Last checked at 6 Nov 2012 07:00
Gemfields plc
("Gemfields" or the "Company")
Results - Singapore Rough Emerald and Beryl Auction
6 November 2012
Gemfields plc (AIM: GEM) is pleased to announce the results of its auction of predominantly higher quality rough emerald and beryl held in Singapore from 29 October to 2 November 2012.
Highlights
- Robust auction revenues of USD 26.8 million - the second highest auction revenues achieved to date;
- Pleasing increase in achieved quality-for-quality per carat prices;
- The auction saw 0.925 million carats of emerald and beryl mined by Gemfields placed on offer, with 97% (0.902 million carats) being sold;
- Solid overall demand continues for Gemfields ethical Zambian emeralds across all major consumer markets; and
- Eleven auctions held since July 2009 have generated USD 160.5 million in total revenue.
Thirty seven companies attended the auction, with thirty five of these placing bids. The auction saw 0.925 million carats of emerald and beryl mined by Gemfields from its Kagem Mine in Zambia placed on offer, with 0.902 million carats sold, generating auction revenues of USD 26.8 million. While this auction was the Company's first for the current financial year (which ends on 30 June 2013), the Company's eleven auctions held since July 2009 have generated USD 160.5 million in aggregate revenues.
The Singapore auction yielded an overall average of USD 29.71 per carat for the lots sold, slightly lower than that which was achieved at the previous higher quality emerald auction held in March 2012 in Singapore (which achieved an overall average of USD 38.25 per carat for the lots sold). However, as the overall quality characteristics (product mix) of the gems placed on offer at this auction were somewhat different to those placed on offer at the earlier auction, the results reflect a pleasing increase in per carat prices when looking at the underlying lots on a quality-for-quality basis and the historic prices achieved for goods of a similar nature.
Given the Company's belief in the long term fundamentals of the emerald market and its strong cash position, Gemfields does not sell lots where the bids do not meet its pre-determined minimum reserve prices. The Company maintained this strategy at the auction resulting in three lots being unsold.
The results of the six higher quality auctions held to date are summarisedbelow:AUCTION RESULTS (HIGHER JUL '09 NOV '09 JUL '10 DEC '10 JUL '11 MAR ` 12 NOV '12 QUALITY) AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTIONDates 20-24 23-27 19-23 6-10 11-15 19-23 29 Oct - 2 Jul `09 Nov `09 Jul `10 Dec `10 Jul `11 Mar `12 Nov `12Location London, UK Johannesburg, London, UK Johannesburg, Singapore Singapore Singapore SA SAType Higher Higher Higher Higher Higher Higher Higher Quality Quality Quality Quality Quality Quality QualityCarats offered 1.36 1.12 0.85 0.87 1.07 0.77 0.93 million million million million million million millionCarats Sold 1.36 1.09 0.80 0.75 0.74 0.69 0.90 million million million million million million millionNo. of 23 19 37 32 38 29 35companiesplacing bidsAverage no. of 10 13 18 16 16 11 11bids per lotNo. of lots 27 19 27 19 25 23 19offeredNo. of lots 26 14 24 18 18 20 16soldPercentage of 96% 74% 89% 95% 72% 87% 84%lots soldPercentage of 99.8% 97% 94% 86% 69% 89% 98%lots sold byweightPercentage of 82% 76% 87% 99% 91% 94% 90%lots sold byvalueTotal sales USD 5.9 USD 5.6 USD 7.5 USD 19.6 USD 31.6 USD 26.2 USD 26.8realised at million million million million million million millionauctionAverage per USD 4.40 USD 5.10 USD 9.35 USD 26.20 USD 42.71 USD 38.25 USD 29.71carat sales /carat /carat /carat /carat /carat /carat /caratvalue
For ease of reference, the results of the four lower quality rough emerald auctions held to date are summarised below:
AUCTION RESULTS MARCH '10 MARCH '11 NOVEMBER '11 JUNE '12 (LOWER QUALITY) AUCTION AUCTION AUCTION AUCTIONDates 11-15 March 10-14 March 21-25 November 9-13 June 2012 2010 2011 2011Location Jaipur, India Jaipur, India Jaipur, India Jaipur, IndiaType Lower Quality Lower Quality Lower Quality Lower QualityCarats offered* 28.90 million 16.83 million 10.83 million 10.85 millionCarats Sold 22.80 million 12.98 million 9.82 million 3.47 millionNo. of companies 25 44 27 20placing bidsAverage no. of bids 8 14 9 3per lotNo. of lots offered 56 35 26 33No. of lots sold 49 34 19 17Percentage of lots 88% 97% 73% 52%soldPercentage of lots 79% 77% 91% 32%sold by weightPercentage of lots 89% 99% 80% 60%sold by valueTotal sales realised USD 7.2 USD 9.9 USD 11.0 USD 9.0at auction million million million million
Average per carat USD 0.31/carat USD 0.77/carat USD 1.12/carat USD 2.61/carat sales value
* A larger volume of material was placed on offer in March 2010 following Gemfields extensive inventory building exercise during 2008 and 2009.
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 mined production and market demand. Each auction is thus made up of somewhat differing overall quality compositions.
Ian Harebottle, CEO of Gemfields, commented:
"Gemfields is delighted with the results of the Singapore auction announced today. The figures provide further evidence that the general global economic uncertainty has not affected the achievable per carat emerald rough prices on a quality-for-quality basis. The higher quality material is often regarded as a store of value in times of uncertainty and we remain confident in the long term value of these gemstones, the consistency of global demand and our ability to ensure a stable supply of high-quality ethically sourced emeralds from our Kagem mine in Zambia. During the coming year we will also begin to focus on new marketing initiatives aimed at increasing the market visibility and profile of emeralds, rubies and other premium coloured gems. We look forward to adding the sale of rough rubies from the Montepuez ruby mine in Mozambique to our auctions in 2013."
Enquiries:
Gemfields dev.shetty@gemfields.co.ukDev Shetty, COO +44 (0)20 7518 3402Canaccord Genuity Limited +44 (0)20 7523 8000Nominated Adviser and Joint Broker to GemfieldsTarica Mpinga/Andrew ChubbJP Morgan Cazenove +44 (0)20 7155 8630Neil PassmoreTavistock Communications +44 (0)20 7920 3150
Jos Simson/Emily Fenton/Jessica Fontaine
Notes to Editors:
Gemfields plc is a leading gemstone miner listed on the AIM market of the London Stock Exchange . The Company's principal asset is the 75% owned Kagem emerald mine in Zambia, the world's single largest emerald mine. In addition to the Kagem emerald mine, Gemfields has a 50% interest in the Kariba amethyst mine in Zambia.
The Company also owns controlling stakes in a highly prospective ruby deposit in Mozambique and licences in Madagascar including ruby, emerald and sapphires deposits.
In July 2009 Gemfields commenced a formal auction programme for its Zambian emeralds. To date, the Company has held eleven auctions which have generated revenues totalling USD 160.5 million.
XLON