones, and especially emeralds, will continue to increase at a steady pace over the coming year.

We are delighted that this auction underscores Lusaka as a key hub in the international emerald trade and we would like to thank the Zambian Government for their support.  

Our focus must now be directed at keeping the current momentum going and on developing Zambian emeralds as the favoured choice. Our investments and efforts in marketing Zambian emeralds worldwide are clearly working. The key is for Zambia to be seen as the most competitive, reliable and trusted source of ethically produced gemstones. Transparency and accountability are crucial to underpinning the integrity of the industry and to establishing Zambian emeralds as the preferred emerald brand among global consumers”.