14th Dec 2010 07:00
Gemfields plc
December 2010 Emerald Auction Results
7:00am, 14 December 2010
Gemfields PLC ("Gemfields" or "the Company", Ticker "GEM") is pleased to present the results of its December 2010 rough emerald auction. All figures are unaudited.
Highlights
- Record single auction revenue of USD 19.6 million, versus prior record of USD 7.5 million in July 2010 and exceeding the total auction revenue of USD 18.7 million from FY 2010;
- Total year to date revenue (July and December Auctions) is USD 27.1 million;
- Per carat prices improved by 180% over the July 2010 auction;
- Five auctions held since July 2009 have generated revenues totalling USD 45.8 million;
- Exceptional 720 carat emerald crystal sets new Gemfields record for `value per carat';
- Auction underpins rising global demand for Gemfields' ethical Zambian emeralds;
- Gemfields' next auction of (predominantly lower quality) rough emeralds and beryl is scheduled to take place during March 2011.
Emerald and Beryl Auctions
Gemfields held an auction of (predominantly higher quality) rough emeralds in Johannesburg from 6 to 10 December 2010. The auction was attended by 32 companies drawn from India, Israel, Germany and the United States. The auction saw 0.87 million carats placed on offer, with 0.75 million carats being sold generating record sales of USD 19.6 million. This single auction exceeds the USD 18.7 million generated from the three emerald auctions held during the 2009/10 financial year.
Coloured gemstone deposits are "pockety" in nature. Accordingly, the grade and quality of production varies widely from month to month. Kagem (Gemfields' flagship mine in Zambia) experienced a period of high quality production and this, together with the implementation of Gemfields' vision of delivering transparent route to market ethical emeralds to the industry, lead to significant unit price increases. The emeralds sold at the auction achieved an average of USD 26.20 per carat, a price increase of some 180% over the USD 9.35 achieved at the July 2010 auction in London.
In particular, an exceptionally rare and magnificent 720 carat emerald crystal set a new Gemfields record in terms of the achieved value per carat. The crystal was acquired by renowned father-and-son dealers Raj Kumar and Rishabh Tongya of Precious Jewels Corporation, who have since named it "The Divine Green of Zambia".
Gemfields has now completed five auctions in the past 18 months, realising revenues totalling USD 45.8 million. The results of the December 2010 auction are summarised below, together with those from the four preceding auctions held in London, Johannesburg and Jaipur:
AUCTION RESULTS JULY `09 NOVEMBER '09 MARCH '10 JULY `10 DECEMBER `10SUMMARY AUCTION AUCTION AUCTION AUCTION AUCTIONDates 20-24 July 23-27 11-15 March 19-23 July 6-10 December 2009 November 2009 2010 2010 2010Location London, Johannesburg, London, Johannesburg, England SA Jaipur, India England SAType Higher Higher Higher Higher Quality Quality Lower Quality Quality QualityCarats offered 1.36 million 1.12 million 28.90 million 0.85 million 0.87 millionCarats Sold 1.36 million 1.09 million 22.80 million 0.80 million 0.75 millionNo. of companiesplacing bids 23 19 25 37 32Average no. ofbids per lot 10 13 8 18 16No. of lotsoffered 27 19 56 27 19No. of lots sold 26 14 49 24 18Percentage oflots sold 96% 74% 88% 89% 95%Percentage oflots sold byweight 99.8% 97.2% 78.9% 94.2% 86%Percentage oflots sold byvalue 82% 76% 89% 87% 99%Total salesrealised at USD 5.9 USD 5.6 USD 7.2 USD 7.5 USD 19.6auction million million million million million
Average per carat USD 4.40 per USD 5.10 per USD 0.31 per USD 9.35 per USD 26.20 per sales value
carat carat carat carat carat
While evidence exists for some resistance to diamond price increases in certain sectors, demand for emeralds has strengthened across all major markets, providing a level of confidence for continued increases in achievable emerald prices throughout 2011.
Gemfields' next auction of (predominantly lower quality) rough emeralds and beryl is scheduled to take place during March 2011.
Ian Harebottle, CEO of Gemfields, commented:
"This was a highly successful auction indicative of the quality of some of our recent production and strong corroboration for our strategy of bringing a regular and reliable supply of ethically-mined emeralds and beryl, from a responsible source, to the market. There is a clear increase in demand for our ethical Zambian emeralds and while it is a little surprising that some parties are yet to grasp the inherent value in what Gemfields and our distribution partners are able to offer discerning consumers, today's outstanding sales speak for themselves and demonstrate the progress we have made with our marketing strategies. Moreover, our pioneering and proprietary emerald grading system has set new standards and continues to mitigate pricing risk for our clients. Today's record auction follows Kagem's recent record quarterly production of 12.8 million carats and underpins our belief that Gemfields is entering into an exceptionally exciting phase of its development".
Enquiries:
Gemfields [email protected]
Dev Shetty, CFO +44 (0)20 7518 3402
Canaccord Genuity Limited
Nominated Adviser and Joint Broker to Gemfields
Tarica Mpinga/Andrew Chubb +44 (0)20 7050 6500
Conduit PR
Jos Simson +44 (0)20 7429 6603
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