JOHANNESBURG (miningweekly.com) – Aim-listed coloured gemstone miner Gemfields on Thursday reported a 42% drop in revenue to $48.4-million and a net loss of $22.8-million for the year ended June 30, mostly owing to disruptions in the company’s emerald auction schedule.

This was a significant drop from the company’s $161.5-million profit in the previous financial year.

Gemfields’ earnings before interest, taxes, depreciation and amortisation for the 2013 financial year year amounted to $1.2-million, compared with $54.6-million in the prior corresponding period.

The company’s intended auction schedule was impeded by discussions between Gemfields and the Zambian government regarding the proposed ban on the auctioning of emeralds outside of Zambia.

“As a result, we managed only two auctions during the year rather than three, with a corresponding adverse effect on revenues,” nonexecutive chairperson Graham Mascall said.

CEO Ian Harebottle added that price growth remained robust – as was visible from the last auction held in Lusaka, in July – post the period under review, where record prices of $54/ct were realised after years of dedicated mining and marketing efforts.

“Had all three auctions initially planned for the financial year to June 30, come to fruition, we would undoubtedly have seen Gemfields report another year of solid financial performance,” Harebottle said.

“I remain hopeful that the ongoing discussions with the Zambian government regarding the geographic location of our future emerald auctions will soon yield a constructive outcome. We will continue our commitment to supporting the competitiveness of Zambian emeralds on the international market,” he added.

Meanwhile, Harebottle pointed out that Gemfields had performed well operationally during the year.

“This year has undoubtedly been one of the busiest years in Gemfields' history, with strong operational performance at our flagship Kagem emerald mine, promising bulk sampling at Montepuez, completion of the Fabergé acquisition and the appointment of actress Mila Kunis as Gemfields' global brand ambassador,” he said.

Emerald and beryl production from the Kagem mine, in Zambia, increased by 42% to 30-million carats for the year, while the emerald and beryl grade improved by 38% to 283 ct/t.

The mine’s emerald and beryl unit production costs decreased by 26% and rock handling unit costs were down 2%.

Meanwhile, the preliminary results of the bulk sampling activities undertaken at Gemfields’ 75%-owned Montepuez ruby operation, in Mozambique, were encouraging, with the extraction of 1.8-million carats during the year.

“Our first ruby auction is expected to take place before June 30, 2014, and will provide an increased level of confidence in, and understanding of, the ruby market and the value of our production profile. Montepuez is expected to add significant additional revenue to the group,” Mascall said.

With regard to amethysts, Gemfields and ZCCM-IH – its partner in amethyst producer Kariba Minerals – had recapitalised Kariba with a $1.25-million contribution each, which was the largest cash injection that the mine had received to date.

Mining and processing equipment had also been purchased by Kariba with a view to double the mine’s monthly revenue in 2014.

Further, Gemfields completed its acquisition of the world-famous Fabergé luxury brand and business, with the new Fabergé advertising campaign titled 'The Art of Colour' launched globally on October 2 in support of the Gemfields coloured gemstone strategy.

“I am pleased to say that the outlook for Gemfields remains bright. Our pursuit of greater value for our shareholders will progress materially with our first ruby auction, the ramp-up of gemstone extraction at the Montepuez ruby deposit, the expansion of activity at Kagem and the evolution of Fabergé. These next steps will ensure that Gemfields is closer to achieving its strategy of becoming the world's 'coloured gemstone champion'," Harebottle concluded.