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  Gemfields closes out 2011/12 fiscal year with emerald auction in Jaipur


July 6, 2012


The rising colored gemstone powerhouse Gemfields auctioned predominantly lower-quality rough emeralds in Jaipur, India, in June, with 10.85 million carats of emerald and beryl mined by the company on offer. Some 3.47 million carats were reported sold, generating revenues of $9 million.

It was was the fourth and final auction of Gemfield's fiscal year, which ended on June 30. At the four auctions it held during the 12-month period, two of which were for lower quality material, the company reported sales worth $77.9 million. This represents a dramatic increase in its volume of sales, considering that the 10 auctions held since July 2009 have generated $133.7 million in aggregate revenues.

The overall quality of the gems placed on offer at the Jaipur auction were broadly similar to those offered at the previous lower quality emerald auction held in November 2011 in Jaipur, which achieved an average of $1.12 per carat for the lots sold. This time, though, the auction yielded an average of $2.61 per carat.

Commenting after the sale, Gemfields CEO Ian Harebottle noted that the sales were particularly robust, considering the backdrop of global economic unease and the substantially weaker Indian rupee against the U.S. dollar.

"General economic instability typically has a greater negative impact on the lower quality grades than it does on the higher quality material, the latter often being seen as a store of value in times of uncertainty," Harebottle stated. "This effect was clearly seen at this auction, where demand for the lowest quality grades was indeed weaker than it has been for some time. However, due to the company's strong cash position and operational performance, Gemfields was not obliged to sell lots at suboptimal prices and is confident in the long term value of these gems."

Gemfields is trying to position itself as a large-scale colored gemstone supplier. Publicly traded on the London Stock Exchange's Alternative Investment Market, the company currently handles 20 percent of all the emeralds in the world, most of that coming from its mine in Zambia.

In the past three years, Gemfields' stock price has soared from 3 pence a share to 38 pence a share on the AIM. But its market capitalization of $208.5 million is considered small, at least in comparison with publicly traded mining companies in the diamond sector.

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