Results - Jaipur Rough Emerald and Beryl Auction

 
TIDMGEM 
 
Gemfields plc 
 
                           ("Gemfields" or the "Company") 
 
               Results - Jaipur Rough Emerald and Beryl Auction 
 
20 June 2012 
 
Gemfields plc (AIM: "GEM") is pleased to announce the results of the auction 
of predominantly lower quality rough emerald and beryl held in Jaipur, India 
from 9-13 June 2012. 
 
Highlights 
 
- Healthy Jaipur auction revenues of USD 9.0 million 
 
- The auction saw 10.85 million carats of emerald and beryl mined 
by Gemfields placed on offer, with 3.47 million carats being sold 
 
- Solid overall demand for Gemfields ethical Zambian emeralds 
continues, with some weakness apparent only in the lowest quality grades 
 
- Four auctions held in the current financial year total USD 77.9 
million in revenue 
 
- Ten auctions held since July 2009 total USD 133.7 million in 
revenue 
 
Gemfields held an auction of predominantly lower quality rough emeralds in 
Jaipur, India from 9 to 13 June 2012. Twenty five companies attended the 
auction, with twenty of these placing bids. The auction saw 10.85 million 
carats of emerald and beryl mined by Gemfields placed on offer, with the 3.47 
million carats sold generating auction sales of USD 9.0 million. 
 
Last week's auction was the fourth and final auction of the current financial 
year (which ends on 30 June 2012). The four auctions, two of which were for 
lower quality material, have generated aggregate sales of USD 77.9 million 
while the 10 auctions held since July 2009 have generated USD 133.7 million in 
aggregate revenues. 
 
The overall quality characteristics of the gems placed on offer at 
last week's auction were broadly similar to those offered at the previous 
lower quality emerald auction held in November 2011 in Jaipur (which achieved 
an average of USD 1.12 per carat for the lots sold). While last week's auction 
yielded an average of USD 2.61 per carat for the lots sold, in the Company's 
opinion, this figure is artificially inflated by the number of lowest quality 
lots that remained un-sold due to the weaker demand experienced at these value 
points with the current per carat value of this quality material having been 
largely stable over the past six months. 
 
Given the Company's strong cash position and its belief in the long 
term fundamentals of the emerald market, Gemfields does not sell lots where 
the bids do not meet its pre-determined minimum reserve prices. Between 
November 2011 and June 2012, the Indian Rupee weakened against the US Dollar 
by 13%, which further negatively affected pricing at this particular auction 
on account of the large percentage of finished goods produced from this 
material that is likely to be consumed directly within the Indian domestic 
retail market. 
 
The results of the four lower quality auctions held to date are summarised 
below: 
 
  AUCTION RESULTS      MARCH '10      MARCH '11     NOVEMBER '11      JUNE '12 
  (LOWER QUALITY)       AUCTION        AUCTION         AUCTION        AUCTION 
 
Dates                 11-15 March    10-14 March   21-25 November    9-13 June 
                          2010           2011           2011            2012 
 
Location             Jaipur, India  Jaipur, India   Jaipur, India  Jaipur, India 
 
Type                 Lower Quality  Lower Quality   Lower Quality  Lower Quality 
 
Carats offered*      28.90 million  16.83 million   10.83 million  10.85 million 
Carats Sold          22.80 million  12.98 million   9.82 million    3.47 million 
No. of companies           25             44             27              20 
placing bids 
Average no. of bids        8              14              9              3 
per lot 
No. of lots offered        56             35             26              33 
No. of lots sold           49             34             19              17 
Percentage of lots        88%            97%             73%            52% 
sold 
Percentage of lots        79%            77%             91%            32% 
sold by weight 
Percentage of lots        89%            99%             80%            60% 
sold by value 
Total sales realised    USD 7.2        USD 9.9        USD 11.0        USD 9.0 
at auction              million        million         million        million 
Average per carat    USD 0.31/carat USD 0.77/carat USD 1.12/carat  USD 2.61/carat 
sales value 
 
 * A larger volume of material was placed on offer in March 2010 
following Gemfields extensive inventory building exercise during 2008 and 
2009. 
 
The Jaipur auction was again used as a platform to further test levels of 
demand for rough emerald and beryl made available from other sources of supply 
(i.e. not certified as having been mined by Gemfields). None of this material 
is included in the data presented above. The most recent trial comprised of 
other rough emerald from Zambia and approximately one quarter of this material 
(by value) was sold. The present net income accruing to Gemfields from traded 
material remains immaterial in the context of Gemfields' own production, and 
the Company will continue to refine and evolve the opportunities of selling 
rough from other sources of supply. 
 
For ease of reference, the results of the six higher quality rough emerald 
auctions held to date are summarised below: 
 
 AUCTION RESULTS     JUL '09       NOV '09      JUL '10       DEC '10      JUL '11      MAR ` 12 
 (HIGHER QUALITY)    AUCTION       AUCTION      AUCTION       AUCTION      AUCTION      AUCTION 
 
Dates               20-24 Jul     23-27 Nov    19-23 Jul     6-10 Dec     11-15 Jul    19-23 Mar 
                       `09           `09          `10           `10          `11          `12 
 
Location            London, UK  Johannesburg,  London, UK  Johannesburg,  Singapore    Singapore 
                                     SA                         SA 
 
Type                  Higher       Higher        Higher       Higher        Higher       Higher 
                     Quality       Quality      Quality       Quality      Quality      Quality 
 
Carats offered     1.36 million 1.12 million  0.85 million 0.87 million  1.07 million 0.77 million 
Carats Sold        1.36 million 1.09 million  0.80 million 0.75 million  0.74 million 0.69 million 
No. of companies        23           19            37           32            38           29 
placing bids 
Average no. of          10           13            18           16            16           11 
bids per lot 
No. of lots             27           19            27           19            25           23 
offered 
No. of lots sold        26           14            24           18            18           20 
Percentage of lots     96%           74%          89%           95%          72%          87% 
sold 
Percentage of lots    99.8%          97%          94%           86%          69%          89% 
sold by weight 
Percentage of lots     82%           76%          87%           99%          91%          94% 
sold by value 
Total sales          USD 5.9       USD 5.6      USD 7.5      USD 19.6      USD 31.6     USD 26.2 
realised at          million       million      million       million      million      million 
auction 
Average per carat      USD           USD          USD           USD          USD          USD 
sales value         4.40/carat   5.10/carat    9.35/carat   26.20/carat  42.71/carat  38.25/carat 
 
The specific auction mix and the exact quality of the lots offered at each 
auction can vary in characteristics such as colour and clarity on account of 
mined production and market circumstances. Each auction is thus made up of 
differing overall quality compositions. 
 
Ian Harebottle, CEO of Gemfields, commented: 
 
"Gemfields is pleased to announce robust results from the recent lower quality 
emerald auction in Jaipur considering the backdrop of global economic unease 
and the substantially weaker Indian Rupee against the US dollar. General 
economic instability typically has a greater negative impact on the lower 
quality grades than it does on the higher quality material, the latter often 
being seen as a store of value in times of uncertainty. This effect was 
clearly seen at this auction, where demand for the lowest quality grades was 
indeed weaker than it has been for some time. However, due to the Company's 
strong cash position and operational performance, Gemfields was not obliged to 
sell lots at sub-optimal prices and is confident in the long term value of 
these gems. 
 
Overall, the on-going appetite for better grades remains firm and ensured that 
Gemfields was able to deliver another set of encouraging auction results 
thanks to our positive momentum, the success of our marketing initiatives and 
the consistency of the emeralds produced at our Kagem mine. In addition, the 
results are particularly pleasing given that a large supply of rough emeralds 
recently entered the Indian market from other sources, creating an isolated 
period of considerable supply which is not sustainable and which bodes well 
for future auctions" 
 
Enquiries: 
 
Gemfields                                       [e-mail] 
Dev Shetty, CFO                                        [phone] 
 
Canaccord Genuity Limited                              [phone] 
Nominated Adviser and Joint Broker to Gemfields 
Tarica Mpinga/Andrew Chubb 
 
JP Morgan Cazenove                                     [phone] 
Neil Passmore 
 
Tavistock Communications                               [phone] 
Jos Simson/Lydia Eades 
 
Notes to Editors: 
 
Gemfields plc is a leading gemstone miner listed on the AIM market of the 
London Stock Exchange (ticker: `GEM'). The Company's principal asset is the 
75% owned Kagem emerald mine in Zambia, the world's single largest emerald 
mine. In addition to the Kagem emerald mine, Gemfields has a 50% interest in 
the Kariba amethyst mine in Zambia. 
 
The Company also owns controlling stakes in a highly prospective ruby deposit 
in Mozambique and licences in Madagascar including ruby, emerald and sapphires 
deposits. 
 
In July 2009 Gemfields commenced a formal auction programme for its Zambian 
emeralds. To date, the Company has held ten auctions which have generated 
revenues totalling USD 133.7 million. 
 
 
 
 
END