Gemfields plc recently provided its operational update (unaudited) for the three month period ending March 31, 2016 (Q3 FY 2016).

The Company’s 75%-owned Kagem Mining Limited in Zambia produced 7.1 million carats of emerald and beryl compared to 9.9 million carats produced in the same period of 2015.  Gemfields attributed   this gap “to the fluid nature of the mineralisation and a higher-grade zone having been encountered during the previous comparative period”.

The Company cited the same reason for the lower average grade of 297 carats per tonne for Q3 2016 as against an average grade of 355 carats per tonne achieved in Q3 2015.

Total operating costs (including mining and production costs, selling, general and administrative expenses, depreciation and amortisation; but excluding capitalised costs and mineral royalties) for Q3 2016 were slightly higher at US$ 10.3 million as compared to US$ 9.8 million for the same period of the previous year. Cash rock handling unit costs stood at US$ 2.69 per tonne (versus US$ 2.85 per tonne in the quarter ending 31 March 2015).

Gemfields held an auction of predominantly higher quality rough emerald in Lusaka, Zambia from March 30 to April 3, 2016; from which it generated revenues of US$ 33.1 million at an average value of US$ 70.68 per carat. This, the Company said, was a “record average price” for higher quality emerald auctions to date.

Gemfields' next auction of predominantly lower quality rough emerald and beryl extracted from Kagem is scheduled to take place in May 2016 in Jaipur, India.

Gemfield’s 75%-owned Montepuez Ruby Mining Limitada in Mozambique produced 2.0 million carats of ruby and corundum in Q3 2016 as compared to 1.4 million carats produced in Q3 2015. The Company said that this was “partially supported by processing of the higher grade, but lower value, amphibolite resources, but offset by prolonged and heavy rainfall during the period”.

The average grade went up to 30 carats per tonne versus an average grade of 18 carats per tonne in the same period of FY 2015 also “attributable to a greater proportion of higher grade amphibolite ore being processed during the quarter,” the Company said.

The total operating costs - as per the same items recorded for Kagem above – amounted to   US$ 5.8 million as compared to US$ 4.6 million for Q3 2015. This, the Company said was “attributable to the increase in headcount and fleet size in anticipation of a continued increase in the scale of operations.”

Cash rock handling unit costs amounted to US$ 10.18 per tonne (versus US$ 7.10 per tonne in the same period of the previous year) “due to higher cash costs in preparation for an increase in the scale of mining operations and a reduction in overall volumes due to the prolonged and heavy rains”, the Company reported.

Gemfields' next auction of mixed qualities of rough ruby extracted from Montepuez ruby mine is expected to take place in June 2016 in Singapore.

Ian Harebottle, CEO of Gemfields, said: "Gemfields has had another pleasing quarter of solid production across its emerald and ruby operations with both Kagem and MRM having maintained the momentum seen over the previous calendar year and well on track to meet their annual guidance.”

Commenting on the situation of the industry in general Harebottle added: "The coloured gemstone market remains robust, as is evident from Gemfields auction results, and is further supported by improving consumer demand within the US. To date the Company has generated over US$ 116 million in revenue from auctions held in the 2016 financial year and we look forward to two additional auctions, firstly a lower quality emerald auction in May and another ruby auction in June, prior to the year end."

As at March 31, 2016, Gemfields reported cash and cash equivalents of US$ 5.6 million (excluding the US$ 33.1 million in auction revenues which were received post March 31, 2016).  The total debt outstanding at March 31, 2016 amounted to US$ 49 million.  In the quarter to March 31, 2016, Gemfields incurred total sales, general and administrative expenses of US$ 14.6 million, the Company stated.