22nd Nov 2010 07:00
Gemfields PLC
Gemfields announces best production quarter on record
7:00am, Monday 22nd November 2010
Gemfields PLC ("Gemfields" or "the Company", Ticker "GEM") is pleased to present an operational update for the three month period ending 30 September 2010. All figures are unaudited.
Highlights
- Exceptional quarterly production of 12.8 million carats of emerald and beryl (equivalent to 74% of the prior year's total production of 17.4 million carats);
- Emerald production (excluding beryl) for the quarter exceeded the prior year's total emerald production;
- Quarterly grade of 668 carats per tonne (emerald plus beryl) was more than twice that of the prior quarter (323 carats per tonne);
- Lowest quarterly unit production costs on record of USD 0.26 per carat (emerald plus beryl) compared with USD 0.73 per carat for year ending 30 June 2010;
- Lowest quarterly rock handling unit cost on record of USD 3.50 per tonne;
- Management stress the "pockety" nature of coloured gemstone deposits and that this trend is not likely to continue;
- Graphical production update available at www.gemfields.co.uk
Production Update
Gemfield's 75% owned Kagem mine is presently Gemfields' only operating emerald mine. Kagem is the single largest emerald mine in the world and its key unaudited production parameters by quarter are summarised below:
KAGEM Quarter 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep TotalQuarterly Summary End: 2008 2008 2009 2009 2009
2009 2010 2010 2010
Gemstone Production million carats 9.4 5.3 7.3 6.0 2.9 4.9 3.5 6.1 12.8 58.2 (Emerald+Beryl)
Ore Production '000 tonnes 21.4 18.7 17.8 22.3 16.0 13.5 12.5 18.9 19.2 160.2 (Reaction Zone)
Grade (Emerald+Beryl/ carats/tonne 438 286 410 268 182 365 277 323 668 363Reaction Zone)Waste Mined million tonnes 1.7 1.0 0.8 0.5 0.5 0.7 0.6 0.7 0.9 7.5(including TMS)Stripping Ratio 81 53 43 22 33 49 51 38 49 47
Total Operating Cost USD million 8.0 6.2 3.7 3.5 3.3 3.1 3.0 3.4 3.3 37.5
Unit Production Cost USD/carat 0.85 1.16 0.51 0.59 1.13 0.63 0.87 0.55 0.26 0.64 (per carat)
Unit Production Cost USD/tonne 372 332 210 159 205 230 241 179 173 234 (per tonne of ore)
Unit Cost (per tonne USD/tonne 4.5 6.1 4.8 6.8 6.1 4.6 4.6 4.6 3.5 4.9 of rock moved)
Note: All figures are unaudited
Kagem's unaudited total operating costs for the period ending 30 September2010 totalled USD 3.3 million (versus USD 3.4 million in the period ending 30June 2010), implying an average production cost during the quarter of USD 0.26per carat of emerald and beryl, the lowest on record (and compared with USD0.73 per carat for year ending 30 June 2010).
The stripping ratio is expected to increase in the short to medium term as areas of overburden are mined in order to expand the levels of available ore and is expected to have a commensurate impact on total mining costs.
Kagem's key annual production parameters are summarised below:
Kagem Annual Production Summary
UNITS YEAR YEAR YEAR YEAR YEAR 2010 to 30 Jun to 30 Jun to 30 Jun to 30 Jun to 30 Jun versus 2006 2007 2008 2009 2010 2009 Gemstone Production
(Emerald+Beryl) million carats 10.2 9.4 9.9 28.0 17.4 -38% Ore Production(Reaction Zone) 000 tonnes 22 29 42 80 61 -24% Grade (Emerald+Beryl/Reaction Zone) carats/tonne 462 325 233 349 286 -18% Waste Mined(incl. TMS) million tonnes 1.8 2.8 5.1 4.0 1.9 -53% Waste+ TMS:Reaction Zone strip ratio 83 96 120 50 42 -16% Total Rock Handling million tonnes 1.8 2.8 5.1 4.1 2.6 -37%
Gemfields' trial underground mining project continues to make progress with atotal of 18.7 metres of horizontal advance being achieved from 22 blastsduring the quarter. Total underground development to date is 95.3 meters (76.6meters at the end of 30 June 2010). A total of 629 tonnes of rock (581 tonnesof ore) was produced during the quarter (versus 347 tonnes of rock and 56tonnes of ore in the quarter to 30 June 2010). Governmental clearance tocontinue the underground operation was received on 9 August 2010 afterapproval of the requisite environmental project brief. About 67k carats(emerald +beryl) were produced in the quarter ending 30 September 2010.Illegal mining activity within the boundaries of the Kagem mining licence isnot yet fully resolved and Gemfields continues to work with key ministries toalleviate this.
A graphical production update can be downloaded from www.gemfields.co.uk
Cash Balances and Auction
As of 30 September 2010, Gemfields had USD 4.8 million in cash. Kagem Mining Ltd, in which Gemfields has a 75% interest, has bank loans and leases repayable by 31 December 2010 totalling USD 1.2 million.
Gemfields' next auction of higher grade rough emerald takes place from 6-10 December 2010.
Ian Harebottle, CEO of Gemfields, commented:
"Kagem has delivered a record-shattering production quarter and we're simplydelighted. Because of the "nugget effect" of coloured gemstone deposits, theselevels of production are not likely to continue and have already begun todecline post the quarter end. However, we are thrilled with the strongplatform that these results provide and look forward to the forthcomingauction of higher grade rough emeralds which will be further supported by thecontinuing improvement in the markets for coloured gemstones".
Enquiries:
Gemfields
Dev Shetty, CFO +44 (0)20 7518 3402Canaccord Genuity LimitedNominated Adviser and Joint Broker to GemfieldsTarica Mpinga/Andrew Chubb +44 (0)20 7050 6500
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