BUSINESS

Lusaka Rough Emerald and Beryl Auction

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Gemfields plc released a statement earlier today via the London Stock Exchange’s Regulatory News Service

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 15 April to 19 April 2013.

Mila Kunis Gemfields

Gemfields plc the family owned company earlier this year announced 29-year-old actress Mila Kunis as the jewellery company’s spokesperson. The talented beauty certainly raised the brands profile after she committed herself  to being the face of Gemfields upon being approached by CEO Ian Harebottle.

 

Highlights

  • Weight offered underpins record revenue of USD 15.2 million for lower quality auctions
  • A 7% decline in average per carat prices for lower quality auctions reverses historic growth trajectory
  • 17.3 million carats offered, with 36% (6.3 million carats) being sold
  • Quality-for-quality per carat prices showed mixed performance, with higher qualities clearly favoured
  • Twelve auctions held since July 2009 have generated USD 175.7 million in total revenue.

Thirty one companies were invited to the auction held in Lusaka and twenty five attended, with all attendees placing at least two bids. This auction, the second of the current financial year (which ends 30 June 2013) was held in Lusaka, Zambia at the request of the Zambian Ministry of Mines, Energy and Water Development. The auction saw 17.3 million carats of emerald and beryl extracted from the Kagem Mine in Zambia placed on offer, with 6.3 million carats sold, generating auction revenues of USD 15.2 million. The Company’s twelve auctions held since July 2009 have generated USD 175.7 million in aggregate revenues.

The Lusaka auction yielded an overall average of USD 2.42 per carat for the lots sold, 7% lower than that achieved at the previous lower quality emerald auction held in June 2012 in Jaipur. As the overall quality characteristics and product mix of the gems placed on offer at this auction were substantively similar to those placed on offer at the earlier auction, the results reflect a slight reduction in the relative per carat prices, the first reversal of the historic growth trajectory in lower quality auction prices.

A factor in this reduction may have been due to a number of declined auction invitations, which was higher than in prior auctions, most notably due to the travel demands placed on clients in reaching Lusaka, typically involving three flights and approaching 24 hours of journey time.

Given the Company’s continued belief in the long term fundamentals of the emerald market, Gemfields does not sell lots where the bids received do not satisfy its pre-determined minimum reserve prices. The Company maintained this strategy at the Lusaka auction, with five lots (representing 64% of the weight offered) remaining unsold.

 

The results of the five lower quality 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.

 

For ease of reference, the results of the seven higher quality rough emerald 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

 

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

Location

London, UK

Johannesburg, SA

London, UK

Johannesburg, SA

Singapore

Singapore

Singapore

Type

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

Carats Sold

1.36 million

1.09 million

0.80 million

0.75 million

0.74 million

0.69 million

0.90 million

No. of companies placing bids

23

19

37

32

38

29

35

Average no. of bids per lot

10

13

18

16

16

11

11

No. of lots offered

27

19

27

19

25

23

19

No. of lots sold

26

14

24

18

18

20

16

Percentage of lots sold

96%

74%

89%

95%

72%

87%

84%

Percentage of lots sold by weight

99.8%

97%

94%

86%

69%

89%

98%

Percentage of lots sold by value

82%

76%

87%

99%

91%

94%

90%

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

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

 

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.

 

Ian Harebottle, CEO of Gemfields, commented:

“Taking into account the prevailing uncertainty surrounding Gemfields’ future ability to freely sell emeralds outside of Zambia, Gemfields is generally satisfied with the results of its Lusaka auction. The results were reasonable but probably not as optimal as they could have been.

The figures provide further evidence that the general global economic uncertainty has not had a significant impact on demand for medium to better quality emeralds and beryl. 

Clarity and stability within our operating environment will no doubt also have a positive impact in the longer term and on the peace of mind of our customers. Confidence in the secure, reliable and convenient supply of our gemstones is a critical ingredient. We will naturally continue to engage all relevant stakeholders within Zambia and abroad in an effort to seek resolution of the prevailing situation in the best interests of the Zambian emerald sector as a whole.” 

Gemfields And W Magazine Celebrate The Launch Of Gemfields' New Brand Ambassador

Mila Kunis seen here posing for the cameras as the new face of Gemfields plc

 

 


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