Gemstone miner Gemfields has progressed with the planning of a series of five small and sequential emerald auctions in November and December to address market demand for specific grades, and to supplement its long-standing direct sales programme for the lowest qualities produced by its Kagem mine in Zambia.
These mini-auctions comprise a selection of grades that are typically offered at Kagem’s auctions of higher-quality emeralds.
The miner on November 10 reiterated that its auctions schedule for this year had been severely impacted on by the many travel, quarantine and congregating restrictions put in place to mitigate Covid-19 contagion.
Having planned to host five regular-format auctions in May, June, August and two in December, the miner has only been able to host one regular-format auction in February in Lusaka, Zambia, yielding $11.5-million from the sale of commercial-quality emeralds.
However, as part of the mini-auctions, selected lots have been made available for in-person and private viewings by customers in Tel Aviv (Israel), Singapore and Jaipur (India).
Subsequent to the conclusion of the viewings, the auctions take place on an online auction platform specifically adapted for Gemfields and enabling customers from multiple jurisdictions to participate in a sealed bid process.
The first mini-auction was successfully completed on November 6 with all four of the offered lots sold.
Gemfields product and sales MD Adrian Banks says the first of five sequential online mini-auctions saw all four of the offered lots successfully sold. “Prices were robust and, in some cases, comfortably exceeded bids received in pre-Covid-19 auctions.”
The remaining four mini-auctions will be concluded on November 12 and 27, as well as on December 4 and 11.
Gemfields expects to announce the final and aggregated results of the five mini-auctions on December 11.
Gemfields' typical auction schedule includes five to six auctions a year – two of mixed-quality rubies and three to four of emeralds (split between higher quality and commercial quality). However, because of a reduced number of auctions this year, Gemfields reports that no ruby auction revenue is expected this year.
As reference, in 2019, Gemfields’ six auctions accounted for 93% of total group revenue (about $200-million out of some $216-million) with $120-million of revenue derived from two ruby auctions and $80-million derived from four emerald auctions. The average number of lots offered at Gemfields’ emerald and ruby auctions to date is 24 and 72 respectively.
As previously announced, Gemfields holds sufficient rough gemstone inventory to be able to host one auction of each of mixed-quality rubies, higher-quality emeralds and commercial-quality emeralds.
Given their reduced size, sales from the five mini-auctions are not expected to materially affect Gemfields’ ability to host three larger auctions using available inventory.
Further, and subject to market conditions and Covid-19 developments, Gemfields expects to host two larger auctions – one each of mixed-quality rubies and higher-quality emeralds – in the first quarter of 2021.
Meanwhile, in terms of gemstone output, Gemfields reports that principal operations at both the Kagem emerald mine and the Montepuez ruby mine have been suspended since March and April, respectively.
However, the miner hopes that mining operations will resume by March 2021, subject to market conditions and Covid-19 developments.