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Thursday, March 10, 2011

Gemfields Becomes Debt-Free as Emerald Sales Shine

An increased demand for emeralds has resulted in a huge turnaround for Gemfields Plc. The emerald company reported that it earned $15.5 million for the six-month period ended December 31, 2010, compared with a $5.8 million loss for the same period of the prior year. Revenue from rough and finished emerald sales more than doubled year-over-year to $29 million for the period. The company also declared that it is debt free, with $15.5 million in cash available.

The London-based company’s primary businesses is the ownership and operation of the Kegem emerald mine in Zambia and a gemstone cutting and polishing facility in Jaipur, India.

The company reports that gemstone production in the first six months of the current financial year was 18.7 million carats, exceeding the entire prior year’s production of 17.4 million carats. In addition, per-carat prices for Kagem mine emeralds rose for the period as a result of the continuing increase in demand for consistently supplied ethical emeralds across all major markets.

The mine is producing 567 carats of emerald per ton, significantly above the average over the past years. In addition, the cost of mining emeralds fell by nearly half to 35 cents per carat.

The company is currently hosting an emerald auction in Jaipur, India, that will run until March 14.

“Gemfields has enjoyed an excellent six month period in which our output from the Kagem mine exceeded the entire prior year’s production,” said Ian Harebottle, Gemfields CEO. “In addition, we are seeing a significant increase in global demand for Gemfields’ ability to provide a consistent supply of well graded and ethically sourced emeralds, as is clearly demonstrated by the record sales of USD 19.6 million achieved at the December 2010 auction. Following the encouraging results reported at our previous year end, the group has continued to enjoy stronger margins, leaving us with a robust and debt free balance sheet. In line with our ongoing inventory and market building initiatives, we do not intend to host a further high grade auction in the coming half year, meaning that revenues during the second half will be derived ostensibly from the upcoming lower grade auction on 10-14 March 2011.”

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