Gemfields PLC Results - Singapore Rough Ruby Auction (1689S)

TIDMGEM

RNS Number : 1689S

Gemfields PLC

19 December 2016

Gemfields plc

("Gemfields" or "the Company")

Results - Singapore Rough Ruby Auction

19 December 2016

Gemfields plc (AIM: GEM) is pleased to announce the results of its auction of rough ruby extracted by Montepuez Ruby Mining Limitada (which is 75% owned by Gemfields and 25% by local partner Mwiriti Limitada) from the Montepuez ruby deposit ("Montepuez") in Mozambique. The auction was held in Singapore from the 12(th) to the 16(th) of December 2016 and was the first ruby auction of this financial year.

Highlights

   --     Auction revenues of USD 30.4 million (the fourth highest ruby auction result to date); 
   --     Average realised price of USD 27.79 per carat; 

-- 1,094,406 carats sold (80% by weight or 85% by market value) out of the total of 1,372,145 carats offered; and

-- Seven Montepuez auctions held since June 2014 have generated USD 225.7 million in aggregate revenues.

Montepuez Ruby Auction

Gemfields' seventh auction of rough rubies and corundum from Montepuez saw 39 companies placing bids. The auction offered high and commercial grade rough rubies in both untreated and treated form. All treated lots were offered using industry accepted treatment techniques and on a fully disclosed basis.

The quality and quantity of the goods placed on offer was developed in response to market feedback which showed growing demand for rough rubies suited to the production of high quality jewellery as well as larger volume production runs, thereby allowing a broad cross-section of product to be placed on offer. The improved reliability of supply and the consistency of the Gemfields grading system continues to be well received by the Company's clients as it facilitates reduced risk, improved manufacturing efficiencies and an increased ability to meet consumer demand.

The auction generated total revenues of USD 30.4 million at an average realised price of

USD 27.79 per carat. Given the quality mix offered at this auction comprised a blend of varying qualities and sizes of material, a direct top-line comparison with the results of previous auctions is not feasible. On a quality for quality basis however, the per carat prices achieved continue to indicate good overall global demand when compared to previous auctions.

The auction results, which saw 58 of the 76 lots offered being sold, provided a high level of support for the Company's understanding of the current market demand profile, which was further supported by customer feedback received during the auction.

The results of the five most recent Montepuez auctions held to date are summarised below (and the prior auction results can be found in the 'further information' section at the end of this announcement):

 
    AUCTION          APRIL              JUNE             DECEMBER 
    RESULTS        '15 AUCTION       '15 AUCTION            '15               JUNE            DECEMBER 
     (RUBY                                                AUCTION              '16               '16 
  & CORUNDUM)                                                                AUCTION           AUCTION 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 Dates               17-22             16-21              14-18              13 -              12 - 
                      April             June             December           19 June         16 December 
                      2015              2015               2015               2016              2016 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 Location           Jaipur,          Singapore          Singapore          Singapore         Singapore 
                      India 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 Type                Rough             Rough              Rough              Rough             Rough 
                      Ruby              Ruby               Ruby               Ruby              Ruby 
                   & Corundum          (Higher            (Higher          & Corundum        & Corundum 
                   (Commercial        Quality)          and Medium          (Higher,          (Higher 
                    Quality)                             Quality)            medium        and Commercial 
                                                                         and Commercial       Quality) 
                                                                            Quality) 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 Carats               4.03 
  offered            million           72,208             92,136           1,601,145         1,372,145 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 Carats               3.96 
  Sold               million           47,451             90,642           1,516,459         1,094,406 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 No. of 
  lots 
  offered              64                46                 49                75                76 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 No. of 
  lots 
  sold                 57                28                 45                71                58 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 Percentage 
  of lots 
  sold                89%               61%                92%                95%               76% 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 Percentage 
  of lots 
  sold 
  by weight           98%               66%                98%                95%               80% 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 Percentage 
  of lots 
  sold 
  by market 
  value               81%               72%                95%                98%               85% 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 Total              USD 15.9          USD 29.3           USD 28.8          USD 44.3          USD 30.4 
  sales              million           million            million           million           million 
  realised 
  at auction 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 Average         USD 4.02/carat   USD 617.42/carat   USD 317.92/carat   USD 29.21/carat   USD 27.79/carat 
  per carat 
  sales 
  value 
--------------  ---------------  -----------------  -----------------  ----------------  ---------------- 
 

The proceeds of this auction will be repatriated to Montepuez Ruby Mining Limitada in Mozambique, with the royalties due to the Government of Mozambique being paid on the full sales price achieved at the auction.

Gemfields' aggregate consolidated revenues from all rough gemstone auctions for the financial year to date stands at approximately USD 41.1 million. Gemfields' auctions of rough gemstones from the Kagem emerald mine in Zambia and from the Montepuez ruby deposit in Mozambique have now generated USD 662.9 million in total revenues.

Ian Harebottle, CEO of Gemfields, commented:

"We are very pleased with the results of Gemfields' seventh Montepuez ruby auction despite some of our customers being unable to attend while they adjust to the regional demonetisation policy changes they've experienced over the past few weeks.

The prices achieved at this auction, combined with the high percentage of the value sold, fully support our view of ongoing solid demand for responsibly sourced Mozambican rubies across key markets and categories. The recent prices obtained for fine cut-and-polished Mozambican rubies by international auction houses further underscore the exciting trajectory for rubies from Mozambique.

As always, we thank our customers, our business partners, our host government and give credit to every member of our devoted and hard-working global team."

Further Information

The results of the first two Montepuez auctions are summarised below:

 
    AUCTION RESULTS      JUNE '14 AUCTION       DECEMBER 
   (RUBY & CORUNDUM)                           '14 AUCTION 
----------------------  -----------------  ----------------- 
 Dates                      12-17 June        3-8 December 
                               2014               2014 
----------------------  -----------------  ----------------- 
 Location                   Singapore          Singapore 
----------------------  -----------------  ----------------- 
 Type                       Rough Ruby         Rough Ruby 
                            & Corundum           (Higher 
                          (Higher, medium       Quality) 
                          and commercial 
                             Quality) 
----------------------  -----------------  ----------------- 
 Carats offered            2.03 million          85,491 
----------------------  -----------------  ----------------- 
 Carats Sold               1.82 million          62,936 
----------------------  -----------------  ----------------- 
 No. of lots offered            62                 41 
----------------------  -----------------  ----------------- 
 No. of lots sold               57                 35 
----------------------  -----------------  ----------------- 
 Percentage of lots 
  sold                         92%                85% 
----------------------  -----------------  ----------------- 
 Percentage of lots 
  sold by weight               90%                74% 
----------------------  -----------------  ----------------- 
 Percentage of lots 
  sold by market 
  value                        79%                93% 

----------------------  -----------------  ----------------- 
 Total sales realised    USD 33.5 million       USD 43.3 
  at auction                                     million 
----------------------  -----------------  ----------------- 
 Average per carat       USD 18.43/carat    USD 688.64/carat 
  sales value 
----------------------  -----------------  ----------------- 
 

ENQUIRIES:

 
 Gemfields                               [e-mail] 
                                         [phone] 
 Janet Boyce, CFO                         7283 
 
 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             [phone] 
  Rider/Jenny Wyllie                      1010 
 
 Macquarie Capital (Europe) 
  Limited 
  Joint Broker 
  Raj Khatri/Nick Stamp/Guy de            [phone] 
  Freitas                                  2000 
 
 Tavistock 
 Jos Simson/Emily Fenton/ Barney         [phone] 
  Hayward                                 3150 
 

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

This information is provided by RNS

The company news service from the London Stock Exchange

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December 19, 2016 02:00 ET (07:00 GMT)