Gemfields PLC Results - Jaipur Emerald and Amethyst Auction (2703L)

TIDMGEM

RNS Number : 2703L

Gemfields PLC

30 September 2016

Gemfields plc

("Gemfields" or "the Company")

Results - Jaipur Emerald and Amethyst Auction

30 September 2016

Gemfields plc (AIM: GEM) is pleased to announce the results of its auction of predominantly commercial quality rough emerald extracted by Kagem Mining Ltd (which is 75% owned by Gemfields and 25% by the Government of the Republic of Zambia) in Zambia.

The auction also included higher quality amethyst from Kariba Minerals Ltd in which Gemfields has a 50% interest, with the balance also belonging to the Government of the Republic of Zambia and with the revenues and royalties being similarly treated.

The auction, at which no beryl was placed on offer, was held in Jaipur, India, from 26 - 29 September 2016.

Highlights - Emerald Auction

   --     Auction revenues of USD 10.7 million; 
   --     A robust USD 3.28 per carat for the specific auction mix offered; 
   --     Of the 4.05 million carats offered for sale, 3.27 million carats were sold (81%); and 
   --     23 Kagem auctions held since July 2009 have generated USD 437 million in total revenues. 

Highlights: The Amethyst Auction

   --     Auction revenues of USD 0.4 million; 
   --     The average realised price was 3.73 US cents per carat; and 
   --     Of the 13.6 million carats offered for sale, 11.6 million carats were sold (86%). 

The Kagem Emerald Auction

A total of 30 companies placed bids in Gemfields' first auction of Kagem production in the current financial year.

The auction saw 4.05 million carats of commercial quality emerald extracted from Kagem placed on offer, with 15 of the 19 lots offered being sold, generating auction revenues of USD 10.7 million. The auction realised a pleasing overall average value of USD 3.28 per carat, a robust figure considering the specific quality mix of goods placed on offer at the auction.

The Company's 23 auctions of emeralds and beryl mined at Kagem since July 2009 have generated USD 437 million in total revenues. The proceeds of this auction will be fully repatriated to Kagem Mining Ltd in Zambia, and with all royalties due to the Government of the Republic of Zambia being paid on the full sales prices achieved at the auction.

The results of the five most recent commercial quality Kagem auctions are summarised in the table below. Additional historic information regarding auctions of similar quality goods can be found in the 'Further Information' section of this announcement:

 
  AUCTION RESULTS       AUG '14          FEB '15          NOV '15          MAY '16          SEP '16 
    (COMMERCIAL          AUCTION          AUCTION          AUCTION          AUCTION          AUCTION 
      QUALITY) 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 Dates                  5-8 Aug           24-27            18-21            17-20            26-29 
                          2014           Feb 2015         Nov 2015         May 2016         Sep 2016 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 Location               Lusaka,          Lusaka,          Jaipur,          Jaipur,          Jaipur, 
                         Zambia           Zambia            India            India            India 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 Type                  Commercial       Commercial       Commercial       Commercial       Commercial 
                         Quality          Quality          Quality          Quality          Quality 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
                         12.11            10.13             5.07             3.67 
 Carats offered          million          million          million          million       4.05 million 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
                         11.58             3.90             4.45             2.78             3.27 
 Carats Sold             million          million          million          million          million 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 No. of companies 
  placing bids             21               21               29               26               30 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 Average no. 
  of bids per 
  lot                      7                5                6                7                7 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 No. of lots 
  offered                  21               26               23               18               19 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 No. of lots 
  sold                     17               19               18               14               15 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 Percentage 
  of lots sold            81%              73%              78%              78%              79% 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 Percentage 
  of lots sold 
  by weight               96%              39%              88%              76%              81% 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 Percentage 
  of lots sold 
  by value                88%              88%              95%              79%              82% 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 Total sales            USD 15.5         USD 14.5         USD 19.2         USD 14.3         USD 10.7 
  realised at            million          million          million          million          million 
  auction 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 Average per         USD 1.34/carat   USD 3.72/carat   USD 4.32/carat   USD 5.15/carat   USD 3.28/carat 
  carat sales 
  value 
------------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 

The specific auction mix and the exact quality of the lots offered at each auction vary in characteristics such as size, colour and clarity on account of variations in mined production and market demand. Each auction naturally contains a degree of variation in overall quality composition, which is typically reflected in the average per carat sales value and means that the results of each auction are not always directly comparable.

The Kariba Amethyst Auction

In addition to the auction of gemstones mined by Gemfields at Kagem, the Jaipur event was also used to host an auction of higher quality amethyst mined by Kariba Minerals Ltd (in which Gemfields has a 50% interest).

The auction saw 13.6 million carats of higher quality amethyst extracted from Kariba placed on offer, with 10 of the 14 lots offered being sold, generating auction revenues of USD 0.4 million from the 11.6 million carats sold. The amethyst auction realised an overall average value of 3.73 US cents per carat.

Gemfields has hosted only four prior rough amethyst auctions which took place in Jaipur in March 2011, Lusaka in February 2015, Singapore in September 2015 and Lusaka in April 2016.

Next Auction

Gemfields' next auction is expected to take place in December 2016 in Singapore. The auction will predominantly comprise of mixed quality rough ruby from the Montepuez ruby deposit in Mozambique.

Ian Harebottle, CEO of Gemfields, commented:

"With 81% of the gems offered successfully sold, Jaipur has yet again delivered a positive result in support of Gemfields' vision and reflecting the fact that the platform upon which the growth of the coloured gemstone sector is being built remains encouraging. While there is evidence of a softening in demand for some of the lower qualities in some markets, the overall average price per carat achieved was impacted on by this auction not having the benefit of some of the larger-size, higher quality gems that were placed on offer in our May 2016 auction.

As always, we thank our partners in the Zambian Government for their vision and support in building and internationalising the Zambian gemstone sector by promoting transparent and globally-competitive practices."

ENQUIRIES:

 
 Gemfields                                  [e-mail] 
                                            [phone] 
 JJ Williams, Company Secretary              4965 
 
 Grant Thornton UK LLP 
 Nominated Adviser 
 Philip Secrett/Richard Tonthat/Jamie       [phone] 
  Barklem                                    5100 
 
 J.P. Morgan Cazenove 
 Joint Broker 
                                            [phone] 
 Jamie Riddell / James Deal                  4000 
 
 BMO Capital Markets Limited 
 Joint Broker 
 Jeff Couch/Neil Haycock/Tom Rider/Jenny    [phone] 
  Wyllie                                     1010 
 
 Macquarie Capital (Europe) Limited 
  Joint Broker 
  Raj Khatri/Nick Stamp/Guy de               [phone] 
  Freitas                                     2000 
 
 Tavistock 
 Jos Simson/Emily Fenton/Barnaby            [phone] 
  Hayward                                    3150 
 

Notes to Editors:

Gemfields plc is the world's leading supplier of responsibly sourced coloured gemstones and is quoted on the AIM division of the London Stock Exchange (ticker: GEM) where it is a constituent of the AIM50 index.

Gemfields is the operator and 75% owner of both the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world). In addition Gemfields also holds a 50% 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 Fabergé - an iconic and prestigious brand of exceptional heritage - enables Gemfields to optimise positioning, perception and consumer awareness of coloured gemstones, advancing the wider 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

Further Information:

The results of earlier lower quality Kagem auctions are summarised below:

 
         AUCTION              MAR           MAR          NOV '11           JUN           APR           NOV 
   RESULTS (COMMERCIAL        '10           '11           AUCTION          '12           '13           '13 
         QUALITY)           AUCTION       AUCTION                        AUCTION       AUCTION       AUCTION 
        Table 1 of 
            2 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 Dates                       11-15         10-14          21-25           9-13          15-19         11-15 
                              Mar           Mar          Nov 2011          Jun           Apr           Nov 
                              2010          2011                           2012          2013          2013 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 Location                   Jaipur,       Jaipur,        Jaipur,         Jaipur,       Lusaka,       Lusaka, 
                             India         India           India          India         Zambia        Zambia 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 Type                     Commercial    Commercial       Commercial    Commercial    Commercial    Commercial 
                            Quality       Quality          Quality       Quality       Quality       Quality 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
                             28.90         16.83          10.83           10.85         17.34         5.62 
 Carats offered*            million       million         million        million       million       million 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
                             22.80         12.98           9.82           3.47          6.30          4.94 
 Carats Sold                million       million         million        million       million       million 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 No. of companies 
  placing bids                25            44              27             20            25            20 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 Average no. 
  of bids per 
  lot                          8            14              9               3             6             7 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 No. of lots 
  offered                     56            35              26             33            28            21 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 No. of lots 
  sold                        49            34              19             17            23            19 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 Percentage 
  of lots sold                88%           97%            73%             52%           82%           90% 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 Percentage 
  of lots sold 
  by weight                   79%           77%            91%             32%           36%           88% 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 Percentage 
  of lots sold 
  by value                    89%           99%            80%             60%           76%           91% 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 Total sales                  USD           USD          USD 11.0          USD           USD           USD 
  realised                    7.2           10.0          million          9.0           15.2          16.4 
  at auction                million       million                        million       million       million 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 Average per                  USD           USD       USD 1.12/carat       USD           USD           USD 
  carat sales              0.31/carat    0.77/carat                     2.61/carat    2.42/carat    3.32/carat 
  value 
-----------------------  ------------  ------------  ---------------  ------------  ------------  ------------ 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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September 30, 2016 02:01 ET (06:01 GMT)