Photo by: reuters
JOHANNESBURG (miningweekly.com) – Posting a threefold jump in revenue from $48.4-million in 2013, to $160.1-million for the year ended June 30, gemstone producer Gemfields has enjoyed what CEO Ian Harebottle describes as a “stellar year”, during which the miner saw record revenues emerge from its emerald business.
The group also saw a $58-million year-on-year increase in earnings before interest, taxes, depreciation and amortisation to $59.3-million, while net profit rose to $16.3-million, from a loss of $22.8-million in the 2013 fiscal period.
“In addition to record revenues from our emerald business, the year saw Gemfields hold its inaugural ruby auction of Mozambiquean rubies, generating sales of $33.5-million from 1.82-million carats sold.
“Both our auction system and the rubies themselves received widespread acclaim from numerous industry stakeholders, underlining the significance to Gemfields of this new business,” commented Harebottle.
Improvements to the group’s bottom line came despite a year-on-year drop in yearly emerald and beryl production from its Kagem mine, in Zambia, from 30-million carats to 20.2-million carats.
The operation achieved an average grade of 253 ct/t and unit cash costs of $0.91/ct, driving narrowed total cash operating costs of $27.4-million.
Three auctions of emerald and beryl mined at Kagem, held in Lusaka, Zambia, generated revenues of $84.4-million, while the average sales value of high-quality gemstones and low-quality gemstones increased from $4.40/ct in the July 2009 auction to $59.31/ct in the February auction, and from $0.31/ct in the March 2010 auction to $3.32/ct in the November 2013 auction respectively.
Traded rough emerald auctions of gems not mined directly at the company's own mining operations were held in Jaipur, India, in September 2013 and May this year, generating revenues of $22-million.
Post period-end, an August auction of lower-quality rough emerald and beryl held in Lusaka generated revenues of $15.5-million.
“The consistent price increases achieved in our emerald business demonstrate our ongoing commitment to supporting the competitiveness of Zambian emeralds on the international market and affirm that our global marketing strategies are successfully driving demand for coloured gemstones,” said Harebottle.
In December 2013, Kagem paid its first ever dividend of $8-million, of which $2-million was paid to the government of Zambia, a 25% shareholder in the operation.
This was followed by a further dividend of equal value in February.
“The Kagem emerald mine continues to be our cornerstone asset and the fact that Kagem is now a fully tax-paying entity validates the investment, turnaround and growth initiatives initiated when Gemfields acquired 75% of Kagem in June 2008,” he noted.
RUBY RECOVERY
Meanwhile, some 6.5-million carats of ruby and corundum were extracted from Gemfields’ Montepuez mine, in Mozambique, taking the total ruby and corundum extracted thus far from the operation to 8.4-million carats.
Total cash operating costs increased from $5.9-million in 2013, to $10.9-million in the year under review.
The company added that its newly introduced proprietary grading and sorting framework for rough rubies was well received at the inaugural auction in Singapore in June, generating revenues of $33.5-million at an average realised price of $18.43/ct.
The next ruby auction was scheduled to take place before December 31.
Further, Gemfields’ wholly-owned Fabergé business increased unit sales, with a 12% relative increase in gross profit margins derived from sales and sales orders agreed during the period.
The company said it would continue to evaluate a number of other gemstone opportunities, including in Colombia and across Africa, announcing recently that it had entered into a joint venture to progress opportunities in the Sri Lankan sapphire and gemstone sector.