Gemfields PLC Market Update - Quarter to 31 December 2016 (0497W)

TIDMGEM

RNS Number : 0497W

Gemfields PLC

06 February 2017

Gemfields plc

("Gemfields" or the "Company")

Market Update - Quarter to 31 December 2016

6 February 2017

Gemfields plc (AIM: GEM) is pleased to present an operational update for the three-month period ending 31 December 2016, the second quarter of the 2017 financial year. All figures are approximate and unaudited. Unless otherwise stated, the term "carats" includes both emerald and beryl in relation to the Kagem emerald mine, and both ruby and corundum in relation to the Montepuez ruby mine.

Highlights

Emeralds

-- Production summary for 75%-owned Kagem Mining Limited ("Kagem") in Zambia for the quarter ending 31 December 2016:

-- Production of 4.7 million carats of emerald and beryl with an average grade of 156 carats per tonne (versus 8.2 million carats with an average grade of 272 carats per tonne in the quarter ending 31 December 2015), with the difference being attributable to the varied nature of the mineralisation and a lower-grade zone mined in the current quarter;

-- Total operating costs(a) of USD 10.2 million (versus USD 12.1 million in the quarter ending 31 December 2015);

-- Unit operating costs(b) of USD 2.17 per carat (versus USD 1.48 per carat in the quarter ending 31 December 2015), while on a cash basis(c) unit operating costs were USD 1.60 per carat (versus USD 0.98 per carat in the quarter ending 31 December 2015) with the difference being primarily attributable to the lower number of carats recovered in the current quarter when compared to the above average number of carats produced in the previous quarter; and

-- Cash rock handling unit costs of USD 2.88 per tonne (versus USD 2.86 per tonne in the quarter ending 31 December 2015).

-- The auction of predominantly higher quality rough emeralds from Kagem mine that was initially scheduled in December 2016 is now going to take place in February 2017 in Lusaka, Zambia.

Rubies

-- Production summary for 75%-owned Montepuez Ruby Mining Limitada ("Montepuez") in Mozambique for the quarter ending 31 December 2016:

-- Production of 1.1 million carats of ruby and corundum with an average grade of 12 carats per tonne (versus 1.6 million carats with an average grade of 22 carats per tonne in the quarter ending 31 December 2015) as a result of the lower grade, but higher value material being processed;

-- Total operating costs(a) of USD 6.6 million (versus USD 6.9 million in the quarter ending 31 December 2015);

-- Unit operating costs(b) of USD 6.00 per carat (versus USD 4.31 per carat in the quarter ending 31 December 2015) as a direct result of the decrease in carats produced. On a cash basis(c) , unit operating costs were USD 5.00 per carat (versus USD 3.31 per carat in the quarter ending 31 December 2015); and

-- Cash rock handling unit costs of USD 4.90 per tonne (versus USD 5.02 per tonne in the quarter ending 31 December 2015).

-- A mixed quality auction of rough rubies and corundum extracted from Montepuez ruby mine was held in Singapore from 12 to 16 December 2016. The auction generated revenues of USD 30.5 million at an average realised value of USD 27.88 per carat; and

-- The next mixed quality auction of rough rubies and corundum from the Montepuez ruby mine is expected to take place in June 2017 in Singapore.

Fabergé

   --     Fabergé highlights for the quarter ending 31 December 2016: 

-- Sales orders agreed(d) during the quarter ending 31 December 2016 increased by 95% when compared to the quarter ending 31 December 2015;

-- The number of sales transactions during the quarter ending 31 December 2016 increased by 48% when compared to the quarter ending 31 December 2015 while the average selling price per piece increased by 12% over the same period;

-- Total operating costs for the quarter ending 31 December 2016 increased by 2% when compared to the quarter ending 31 December 2015, largely due to an increased marketing and events spend;

-- For the second year running Fabergé won the prestigious Grand Prix d'Horlogerie de Genève (GPHG) held in November 2016, the Swiss watchmaking industry's highest honour. This year the Visionnaire DTZ timepiece won the award in the 'Travel Time' category. The award cements Fabergé's position as a leader in the watch-making industry; and

-- Fabergé's acclaimed Secret Garden suite won the 'Best Colourful Jewellery' category at the Middle East Jewellery of the Year Awards 2016 in November 2016, highlighting Fabergé's position as a market leader in coloured gemstone jewellery.

Corporate and cash

   --     Cash and cash equivalents of USD 12.3 million at 31 December 2016; and 
   --     Total debt outstanding of USD 58.3 million at 31 December 2016. 

Ian Harebottle, CEO of Gemfields, commented:

"This quarter has seen Montepuez continue to deliver strong results, with a significant increase in ore processed relative to the prior comparable period as a result of improved operational efficiencies. This performance is particularly pleasing given the results have been achieved despite a planned temporary shutdown of the wash plant to allow for substantial upgrades. This included the installation of a new scrubber, de-grit unit and Dense Medium Separation ("DMS") unit. Traditionally used in the diamond sector, this is the first time a DMS plant has been used in ruby production. We are very pleased with the initial results and are anticipating a significant uplift in processing rates over the coming months.

Kagem has seen a mixed quarter with the reduced volumes of production, as a direct result of the varied nature of the mineralisation at the deposit, being countered to some extent by the sterling efforts of our operating team on site. During the current quarter their focus was on further improving operational efficiencies while exploration and bulk sampling activities at the Fibolele and Libwente sectors continued at a steady pace.

New projects continued at a steady pace including the addition of a further 116 sq km of highly prospective ruby licencing being added to the Company's Montepuez project via a 75% stake in the JV Eastern Mining Ltd, as well as particularly good progress being made in Ethiopia. Here, bulk sampling is expected to commence by the end of 2017 following encouraging results from the Phase 1 diamond drilling programme.

It is also pleasing to see that the luxury market has started off the year with a buoyant note with Fabergé showing solid January sales demand and a positive market sentiment noted by our customers who attended the Tucson gemstone fair. All of our customers are confirmed to attend the next auction of predominantly higher quality rough emeralds from 13 to 17 February 2017 in Lusaka, Zambia, and I look forward to sharing with you the results."

Explanatory Notes:

(a) Total operating costs include mining and production costs, selling, general and administrative expenses, depreciation and amortisation, but exclude capitalised costs and mineral royalties.

(b) Unit operating costs are calculated as total operating costs divided by the total gemstone production during the period.

(c) Cash operating costs include mining and production costs, capitalised costs, selling, general and administrative expenses, and exclude property, plant and equipment capital expenditure, depreciation, amortisation and mineral royalties.

(d) Sales orders agreed are sales that Fabergé has agreed and confirmed with customers during the reporting period. Payment and/or delivery may take place later.

KAGEM EMERALDS

Production and Operations Update

The 75%-owned Kagem emerald mine remains the single largest producing emerald mine in the world. The key production parameters by quarter are summarised below:

 
                                                                    Quarter                                 Half Year 
------------------------                 --------------------------------------------------------------  ---------------- 
KAGEM Quarterly Summary                                                                                  2015-16  2016-17 
to December-16                Units      Mar-15  Jun-15  Sep-15  Dec-15  Mar-16  Jun-16  Sep-16  Dec-16 
------------------------  -------------  ------  ------  ------  ------  ------  ------  ------  ------  -------  ------- 
PRODUCTION 
Gemstone Production          million 
 (Emerald+Beryl)              carats      9.9     8.1     7.5     8.2     7.1     7.2     6.0     4.7     15.7     10.7 
Ore Production (Reaction 
 Zone)                     '000 tonnes    27.9    36.5    31.7    30.1    23.9    39.0    34.4    30.2    61.8     64.6 
Grade 
 (Emerald+Beryl/Reaction 
 Zone)                    carats/tonne    355     222     237     272     297     185     174     156      254      166 
Waste Mined (including       million 
 TMS)                         tonnes      4.0     3.6     4.0     2.8     2.6     3.1     2.9     2.6      6.8      5.5 
                             million 
Total Rock Handling           tonnes      4.0     3.6     4.1     2.8     2.6     3.1     3.0     2.6    6.8(e)     5.6 
Stripping Ratio                           143      99     126      93     109      79      84      86      110      85 
---------------------------------------  ------  ------  ------  ------  ------  ------  ------  ------  -------  ------- 
CAPITAL EXPITURE 
Property, Plant and 
 Equipment                 USD million    1.0     1.8     0.2     0.5     2.6     0.4     0.6     0.1      0.7      0.7 
Capitalised Waste 
 Stripping (d)             USD million    5.9     4.7     2.5      -       -       -       -       -       2.5       - 
------------------------  -------------  ------  ------  ------  ------  ------  ------  ------  ------  -------  ------- 
CASH COSTS (a) 
Total (Cash) Operating 
 Costs (a)                 USD million    11.4    10.5    8.4     8.0     6.8     8.1     7.1     7.5     16.4     14.6 
Gemstone (Cash) Unit 
 Cost (Emerald+Beryl) 

 (a)                        USD/carat     1.15    1.30    1.12    0.98    0.96    1.13    1.18    1.60    1.04     1.36 
Ore / Reaction Zone 
 (Cash) Unit Cost (a)     USD/RZ tonne    409     288     265     266     285     208     206     248      265      226 
Rock Handling (Cash) 
 Unit Cost (a)              USD/tonne     2.85    2.92    2.05    2.86    2.62    2.61    2.37    2.88    2.41     2.61 
------------------------  -------------  ------  ------  ------  ------  ------  ------  ------  ------  -------  ------- 
ACCOUNTING COSTS (b) (d) 
Total Operating Costs 
 (b) (c) (d)               USD million    9.8     12.8    11.4    12.1    11.2    12.6    10.2    10.2    23.5     20.4 
Gemstone Unit Cost 
 (Emerald+Beryl) (b) (d)    USD/carat     0.99    1.58    1.52    1.48    1.58    1.75    1.70    2.17    1.50     1.91 
Ore / Reaction Zone Unit 
 Cost (b) (d)             USD/RZ tonne    351     351     360     402     469     323     297     338      380      316 
Rock Handling Unit Cost 
 (b) (d)                    USD/tonne     2.45    3.56    2.78    4.32    4.31    4.06    3.40    3.92    3.46     3.64 
------------------------  -------------  ------  ------  ------  ------  ------  ------  ------  ------  -------  ------- 
 

(a) Cash operating costs include mining and production costs, capitalised waste stripping costs, selling, general and administrative expenses, and exclude property, plant and equipment capital expenditure, depreciation, amortisation and mineral royalties.

(b) Total operating costs include mining and production costs, selling, general and administrative expenses, depreciation and amortisation, but exclude capitalised waste stripping costs and mineral royalties.

(c) As at 31 December 2016, a total of approximately USD 62.4 million of waste moving costs was capitalised and is being amortised as and when the associated ore is mined. The balance of capitalised waste moving costs, net of amortisation, as at 31 December 2016 amounted to USD 12.7 million.

(d) Following the updated JORC Reserves and Resource Statement in September 2015, Kagem changed its mine plan from previously undertaking significant high wall pushbacks to now undertaking continuous waste removal and mining. The previous high wall pushback campaigns whose costs were capitalised as deferred stripping costs ceased in September 2015. The results of the three quarters to March 2016 have been restated, to reflect this change in accounting treatment.

(e) Half year 2015-16 figures don't equal the sum of Q1 2016 and Q2 2016 figures due to rounding.

Total rock handling during the quarter ending 31 December 2016 was 2.6 million tonnes with total production of 4.7 million carats (versus 2.8 million tonnes of rock handling with total production of 8.2 million carats in the quarter ending 31 December 2015). Despite the lower overall production, attributable to the varied nature of the mineralisation and a lower-grade zone mined in the current quarter, added focus was placed on continuous improvement in operational efficiencies and the opening of new areas for future production. Exploration and bulk sampling activities at the Fibolele and Libwente sectors continued in the current quarter.

Health, Safety, Environment and Community Update

Kagem continues to maintain an excellent safety record, with no reportable lost time injuries being recorded, supported by a high-level commitment to the wellbeing of our employees. Kagem has begun the process towards the establishment and certification of an integrated Health, Safety & Environmental management system to comply with ISO14001 and OHSAS18001 standards. Kagem has continued to engage local stakeholders to assist in identifying community needs and jointly developing project plans, roles and responsibilities. Kagem also made a contribution to the Zambia Carnivore Programme dedicated to conserving large carnivore species in Zambia.

Emerald Auction Update

To allow our rough emerald customers, who predominantly hail from India, to adjust to the demonetisation programme initiated by President Modi in November 2016, the higher quality emerald auction originally scheduled to take place in December 2016 was postponed. Consequently, the next auction of predominantly higher quality rough emeralds from the Kagem mine is scheduled to take place from 13 to 17 February 2017 in Lusaka, Zambia.

MONTEPUEZ RUBIES

Production and Operations Update

The ongoing mining and bulk sampling operations continued during the period at the Montepuez ruby deposit in Mozambique, in which Gemfields has a 75% interest. The key production parameters by quarter are summarised below:

 
                                                                  Quarter                                   Half Year 
--------------------                 ------------------------------------------------------------------  ---------------- 
MONTEPUEZ Quarterly 
Summary to 
December-16               Units      Mar-15  Jun-15  Sep-15   Dec-15   Mar-16  Jun-16  Sep-16   Dec-16   2015-16  2016-17 
--------------------  -------------  ------  ------  -------  -------  ------  ------  -------  -------  -------  ------- 
PRODUCTION 
Gemstone Production      million 
 (Ruby+Corundum)          carats      1.4     0.7      0.5      1.6     2.0     6.2      4.5      1.1      2.1      5.6 
Ore Production 
 (Primary+Secondary)   '000 tonnes    79.4   119.5    136.9    132.9    65.1   175.5    177.4    196.0    269.8    373.4 
Ore Processed 
 (Primary+Secondary)   '000 tonnes    78.6    75.5    72.8     71.7     67.6    83.1    102.6    89.4     144.5    192.0 
Grade 
 (Ruby+Corundum/Ore 
 Processed)           carats/tonne     18      9        7       22       30      75      44       12       15       29 
Waste Mined            '000 tonnes   441.7   859.7    996.8    922.0   406.3   693.2    923.0    927.3   1,918.8  1,850.3 
Total Rock Handling    '000 tonnes   521.1   979.2   1,133.7  1,054.9  471.4   868.7   1,100.4  1,123.3  2,188.6  2,223.7 
Stripping Ratio                       5.6     7.2      7.3      6.9     6.2     3.9      5.2      4.7      7.1      5.0 
-----------------------------------  ------  ------  -------  -------  ------  ------  -------  -------  -------  ------- 
CAPITAL EXPITURE 
Property, Plant 
 and Equipment         USD million    1.4     2.3      3.3      1.8     1.6     0.8      3.6      5.2      5.1      8.8 
--------------------  -------------  ------  ------  -------  -------  ------  ------  -------  -------  -------  ------- 
CASH COSTS (a) 
Total (Cash) 
 Operating 
 Costs (a)             USD million    3.7     6.0      5.1      5.3     4.8     6.2      4.7      5.5     10.4     10.2 
Gemstone (Cash) 
 Unit Cost 
 (Ruby+Corundum) 
 (a)                    USD/carat     2.64    8.57    10.20    3.31     2.40    1.00    1.04     5.00     4.95     1.82 
Ore Production 
 (Cash) 
 Unit Cost (a)          USD/tonne    46.60   50.21    37.25    39.88   73.73   35.33    26.49    28.06    38.55    27.32 
Rock Handling (Cash) 
 Unit Cost (a)          USD/tonne     7.10    6.13    4.50     5.02    10.18    7.14    4.27     4.90     4.75     4.59 
--------------------  -------------  ------  ------  -------  -------  ------  ------  -------  -------  -------  ------- 
ACCOUNTING COSTS 
 (b) 
Total Operating 
 Costs (b)             USD million    4.6     7.0      6.1      6.9     5.8     7.4      5.8      6.6     13.0     12.4 
Gemstone Unit Cost 
 (Ruby+Corundum) 
 (b)                    USD/carat     3.29   10.00    12.20    4.31     2.90    1.19    1.29     6.00     6.19     2.21 
Ore Production Unit 
 Cost (b)               USD/tonne    57.93   58.58    44.56    51.92   89.09   42.17    32.69    33.67    48.18    33.21 
Rock Handling Unit 
 Cost (b)               USD/tonne     8.83    7.15    5.38     6.54    12.30    8.52    5.27     5.88     5.94     5.58 
--------------------  -------------  ------  ------  -------  -------  ------  ------  -------  -------  -------  ------- 
 

(a) Cash operating costs include mining and production costs, capitalised costs, selling, general and administrative expenses, and exclude property, plant and equipment capital expenditure, depreciation, amortisation and mineral royalties.

(b) Total operating costs include mining and production costs (including security costs), selling, general and administrative expenses, depreciation and amortisation, but exclude capitalised costs and mineral royalties.

Operations commenced at a new pit within the Mugloto area during the quarter. A new bulk sampling block, called Maninge Nice East, has also been opened during the quarter. In the quarter ending 31 December 2016, a total of 196.0 thousand tonnes of ore was mined (versus 132.9 thousand tonnes for the quarter ending 31 December 2015). The stripping ratio decreased to 4.7 (versus 6.9 for the quarter to 31 December 2015) due to the mining of exposed ore in Mugloto and Glass pits for which stripping had been completed in previous quarters.

During the quarter ending 31 December 2016, the wash plant saw 89.4 thousand tonnes processed, a 25% increase over 71.7 thousand tonnes processed in the quarter ending 31 December 2015. This increase, despite the requisite shutdown period is attributable to fewer plant stoppages, processing of pre-screened material and the addition of the newly installed water treatment plant to the circuit. Planned upgrades to the processing plant, including the installation of a scrubber, de-grit unit and a DMS unit were completed in December 2016. The enhanced processing plant is expected to double the average operational throughput rate from 70 tonnes per hour to an operational throughput target rate of 150 tonnes per hour once fully operational.

The average grade during the quarter ending 31 December 2016 decreased to 12 carats per tonne (compared to 22 carats per tonne in the comparative period) producing a total of 1.1 million carats of rough rubies and corundum (versus 1.6 million carats in the quarter to 31 December 2015). The decrease is due to the processing of a greater proportion of lower grade but higher quality alluvial ore, which was partially offset by a higher processing throughput despite the planned shutdown of the wash plant to allow for the inclusion of the scrubber, de-grit and DMS units into the circuit.

The construction of the new Montepuez camp is proceeding according to plan and is expected to be fully completed by June 2017.

Security Update

Additional security measures have been put into place to support the expansion of the mining operations and upgraded processing plant. New CCTV cameras have been installed at various critical locations across the operation. In respect of industrial security, improvements include the installation of back-up servers at the control room, the separation of electrical connections from CCTV connection and the installation of uninterrupted power supply systems at the control room. An alarm system was also installed in the sort house. Use of a helicopter for the transfer of products from the mine to Pemba airport, in addition to road transport, was also implemented and provided additional product security.

Health, Safety, Environment and Community Update

Regular employee training sessions covering human rights, conflict resolution, housekeeping procedures and operation and maintenance of heavy earth moving machinery continued during the quarter. Montepuez has begun the process for the establishment and certification of an integrated Health, Safety & Environmental management system to comply with ISO14001 and OHSAS18001 standards.

Notable progress has been made regarding DUAT and the Resettlement Action Plan ("RAP") applications. During the quarter, DUAT for an area of 7,642 hectares was approved by the Mozambique Government. DUAT application for the balance area of about 18,000 hectares is awaiting approval of the council of ministers and is expected to be approved early this year. The RAP application is in the advanced stages of approval. The RAP has been endorsed by the Council of ministers and the approval is also expected to be received later this year.

Montepuez launched a conservation farming initiative with demonstration plots being delineated in each of the six main villages within our concession, to encourage cooperatives to farm higher value crops using traditional farming methods. The first chicken farm built by Montepuez was handed over to the Nanune women' association after the third cultivation cycle on 10 November 2016. The project is running satisfactorily and the women's association has become self-reliant. Montepuez is also constructing a second chicken farm, at Namanhumbir village, for another women's cooperative which will start its first phase of cultivation in February 2017.

Montepuez rehabilitated a local primary school and handed it over to the government. With a view to create a primary school infrastructure within the region, Montepuez is also in the process of constructing three additional primary schools, which will be completed during the next quarter. In order to improve the primary health care of the local villages, Montepuez handed over a mobile clinic to the District Health Department in January 2017.

Ruby Auction Update

The December 2016 auction of higher and commercial quality rough rubies and corundum extracted from Montepuez ruby mine was held in Singapore. The auction saw 1.09 million carats being sold, which represented 92% of the value and 80% of the weight offered. The auction generated revenues of USD 30.5 million at an average realised value of USD 27.88 per carat.

The auction results are summarised below:

 
 
   RUBY AUCTION RESULTS        December 2016 
------------------------  ---------------------- 
                              12-16 December 
 Dates                              2016 
 Location                        Singapore 
                           Higher and commercial 
 Type                             quality 
 Carats offered                1.37 million 
 Carats sold                   1.09 million 
 No. of lots offered               71(a) 
 No. of lots sold                  59(a) 
 Percentage of lots 
  sold                            83%(a) 
 Percentage of lots 
  sold by weight                    80% 
 Percentage of lots 
  sold by value                     92% 
 Total sales realised 
  at auction                USD 30.5 million(a) 
 Average per carat 
  sales value               USD 27.88/carat(a) 
------------------------  ---------------------- 
 

(a) Please note that the December 2016 ruby and corundum auction results have been amended to include a lot that was not previously included in the original announcement made on 19 December 2016. Revenues have increased by USD 0.1 million.

Gemfields' next mixed quality auction of rough rubies and corundum extracted from Montepuez ruby mine is expected to take place in June 2017 in Singapore.

FABERGÉ

Fabergé saw a 95% increase in sales orders agreed during the quarter ending 31 December 2016 when compared to the quarter ending 31 December 2015, and a 48% increase in the number of sales transactions in the same period. Total operating costs for the quarter ending 31 December 2016 increased by 2% when compared to the quarter ending 31 December 2015 following the increased investment in marketing in the current period.

For the second year running Fabergé won the prestigious Grand Prix d'Horlogerie de Genève (GPHG) held in November 2016, the Swiss watchmaking industry's highest honour. This year the Visionnaire DTZ timepiece won the award in the 'Travel Time' category. The award cements Fabergé's position as a leader in the watch-making industry.

Fabergé's acclaimed Secret Garden suite won the 'Best Colourful Jewellery' category at the Middle East Jewellery of the Year Awards 2016 in November 2016, highlighting Fabergé's position as a market leader in coloured gemstone jewellery.

COLOMBIA

The Company continues to progress the conclusion of the Cosquez transaction with further due diligence at an advanced stage. Gemfields continued pre-completion exploration, mine planning and administrative activities. These included geochemical analysis of rock samples and other operational aspects such as equipment, explosives magazine, expansion of current environmental licence to match future projections and workforce requirements. Several meetings were held with the Colombian National Mining Agency ("ANM") to discuss modalities of transferring the mining title to the joint venture in good standing. The operations team is also developing near-term social plans through Suna Verde, a two-way digital communications platform created by Gemfields.

Gemfields has a number of active operations, and is currently exploring many more interests globally. The feasibility of progressing each prospective operation is examined carefully and in line with our established business practices. In this instance, and in the context of our world leading global asset portfolio, it has been decided to focus on major assets which have the best prospects of delivery in the near term. A misalignment of commercial objectives between the shareholders in the ISAM transaction, and consequent project delays, have led to an agreement by the parties not to complete the acquisition on an amicable basis. Consequently, all legal and administrative aspects of the share transfer process to ISAM, including return of documents, change of legal representatives and board of directors, and changes in the registry of the Colombian Chamber of Commerce were finalised by the team in Colombia in full accordance with Colombian law. Gemfields remains focused on finalising all matters in relation to the Coscuez transaction.

ETHIOPIA

The exploratory diamond core drilling programme initiated in July 2016 at the Dogogo-South block was completed in early December 2016. A total of 3,538 metres was drilled over 45 closed drill holes. Pegmatite was intersected in all sections along 800 metres' strike length. Furthermore, a level plan at 1,300 metres Reduced Level (about 25 metres below surface) confirms the presence of three sets of pegmatitic bodies. Drilling also confirms the depth continuity of the ore body that was exposed during trenching and pitting exercise up to 50 metres vertical depth. Geochemical analysis of the drilled core is in progress using a handheld XRF machine, and samples will be checked by laboratory procedure. The Company submitted an annual progress report, a work programme for 2017, and an application for the extension of its exploration license by a further year to the Ministry of Mines. Ground preparation is underway for commencement of bulk sampling in the next financial year.

SRI LANKA

Gemfields has always viewed the joint venture with East West Gem Investments Limited as a test project to increase its knowledge in advance of a larger scale expansion into sapphires. While positive progress had been achieved during the previous quarter, various factors have impacted Gemfields ability to progress these projects to the extent that the Company would ideally have liked during the quarter under review. The long term future of the project therefore is currently under review and a more definitive decision is likely to be made in the near to medium term.

MOZAMBIQUE

The exploration licence 5061L held by Eastern Mining Ltd, a JV company registered in Mozambique with Gemfields holding 75% interest, was converted and issued by the Ministry of Mines as a mining title with identification number 8277C on 29 November 2016, valid for 25 years. The licence covers an area of 116 sq km and shares its western boundary with the southern licence of Megaruma Mining Ltd, another joint venture of Gemfields.

MARKETING

Marketing has seen the Ruby Inspired Stories campaign building positive brand awareness via global digital and print platforms. Gemfields has also had a glamorous quarter, frequently featuring on the red carpet thanks to its ongoing collaborations with Chopard and Eco-Age, and its recently initiated campaign with Fred Leighton. Oscar, Bafta and Golden Globes nominated actress Ruth Negga has selected to wear Gemfields gemstones, drawing much attention for her stylish choices and generating considerable awareness for the Company's products.

CORPORATE & CASH

At 31 December 2016, Gemfields had cash and cash equivalents of USD 12.3 million. The total debt outstanding at 31 December 2016 was USD 58.3 million, which includes USD 10.0 million with Macquarie Bank Limited (UK Branch), USD 5.0 million with Pallinghurst Resources Limited, Kagem's outstanding debt balance of USD 30.0 million with Barclays Bank and USD 13.3 million outstanding with BCI and Barclays in Mozambique for Montepuez Ruby Mining Limitada. Gemfields had total sales, general and administrative expenses of USD 14.8 million in the quarter to 31 December 2016.

ENQUIRIES:

 
Gemfields                                        [e-mail] 
Janet Boyce, CFO                                 [phone] 
 Grant Thornton UK LLP 
Nominated Adviser 
Philip Secrett/Richard Tonthat/Jamie Barklem     [phone] 
 JP Morgan Cazenove 
Joint Broker 
Jamie Riddell/James Deal                         [phone] 
 BMO Capital Markets Limited 
Joint Broker 
Jeff Couch/Neil Haycock/Tom Rider/Jenny Wyllie   [phone] 
 Macquarie Capital (Europe) Limited 
Joint Broker 
Raj Khatri/Nick Stamp/Guy de Freitas             [phone] 
 Tavistock 
Jos Simson/Emily Fenton/Barnaby Hayward          [phone] 
 

Notes to Editors:

Gemfields plc is a leading supplier of responsibly sourced coloured gemstones and is quoted on the AIM market of the London Stock Exchange (ticker: GEM).

Gemfields is the operator and 75 per cent. owner of both the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby deposit in Mozambique (one of the most significant recently discovered ruby deposits in the world). In addition, Gemfields also holds a 50 per cent. interest in the Kariba amethyst mine in Zambia, as well as controlling interests in various other gemstone mining and prospecting licenses in Zambia, Mozambique, Colombia, Ethiopia, Madagascar and Sri Lanka.

Gemfields' outright ownership of the Fabergé brand - an iconic and prestigious brand of exceptional heritage - enables Gemfields to optimise positioning, perception and consumer awareness of coloured gemstones, advancing the Group's "mine and market" vision.

Gemfields has developed a proprietary grading system and a pioneering auction and trading platform to provide a consistent supply of quality coloured gemstones to the global downstream markets. This is a key component of the Company's business model which the Directors believe has played an important role in the appropriate distribution and associated resurgence of the global coloured gemstone sector.

www.gemfields.co.uk

"The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulations (EU) No. 596/2014."

This information is provided by RNS

The company news service from the London Stock Exchange

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