JOHANNESBURG (miningweekly.com) – Aim-listed Gemfields’ 75%-owned Kagem emerald mine, in Zambia, yielded 6.3-million carats at a grade of 214 ct/t of ore and unit operating costs of $1.63/ct in the three months ended September 30.

This was a slight decrease on the 6.5-million carats recovered in the quarter ended September 30, 2013.

The quarter under review saw some 3.2-million tons of rock moved, compared with 1.9-million tons in the prior year’s comparable quarter, while cash rock handling unit costs narrowed from $3.58/t to $2.91/t over the same period.

A total of 380 t of ore was produced during the quarter, while some 20 355 ct were produced by the underground operation.

The grade for the quarter was 53.6 c/t, while the grade for the project was 75.4 ct/t.

The fourth phase of the high-wall pushback programme at the mine continued to progress over the quarter, with a total of 3.2-million tons of waste moved.

Meanwhile, Gemfields' trial underground mining project achieved 42.4 m of horizontal advance during the quarter, compared with 74.2 m in the prior year’s quarter.

The tunnel support works continued, with wire-meshing and lacing sections installed.

Additional support was being installed where required.

“With a proven resource in the Chama pit and the continued viability of openpit operations, given robust emerald prices, Kagem has the flexibility to extend the openpit operation with further pushbacks and is likely, in the short term, to continue underground mining only on a trial basis,” the group noted.

Illegal mining activity within the boundaries of the Kagem mining licence was not yet fully resolved and Gemfields continued to work with key ministries to alleviate this challenge.

The August auction of predominantly lower-quality rough emerald and beryl held in Lusaka, Zambia, saw 11.6-million carats sold, representing 88% of the value offered, and generating auction revenues of $15.5-million.

The auction yielded an overall average of $1.34/ct, including for the sale of 1.5 t of low-grade beryl.

“Gemfields enjoyed a solid quarter of gemstone production, notwithstanding lower grades than those in the same quarter last year. Market conditions remain upbeat, with ongoing enthusiasm from the trade, retailers and consumers for responsibly supplied coloured gemstones,” CEO Ian Harebottle said in a statement.

RUBIES
Meanwhile, bulk-sampling operations at the Montepuez ruby project, in Mozambique, in which Gemfields had a 75% interest, were continuing to provide insight into the geological controls of the deposit.

The core infrastructure was largely in place and progress was being made toward formalised mining.

“The testwork has led to an enhanced understanding of the ore characteristics and improved throughput in the semimobile processing plant. These improvements saw a two-and-a-half-fold increase in processed tons when compared to the same quarter in the prior year,” outlined Gemfields.

About 2.9-million carats of ruby and corundum were extracted during the quarter as part of the bulk sampling operation. The total ruby and corundum extracted at Montepuez since the start of bulk sampling stood at 11.3-million carats.

Lower grades of ore were processed during the quarter, accounting, in part, for the flat gemstone production.

Unit operating costs were $1.48/ct, compared with $0.62/ct in the prior comparable quarter.

Total rock handling during the quarter stood at 533 895 t, of which 81 699 t were ore and 452 196 t were waste – representing a stripping ratio of 5.5.

Cash rock handling unit costs were $6.93/t, compared with $6.34/t in the prior year’s quarter.

“Given the size and nature of the Montepuez ruby licence, unlicensed mining activity and asset loss remain key challenges, although new infrastructure, a significant security presence and ongoing efforts have resulted in a clear improvement,” said Harebottle.

Gemfields' next auction of rough ruby and corundum was scheduled to take place in Singapore in December.

“We've been pleased to see new world records – on a per carat basis – achieved by both sapphires and rubies at recent auctions held by Sotheby's in Hong Kong and Geneva respectively.

“In particular, the sale of a 8.62 ct Burmese ruby has raised the world record for rubies at auction by 81% to $997 727/ct. It is against this market backdrop that we look forward to our second auction of rough ruby and corundum next month,” he said.

FABERGÉ
Wholly-owned Fabergé saw the value of sales orders agreed during the quarter increase by 50% on the comparative quarter in 2013. Operating costs for the quarter were 26% lower than the comparative period in the prior year.

Fabergé also completed the relocation of its boutique within Geneva.

In September, Fabergé was awarded the Best International Brand Collection 2014 prize at the Andrea Palladio International Jewellery Awards 2014 in Italy for its Spiral, Treillage and Emotion collections.

Fabergé continued to work on the expansion of its jewellery and timepiece collections and the introduction of ‘Objets’, a new category. The related product launches were expected during the second half of the 2015 financial year.

SRI LANKA
In September, Gemfields entered into a joint venture with East West Gem Investments (EWGI), a Jersey registered company, to progress opportunities in the Sri Lankan sapphire and gemstone sector through three Sri Lankan subsidiaries which would be 75% and 25% held by Gemfields and EWGI respectively.

Under the terms of the agreements, Gemfields had acquired a 75% operating interest in 16 exploration licences covering diverse minerals for $400 000.

“The joint venture will also see Gemfields and EWGI establish a gemstone trading company called Ratnapura Lanka Gemstones, a company approved by the Board of Investment of Sri Lanka. The trading company will focus on sourcing rough sapphires from various sources in the local market,” the group reported.

CORPORATE & CASH
Kagem, meanwhile, entered into a $20-million revolving credit facility with Barclays Bank Zambia over the period, of which $15-million was drawn down by the end of the quarter.

The funds drawn bore interest at a rate of three-month dollar London Inter-Bank Offered Rate plus 4.5%.

At the end of the quarter, Gemfields had cash and cash equivalents of $32.2-million and total debt outstanding of $25.1-million, including the outstanding balance of $15-million at Kagem.