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Gemfields turns focus to high quality assets as it withdraws from Coscuez and Sri Lanka


Gemfield is making improvements to operational efficiencies and cutting operating costs at its Kagem mine in Zambia
Gemfields says demand for coloured gems continues to rise

Gemfields plc (LON:GEM) has decided to focus on opportunities that will deliver “considerably higher returns” as it withdraws from its Coscuez emerald mine transaction in Colombia and in operations in Sri Lanka.

The company said will turn its attention to its portfolio of high quality assets in Africa and potential expansion opportunities in Zambia, Mozambique and Ethiopia.

The decision to withdraw from its Coscuez followed an internal review. In 2015, Esmeracol S.A transferred the Coscuez emerald mine licence into a newly incorporated company, Coscuez New Co, in which Gemfields bought a 70% indirect stake.

“Gemfields and its prospective project partner, New-Esmeracol S.A. made the joint decision to withdraw from the Coscuez transaction on the grounds that not all of the conditions precedent to the existing share purchase agreement were able to be satisfied within the stipulated timeframe,” the company explained.

In Sri Lanka, the company has decided not to progress operations after a review found more potential for expansion opportunities in other jurisdictions.

The announcement on its exit from Sri Lanka and Cosuez came as the company said demand for coloured gems continues to rise despite a setback to production of emeralds and rubies in the first quarter.

Production of carats of emerald and beryl from its Kagem operations in Zambia fell to 4.5mln in the first quarter from 7.1mln carats the same period a year earlier. The average grade was 193 carats per tonne, down from 297 carats per tonnes.

The decline was due to high rainfall and a renewed focus on opening new areas for future production.

Ruby and corundum production at Montepuez mine in Mozambique fell to 1.2mln carats from 2.0mln carats while the average grade dropped to 7.0 carats per tonne from 30 carats per tonne.

The full year targeted total production is now estimated to be between 8 to 10 million carats of rough rubies and corundum as company processes “predominantly lower grade but considerably higher value ore” for the remainder of the year.

The Faberge business, famed for its intricate, jewelled Russian Imperial eggs, saw the number of piece sold jump 63% in the first quarter compared to year ago, boosted by a 18% rise in the number of sales transactions. Total operating costs fell 13%.

Fabergé has launched the third men's timepiece in the Fabergé Visionnaire collection.

Gemfields said the Visionnaire Chronograph was showcased alongside new jewellery pieces at Baselworld 2017, the World Watch and Jewellery Show, and has already received considerable acclaim.

Chief executive Ian Harebottle said: "From an operational perspective the quarter under review delivered mixed results but we remain delighted that demand for coloured gemstones continues to increase as the sector strengthens.”

Harebottle said Montepuez saw a significant increase in the quantity of ore and the quality of the gemstones produced while an upgrade to the existing wash plant has delivered a 170% increase in ore processed.

On the lower production at Kagem, he said the company was working to counteract this with further improvements to operational efficiencies, a reduction in total operating costs, and continuing exploration and bulk sampling activities.

Harebottle added: “Importantly, the lower production experienced during the quarter at both Kagem and Monetpuez, and the changes to the targeted total production figures for financial year 2017, will not impact on the company's upcoming auction schedule.”


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