“We are naturally delighted to announce the stellar results of our first auction of rubies and corundum from Montepuez in Mozambique. The extension of our transparent and well-regarded auction platform into the ruby trade has been very well received by the market, with an expanded customer base now having access to reliably supplied and consistently graded rough emeralds, beryl, rubies and corundum,” Gemfields CEO, Ian Harebottle, commented.

The auction was held in Singapore from June 12th – June 17th, 2014 and a total of 55 companies placed bids. Of the 62 lots offered, 57 were sold (representing approximately 91% of the market value of the lots offered). In carat terms, the auction saw 2.03 million carats of ruby and corundum placed on offer, of which 1.82 million carats were sold (representing 90% by weight), generating gross auction revenues of USD 33.5 million. The auction yielded an overall average value of USD 18.43 per carat. Cumulative costs incurred at Montepuez to date (including acquisition cost, capital expenditure and operating costs) stand at approximately USD 34 million in total.

Importantly, the proceeds of this auction will be fully repatriated to Mozambique, to Montepuez Ruby Mining Limitada, in which Gemfields owns 75% and with all royalties due to the Government of Mozambique being paid on the full sales price achieved at the auction. The Gemfields strong man congratulated the company 25% partners in Montepuez, and the team on the ground in Mozambique, for their “foresight, dedication and hard-work in reaching this milestone.”

“We would also like to thank the Mozambican government for its support, particularly in relation to security and the implementation of prudent policies to foster growth and development of the Mozambican coloured gemstone industry,” Harebottle said.

Gemfields CEO said the company was pleased that representatives of the Mozambican government were able to visit the auction in Singapore, to witness first-hand what is a landmark achievement for the Mozambican gemstone sector.

The revenues from Gemfields maiden ruby auction to those derived during this financial year from rough emerald and beryl sales implies aggregate consolidated revenues (from rough gemstone sales) in excess of USD 143 million, a superb performance of which every member of our devoted and disciplined team should be deservedly proud.

A considerable number of auction participants were attending a Gemfields auction for the first time. Most were from or closely associated with Thailand, which has a deep and long-standing relationship with the ruby trade. In an important development for the coloured gemstone industry as a whole, buyers from various other locations, including New York, Jaipur, Germany and Israel (many of whom have previously attended Gemfields’ emerald auctions), featured significantly at the Singapore ruby auction. This cross-pollination of clients and gemstone specialists is expected to further Gemfields’ vision for growth and development of the coloured gemstone sector internationally.

Gemfields used the expertise derived from its development of a pioneering and proprietary rough emerald grading system at the Kagem emerald mine to assist in the development of a ‘first-of-a-kind’ comprehensive grading and sorting framework for rough rubies, and which was successfully utilised and received much acclaim from all of the participants attending the auction.

Prior to the auction, Gemfields also investigated and tested various downstream ruby and corundum enhancement processes for rough gemstones, including heat treatment. These yielded encouraging results, improving the aesthetics of the rough material at a reasonable cost. Consequently, Gemfields offered both untreated and treated rough gemstones at the auction with any treated lots being offered on a fully disclosed basis.

Gemfields announced the proposed acquisition of a 75% interest in the Montepuez ruby deposit on June 8, 2011. Completion of the acquisition, together with the issuance of 25-year licences, was announced on February 27, 2012. The extraction of ruby and corundum as part of the ongoing bulk-sampling program began in November 2012. On March 31, 2014, when Gemfields last provided a quarterly production update, total ruby and corundum extracted at Montepuez since the commencement of bulk sampling stood at 8.2 million carats. A cumulative total of approximately USD 34 million has been spent at Montepuez to date (comprising the acquisition cost as well as capex and opex since inception).