News

Feb 15, 2017

Gemfields' Production Dips in Q2 FY 2017

Presenting its operational update for the quarter ended December 31, 2016 (Q2 FY 2017), Gemfields reported that emerald and beryl production by its 75% owned Kagem Mining Limited (Kagem) in Zambia stood at 4.7 million carats for the period with an average grade of 156 carats per tonne. This reflects a huge drop y-o-y compared to production of 8.2 million carats with an average grade of 272 carats per tonne produced in the quarter ending December 31, 2015. The Company attributed this fall to “the varied nature of the mineralisation and a lower-grade zone mined in the current quarter". Kagem's total operating costs for Q2 FY 2017 amounted to US$ 10.2 million compared to US$ 12.1 million expended in the same period of the previous year. For the quarter ending 31 December 2016 the 75%-owned Montepuez Ruby Mining Limitada (Montepuez) in Mozambique produced 1.1 million carats of ruby and corundum with an average grade of 12 carats per tonne compared to 1.6 million carats with an average grade of 22 carats per tonne produced in Q2 FY 2016. This, the Company explained was "a result of the lower grade, but higher value material being processed". Montepuez's total operating costs for the period amounted to US$ 6.6 million as against costs of US$ 6.9 million incurred in the same period of the previous year. Ian Harebottle, CEO of Gemfields, commented: "This quarter has seen Montepuez continue to deliver strong results, with a significant increase in ore processed relative to the prior comparable period as a result of improved operational efficiencies." He referred to the installation of a new scrubber, de-grit unit and Dense Medium Separation (DMS) unit. "Traditionally used in the diamond sector, this is the first time a DMS plant has been used in ruby production," he explained. "We are very pleased with the initial results and are anticipating a significant uplift in processing rates over the coming months.” Harebottle added: "Kagem has seen a mixed quarter with the reduced volumes of production, as a direct result of the varied nature of the mineralisation at the deposit, being countered to some extent by the sterling efforts of our operating team on site." Harebottle noted the “steady pace” at which new projects were growing, "including the addition of a further 116 sq km of highly prospective ruby licencing being added to the Company's Montepuez project via a 75% stake in the JV Eastern Mining Ltd, as well as particularly good progress being made in Ethiopia". Referring to the Company's Fabergé operations, Harebottle said: "It is also pleasing to see that the luxury market has started off the year with a buoyant note with Faberge showing solid January sales demand and a positive market sentiment noted by our customers who attended the Tucson gemstone fair." Gemfields is holding its latest auction of predominantly higher quality rough emeralds from Kagem mine -- that was initially scheduled in December 2016 -- from February 13 to 17, 2017 in Lusaka, Zambia. The Company earlier held an auction of mixed quality rough rubies and corundum from Montepuez, in Singapore from December 12 to 16 , 2016. The auction generated revenues of US$ 30.5 million at an average realised value of US$ 27.88 per carat. The next auction of mixed quality rough rubies and corundum from the Montepuez ruby mine is expected to take place in June 2017 in Singapore.