July 1 Gemfields Plc, a Zambia-focused precious stones miner, estimated a 46 percent fall in full-year auction revenue as it delayed its rough-emeralds auction by a month, following a directive by the Zambian government.
The Zambian Ministry of Mines, Energy and Water Development issued a directive in April that all auctioning of emeralds mined in the country be held in Zambia as their sale in foreign markets contributes to capital flight.
Gemfields, which operates its core Kagem emerald mine in north Zambia, said its auction of higher-grade rough emeralds would now take place in Lusaka, Zambia from July 15 to 19, instead of Singapore, where it was originally scheduled from June 10 to 14.
The emerald miner said on Monday that it had completed only two auctions in the financial year ending June 30, 2013, due to the delay, generating aggregate auction revenue of $42 million.
Canaccord Genuity analyst Dmitry Kalachev said any adverse effect on auction attendance or pricing in the near term was unlikely as the company had already established a loyal customer base.
"Long term, however, the requirement to auction emeralds in Zambia may limit the number of buyers attending that could impact realisations," Kalachev said.
The company, which owns the Fabergé luxury jewellery brand, held four auctions in the prior financial year, generating auction revenue of $77.9 million.
Gemfields shares were down 5 percent at 22 pence at 1042 GMT on the London Stock Exchange on Monday. They fell as much as 10 percent earlier in the session.