Releasing its unaudited interim results for the six months ending 31 December 2016 (H1 FY 2017), Gemfields plc announced that revenue declined to US$ 51.0 million (2015: US$ 94.0 million) resulting in a net loss after tax of US$ 13.6 million (2015: profit of US$ 8.2 million).

The Company said that this was on account of the deferral of the higher quality rough emerald auction originally scheduled to take place in December 2016 to February 2017 and a moderated product mix placed on offer at the last ruby auction. During the period, EBITDA reported was a loss of US$ 4.3 million (2015: profit of US$ 35.6 million).

During the six month period, Gemfields held only two auctions. One consisted of commercial quality rough emerald and beryl, while the other was of mixed quality rough ruby and corundum auction. In the comparable period in 2015, the Company held three auctions including one higher quality and one commercial quality rough emerald and beryl auction and one mixed to higher quality rough ruby and corundum auction.

The auction of predominantly higher quality rough emerald, which was deferred in December on account of the situation arising due to demonetisation in India, was successfully held during the week commencing 13 February 2017 generating revenue of US$22.3 million. Gemfields said it plans to hold a further auction of commercial quality rough emerald and beryl as well as another mixed quality rough ruby and corundum auction during the second half of the financial year 2017.

At the Kagem mine, where it holds a 75% stake, Gemfields reported revenue of US$ 10.7 million from one commercial quality rough emerald and beryl auction (2015: US$ 53.8 million). Production declined to 10.7 million carats of rough emerald and beryl (2015: 15.7 million carats) and unit operating costs consequently rose from US$ 1.50 per carat to US$ 1.91 per carat.

 At the Montepuez mine, where it holds a 75% stake, Gemfields reported revenue of US$ 30.5 million (2015: US$ 28.8 million) achieved in the period from one mixed quality rough ruby and corundum auction, with an average price of US$ 27.88 per carat. Production rose to 5.6 million carats (2015: 2.1 million carats) with a higher grade achieved at 29 carats per tonne (2015: 15 carats per tonne). Gemfields also reported a 52% increase in premium quality rough rubies recovered. As a result, unit operating costs were lower at US$ 2.21 per carat compared with US$ 6.19 per carat in 2015.

The 100% owned Fabergé business saw a 41% increase in sales orders agreed during the six month period, while the number of sales transactions increased by 53%  and the average selling price per piece by 30% over the same period. The recorded revenue from realised sales amounted to US$ 6.8 million (2015: US$ 7.2 million), which excludes approximately US$ 1.9 million of orders that was to be delivered and realised post December 2016.

Ian Harebottle, CEO of Gemfields, commented, "Gemfields' financial results for the six months have been impacted by the oneoff Indian demonetisation programme which has affected the Company's auction schedule. We are confident that we will see a correction in the market in the short term as the actions required by our customers to improve liquidity and adjust to the demonetisation programme begin to bear fruit.”

He added, “The clear shift in both consumer trends and the increased urgency with which so many of the world's leading luxury brands are beginning  to embrace coloured gemstones remain extremely encouraging and provides for a continued long term positive outlook for the sector. This is clearly evidenced by the increased number of retail brands that are now looking to collaborate with Gemfields."

Gemfields is undertaking new projects for emerald mining in Coscuez, Colombia and for emerals and diamonds at the DogogoSouth block in Ethiopia. It also commenced preliminary drilling at the Megaruma licence in Mozambique and is advancing towards mining at Eastern Ruby Mining Ltd exploration licence 5061L. It is currently reviewing a project for Sapphire in Sri Lanka.