Gemfields reports highest auction revenue in five years
JOHANNESBURG - GEMFIELDS, the London-headquartered supplier of coloured gemstones, reported the highest auction revenue in five years from Kagem, its Zambia-based emerald mine.
Gemfields, which also operates Montepuez Ruby Mining in Mozambique, said 59 companies had placed bids generating $31.4 million (R445.84m), with an overall average of $115.59 a carat (R1 584.56) during five sequential mini-auctions held between March 15 and April 17.
The group said its 37 auctions of emeralds and beryl mined at Kagem since July 2009 had generated $688.8m in total revenue.
Managing director of products and sales Adrian Banks said through the auctions Kagem had generated the highest auction revenue since March 2016.
Banks said the group had seen strong demand and pricing during the five sequential mini-auctions, where 97 percent of lots and 99 percent of offered carats were sold.
Banks said because operations were suspended at Kagem in March last year, the world’s largest emerald mine had produced no new emeralds for more than a year.
“Due to the arising supply-and-demand dynamics, a number of our clients have, therefore, seen this auction as a vital opportunity to purchase emeralds. Today’s result also means that Kagem has already surpassed the aggregate auction revenues achieved in the whole of 2020, which stood at just $22.4m as a result of the fall-out from the Covid-19 pandemic,” said Banks.
The group said the proceeds of this auction would be fully repatriated to Kagem in Zambia, with all royalties due to Zambia being paid on the full sales prices achieved at the auction.
Kagem, which is 75 percent owned by Gemfields and 25 percent owned by the Industrial Development Corporation of Zambia, generated $11.4m in revenue during its only commercial-quality auction held in February last year, at an average of $4.01 per carat.
Gemfields suspended Kagem operations last March to preserve cash during market conditions as a result of the Covid-19 pandemic.
Gemfields said it expected Kagem to ramp back up to full scale by the end of this month.
The rough emeralds sold at the auction were all extracted before March last year from the mining licence held and operated by Kagem, said Gemfields.
Gemfields swung to an $93.3m annual loss during the year to the end of December last year as travel restrictions to curb the spread of the Covid-19 pandemic weighed heavily on the group’s financial performance.