The first six months of the financial year have seen steady demand for emeralds and rubies, with Aim-listed precious gems producer Gemfields reporting $94-million in revenue and earnings before interest, taxes, depreciation and amortisation (Ebitda) of $35.6-million, in the six months ending December, 31 2015.

Gemfields CEO Ian Harebottle predicted in the company’s interim results, published on Monday, that the 2016 financial year would be “a year of two halves” compared with the “considerable first-half bias” of 2015.

Harebottle attributed the change to a planned more equal auction mix between the first and second halves of the 2016 financial year compared with the same halves of the previous year.

Three auctions were held during the first half of the year, including two rough emerald and beryl auctions and one rough ruby and corundum auction.

Gemfields planned to hold two further auctions of rough emerald and beryl during the second half of the financial year 2016 with the next auction of predominantly higher-quality rough emeralds expected to take place in March.

At least one larger auction of mixed qualities of ruby and corundum was expected to take place before the end of June.

“The three auctions hosted so far this financial year yielded aggregate revenues of $82.7-million – an excellent result in its own right, but even more so when compared with some of the challenges currently being experienced across the broader resource and luxury sectors,” noted Harebottle. 

Production from Kagem emerald mine for the period was 15.7-million carats of emerald and beryl with an average grade of 254 c/t - a 30% increase on the comparable period.

Total operating costs were $22.4-million and corresponding cash operating costs were $16.2-million, following the completion of the fourth high wall pushback in September 2015.

The company’s Montepuez ruby mine produced 2.1-million carats of ruby and corundum, down 6.3-million year-on-year. However, first-half production focused on lower-grade, but significantly higher-value alluvial ore resources, delivering a 341% increase in overall volume of higher quality rubies recovered.

“[Our] deliberate shift in focus [therefore] resulted in a marked increase in the volume of higher value rubies produced. Our current focus on mining the lower-grade alluvial resources is soon to be supplemented by a planned shift in mining operations to areas of the already exposed higher-grade, lower-value, ore over the coming months,” noted Harebottle.

The group’s wholly owned Fabergé division saw the value of realised sales during the period increase by 70% year-on-year. Losses before Ebitda reduced by 21%.

Meanwhile, the coloured gemstone market continued to expand in the second half of the 2015 calendar year with record per-carat prices for predominantly lower-quality emerald and beryl being achieved at the Gemfields auction in November 2015.

OUTLOOK
Subsequent to the binding and conditional agreement announced in September last year, Gemfields looked forward to the completion of the acquisition of a controlling interest in the Coscuez emerald mine in Boyacá, Colombia, and was proceeding with its plan for exploration and development of the project during the remaining half of the financial year.

The company retained its production forecast of 25-million to 30-million carats for rough emerald and beryl, and 8-million carats of ruby and corundum for the 2016 financial year.