Shares in Gemfields (GEM) climbed 5 per cent after the coloured gemstone producer reversed last year’s operating loss to record an operating profit of $37m (£23m). However, heavy rainfall and work delays meant annual production at Kagem, its flagship emerald mine in Zambia, slumped by a third to just over 20m carats, pushing up unit production costs by 65 per cent.
The group’s gains stemmed from its ‘traffic light’ strategy of selling red, blue and green gemstones, seemingly at ever higher prices. It netted a record $84m in revenues from three auctions of emerald and beryl in Zambia, and made a further $34m from its first auction of rubies mined at its Montepuez mine in Mozambique. It also announced a joint venture to pursue sapphire mining opportunities in Sri Lanka, and continues to evaluate other mining prospects in Colombia and across Africa.
This year Gemfields plans to produce 25-30m carats of emerald and beryl and 8m carats of ruby and corundum, and to hold at least five auctions. Last year's improved auction activity led broker JPMorgan Cazenove to hike its forecasts. It now expects pre-tax profits of $47m, giving EPS of 2.9¢.
| GEMFIELDS (GEM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 52p | MARKET VALUE: | £ 281m | |
| TOUCH: | 50-52p | 12-MONTH HIGH: | 55p | LOW: 24p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 42 | |
| NET ASSET VALUE: | 44¢ | NET CASH: | $20.1m | |
| Year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 20 | 2 | 1.0 | nil |
| 2011 | 40 | 20 | 5.0 | nil |
| 2012 | 84 | 249 | 37.0 | nil |
| 2013 | 48 | -20 | -5.0 | nil |
| 2014 | 160 | 36 | 2.0 | nil |
| % change | +231 | - | - | - |
£1=$1.63 | ||||
