Gemfields’ drop in Kagem output offset by surge at Montepuez

JOHANNESBURG (miningweekly.com) – Aim-listed Gemfields on Tuesday reported a decline in emerald and beryl output from the Kagem emerald mine, in Zambia, while production of ruby and corundum from the Montepuez ruby mine, in Mozambique, surged dramatically during the first quarter of the year.

In a quarterly market update to shareholders, Gemfields noted production of six-million carats with an average grade of 174 ct/t in the three months to September 2016, compared with the 7.5-million carats with an average grade of 237 ct/t in the quarter to September 2015.

The company attributed this to the “varied nature” of the mineralisation and a higher-grade zone mined in the comparative period last year.

“At Kagem, production remains consistent and operating costs saw a reduction on the corresponding period last year,” said Gemfields CEO Ian Harebottle.

The group’s total operating costs fell from $11.4-million during the first quarter of the 2016 financial year to $10.2-million in the first quarter of the 2017 financial year.

A September emerald auction, held in Jaipur, India, netted revenue of $10.7-million at an average value of $3.28/ct, with the next auction planned to take place in Singapore, in December.

Meanwhile, output from Gemfields’ 75%-owned Montepuez ruby mine jumped from 500 000 ct at an average grade of 7 ct/t in the first quarter of last year, to 4.5-million carats of ruby and corundum with an average grade of 44 ct/t in the quarter under review, mostly as a result of the processing of higher-grade, but lower-value, amphibolite resources.

“This has been a positive quarter, with Montepuez continuing to generate strong results. The increased processing capacity and efficiency have seen us achieve exceptional production results,” he said.

The operation’s total operating costs declined from $6.1-million in the September 2015 quarter to $5.8-million during the September 2016 quarter.

The auction held in Singapore in September generated revenues of $400 000. The next mixed-quality auction of rough rubies is also expected to take place in December, in Singapore.

“Work on new projects continues apace and plans remain on schedule to meet our annual target production of 40-million carats of rough emeralds from Kagem and 20-million carats of rough rubies from Montepuez within the next three years,” Harebottle said.

The company held cash and cash equivalents of $24.1-million as at September 30.