JOHANNESBURG (miningweekly.com) – Aim-listed Gemfields has entered into a joint venture (JV) with East West Gem Investments (EWGI) to pursue opportunities in the Sri Lankan sapphire and gemstone sector.

Under the terms of the agreement, Gemfields would gain a 75% stake in three EWGI subsidiaries, holding 16 exploration licences covering diverse minerals, for $400 000.

The JV partners would seek to develop the broader exploration, mining and sorting infrastructure in Sri Lanka to promote a sustainable, transparent and globally competitive gemstone sector.

The deal would see Gemfields employ its exploration and gemstone experience with a view to replicating the successes achieved in Zambia and Mozambique.

“We are delighted to announce our entry into what we consider to be the third of the 'big three' coloured gemstones. With revenue-producing emerald and ruby operations in Zambia and Mozambique already in the Gemfields portfolio, the proposed development of sapphire operations in Sri Lanka will realise our stated red, blue and green 'traffic light' of coloured gemstones strategy,” commented Gemfields CEO Ian Harebottle.

Sri Lanka is known as a key source of sapphires of all colours, including the padparadscha sapphire – a rare pinkish orange coloured sapphire.

Gemfields added that a favourable business climate and attractive incentives provided a sound platform for investment and evaluation of growth opportunities in the country.

Meanwhile, Gemfields and EWGI would also establish a gemstone trading company Ratnapura Lanka Gemstones, which would source rough sapphires from various sources in the Sri Lankan market.

Gemfields' proprietary gemstone grading systems and marketing methodologies would be used to offer the gems to international buyers through the company’s rough gemstone auction platforms.

“We are excited about the possibility of being able to offer a reliable supply of well-graded sapphires to customers attending our auctions, and to ensuring that all gemstone stakeholders in Sri Lanka – including its government and general population – benefit from the value addition and transparency that the Gemfields approach has already delivered in Zambia and Mozambique,” said Harebottle.