London: Gemfields PLC on Monday said first half production of emerald and beryl declined heavily from the previous year whilst output of rubies and corundum saw a significant step-up.
The company said production from the 75%-owned Kagem mine in Zambia in the first half to the end of 2016 dropped to just 10.7 million carats from 15.7 million carats a year earlier. Grades dropped substantially year-on-year while ore production and mined waste volumes both rose.
Capital expenditure at the mine totalled USD3.2 million versus just USD700,000 the year before, driven by capitalised waste stripping costs. Total cash costs for the mine in the half, however, fell to USD14.6 million from USD16.4 million, as the unit cash handling costs increased to USD1.36 per carat from USD1.04 per carat. Total operating costs at Kagem, however, fell to USD20.4 million from USD23.5 million.
The auction of predominantly higher quality rough emeralds from Kagem mine that was initially scheduled in December 2016 is now going to take place in February 2017 in Lusaka, Zambia, Gemfields said.
“Kagem has seen a mixed quarter with the reduced volumes of production, as a direct result of the varied nature of the mineralisation at the deposit, being countered to some extent by the sterling efforts of our operating team on site,” said Gemfields.
“To allow our rough emerald customers, who predominantly hail from India, to adjust to the demonetisation programme initiated by President Modi in November 2016, the higher quality emerald auction originally scheduled to take place in December 2016 was postponed,” Gemfields added.
At the 75%-owned Montepuez mine in Mozambique, first half production increased to 5.6 million carats from 2.1 million carats. The average grade almost doubled year-on-year, allowing less waste to be mined. However, ore production and processing volumes increased significantly.
Capital expenditure at Montepuez totalled USD8.8 million in the half versus USD5.1 million the year before. Total cash operating costs dipped to USD10.2 million from USD10.4 million, with unit costs falling to USD1.82 per carat from USD4.95.
Total operating costs for Montepuez in the first half amounted to USD12.4 million, down from USD13 million a year earlier.
The construction of the new Montepuez camp is proceeding according to plan and is expected to be fully completed by June 2017, said the miner. In addition, security measures have been intesified at “various critical locations” while the construction of the new Montepuez camp is proceeding, with the expectation that will be fully completed by June 2017.
The ruby auction held in Singapore in the period, taking rubies from Montepuez, saw 1.1 million carats sold for USD27.88 per carat, generating a total of USD30.5 million. A total of 1.37 million carats of higher quality had been offered.
Gemfields’ next mixed quality auction of rough rubies and corundum extracted from Montepuez ruby mine is expected to take place in June 2017 in Singapore.
The miner’s luxury Faberge unit saw a 95% rise in sales orders in the three months to the end of 2016 versus a year earlier, and a 48% lift in sales transactions in the period.
“It is also pleasing to see that the luxury market has started off the year with a buoyant note with Faberge showing solid January sales demand and a positive market sentiment noted by our customers who attended the Tucson gemstone fair,” said Gemfields.