| April 22
April 22 Emerald miner Gemfields Plc
reported a 7 percent decline in average per-carat prices at its
lower-quality gemstone auction earlier this month, hurt by a
recent directive by the Zambia government that prevents the
overseas sale of gemstones mined in the country.
The rough emerald and beryl auction in Lusaka, Zambia,
generated revenue of $15.2 million, but the gemstones sold for
an average of $2.42 per carat, the first dip in per-carat prices
in the last five auctions of lower-quality stones by Gemfields.
"The results were reasonable, but probably not as optimal as
they could have been," Chief Executive Ian Harebottle said.
Gemfields, which mines emeralds at Kagem in Zambia, as able
to sell only 36 percent of the 17.34 million carats offered for
sale at the auction.
"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," the company said.
Gemfields said earlier this month that the potential ban on
selling gemstones outside Zambia could hurt its competitive
position against countries like Brazil and Colombia.
Zambia is the third largest producer of emeralds after
Colombia and Brazil.
"At this stage, it is unclear whether the (company's)
higher-quality auction in Singapore scheduled for June 2013 will
go ahead," JPMorgan Cazenove analyst Alexander Mees said.
"The government of Zambia is a 25 percent shareholder in
Kagem and so would presumably want to consider the impact of any
changes on the value of its investment as well as the tax
remittance currently being generated."
The company said it would continue to seek a resolution to
the prevailing situation.
Gemfields produced 6.6 million carats in the quarter ended
Dec. 31 at Kagem, its only producing mine, up from 3.9 million
carats in the prior year.
"We are concerned that volumes have been significantly
lighter for the past two auctions, especially as mine production
is expected to increase," Canaccord Genuity's Jeremy Dibb said.
"Though the lowest quality stones are by nature the lowest
revenue contributors this will result in a significant inventory
Shares in the company were trading down marginally at 26.5
pence at 0844 GMT on Monday on the London Stock Exchange.