Gemfields is digging up a shiny profit

Gemfields, the gemstones miner, has seen its share price edge north after delivering a record performance in the three month period and year ending 30 June 2011. The company's year-on-year production soared 90% to 33m carats (2010: 17.4 million carats) while production costs fell 41% from $0.73 to $0.43 per carat and unit rock handling costs fell 25% from $4.92 to $3.70 per tonne. Gemfields has recently completed the last of seven auctions of rough emeralds in the past two years, generating total revenue of $87.5 million. The most recent auction saw 1.07 million carats of higher quality rough emeralds mined by Gemfields placed on offer, with 0.74 million carats being sold and generating record sales of $31.6 million. When compared with the higher quality auction held in December 2010, average per carat prices improved by 63% from $26.20 per carat to $42.71 per carat. As of 30 June 2011, Gemfields had $13.6 million in cash, prior to receipt of the $31.6 million from the most recent auction and Kagem Mining, in which Gemfields has a 75% interest, is debt free.Ian Harebottle, chief executive of Gemfields, said: "Continued price increases for rough diamonds are a good indicator of the strength of the luxury goods sector as a whole. "As a relatively new and informal sector coming off a low base, coloured gemstones in general and emeralds in particular are expected to enjoy even greater scope for increases in demand, which is clearly evident from our recent auction results. "Gemfields is well positioned to achieve maximum benefit from present trends and feels these key drivers are likely to persist in supporting the popularity of Gemfields' products."The share price was +4.26 to 24.50p at 15.46. NR Gemfields Grou.