Results - Singapore Rough Ruby Auction

Released : 21 Dec 2015 07:00:08

RNS Number : 6559J
Gemfields PLC
21 December 2015
 

Gemfields plc

("Gemfields" or "the Company")

Results - Singapore Rough Ruby Auction

21 December 2015

 

Gemfields plc (AIM: GEM) is pleased to announce the results of its auction of higher and medium qualities of rough ruby extracted by Montepuez Ruby Mining Limitada (which is 75% owned by Gemfields and 25% by local partners Mwiriti Limitada) from the Montepuez ruby deposit ("Montepuez") in Mozambique. The auction was held in Singapore from 14 to 18 December 2015.

 

 

Highlights

 

·     Auction revenues of USD 28.8 million;

·     Average realised price of USD 317.92 per carat;

·     90,642 carats sold (98% by weight or 95% by market value) out of the total of 92,136 carats offered; and

·     The five Montepuez auctions held since June 2014 have generated USD 150.8 million in aggregate revenues.

 

Montepuez Ruby Auction

 

Gemfields' fifth auction of rough rubies and corundum from Montepuez saw 36 companies placing bids.

 

The auction offered both higher and medium quality 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 auction generated total revenues of USD 28.8 million at an average realised price of USD 317.92 per carat. The auction results, which saw 45 of the 49 lots offered being sold, provided a clear indication with respect to the level of demand for these goods and supported the Company's decision to place both higher and medium quality rough rubies on offer.

 

Larger volumes of smaller size and mid-priced gems were placed on offer as a direct response to market feedback which indicated increased demand for rough rubies suited to the production of calibrated cut-and-polished gemstones. This demand is supported by the request of auction clients to undertake larger production runs, to improve their manufacturing efficiencies and to make the most of the broadening distribution networks available as new downstream customers join an industry now enjoying consistent and reliable supply.

 

Given that the quality mix offered at this auction comprised a new blend of both higher and medium quality rubies, the results cannot be directly compared with prior Gemfields auctions. On a quality-for-quality basis, however, the per carat prices achieved remained broadly consistent with those achieved at previous auctions.

 

The results of the five Montepuez auctions held to date are summarised below:

 

AUCTION RESULTS 

(RUBY & CORUNDUM)

JUNE '14 AUCTION

DECEMBER '14 AUCTION

APRIL '15 AUCTION

JUNE '15 AUCTION

DECEMBER '15

AUCTION

Dates

12-17 June 2014

3-8 December 2014

17-22 April 2015

16-21 June 2015

14-18 December 2015

Location

Singapore

Singapore

Jaipur, India

Singapore

Singapore

Type

Rough Ruby & Corundum (Higher and Lower Quality)

Rough Ruby

(Higher Quality)

Rough Ruby & Corundum (Lower Quality)

Rough Ruby

(Higher Quality)

Rough Ruby (Higher and Medium Quality)

Carats offered

2.03 million

85,491

4.03 million

72,208

92,136

Carats Sold

1.82 million

62,936

3.96 million

47,451

90,642

No. of lots offered

62

41

64

46

49

No. of lots sold

57

35

57

28

45

Percentage of lots sold

92%

85%

89%

61%

92%

Percentage of lots sold by weight

90%

74%

98%

66%

98%

Percentage of lots sold by market value

79%

93%

81%

72%

95%

Total sales realised at auction

USD 33.5 million

USD  43.3 million

USD 15.9 million

USD 29.3 million

USD 28.8 million

Average per carat sales value

USD 18.43/carat

USD  688.64/carat

USD 4.02/carat

USD 617.42/carat

USD 317.92/carat

 

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.

 

At 30 September 2015, when Gemfields provided its latest quarterly production update, total ruby and corundum extracted at Montepuez since commencement of the project stood at 17.2 million carats.

 

This auction was Gemfields' third auction of the current financial year ending 30 June 2016. The first and second auctions of the current financial year were of predominantly higher quality emerald (September 2015) and lower quality emerald and beryl (November 2015) from the Kagem emerald mine ("Kagem"), Zambia.

 

Gemfields' aggregate consolidated revenues from rough gemstone sales for the financial year to date stands at approximately USD 82.7 million. Gemfields' 25 auctions of rough gemstones from Kagem and Montepuez have now generated USD 530 million in total revenues.

 

Next Auction

 

The next auction will be of predominantly higher quality emerald from Kagem and is presently expected to take place during March 2016.

 

Ian Harebottle, CEO of Gemfields, commented:

 

"The outcome of Gemfields' fifth Montepuez ruby auction is pleasing. Demand for fine gems remains healthy and has recently been supported by a commensurate increase in demand for mid-priced and high-production-run gems. The prices Gemfields has achieved in this auction are in line with the Company's expectations. Only a small selection of goods remained unsold. I have no doubt that the joint efforts to continue to build and expand the reach of the coloured gemstone sector means that all Gemfields' auction clients will be able to achieve healthy margins on their purchases.

 

Although some degree of softening in the demand for certain darker tone and lower quality grades remains, largely as a direct result of a short term shift in global buying patterns, this should be overcome as Gemfields' consumer education initiatives continue to reach a broader cross-section of markets and as key economies continue to strengthen.

 

The three auctions Gemfields has hosted so far this financial year, two of emeralds and one of rubies, have yielded aggregate revenues of USD 82.7 million, a superb performance by the Company with credit due to every member of its devoted and hard-working global team as well as its respective business partners in each of its host operating nations."

 

ENQUIRIES:

Gemfields

janet.boyce@gemfields.co.uk

Janet Boyce, CFO

+44 (0)20 7518 7283

 

 

Grant Thornton UK LLP          

 

Nominated Adviser

 

Philip Secrett/Richard Tonthat/Jamie Barklem

+44 (0)20 7383 5100

 

 

J.P. Morgan Cazenove 

 

Joint Broker

 

Jamie Riddell    

+44 (0)20 7742 4000

 

 

BMO Capital Markets Limited

 

Joint Broker

 

Jeff Couch/Neil Haycock/Tom Rider/Jenny Wyllie

+44 (0)20 7236 1010

 

 

Macquarie Capital (Europe) Limited

Joint Broker

Raj Khatri/Ken Fleming/Nick Stamp/Fergus Marcroft

 

 

+44 (0)20 3037 2000

 

 

Tavistock

 

Jos Simson/Emily Fenton

+44 (0)20 7920 3150

 

Notes to Editors:

Gemfields plc is the world's leading supplier of responsibly sourced coloured gemstones and is quoted on the AIM division of the London Stock Exchange (ticker: GEM) where it is a constituent of the AIM50 index.

 

Gemfields is the operator and 75% owner of both the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world). In addition Gemfields also holds a 50% 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 Fabergé an iconic and prestigious brand of exceptional heritage enables Gemfields to optimise positioning, perception and consumer awareness of coloured gemstones, advancing the wider 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


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