Gemfields Sees Strong Ruby Auction Results Despite Demonetization

(IDEX Online) – Gemfields plc reported sales of $30.4 million from an auction of rough ruby extracted by Montepuez Ruby Mining Limitada in Mozambique, which is 75% owned by Gemfields. 

The auction, held in Singapore from December 12 to 16, was the first ruby sale of this financial year and generated the fourth highest ruby auction result to date and average realized price per carat of $27.79.

Gemfields said that 1,094,406 carats sold (80% by weight and 85% by market value), with a total of 1,372,145 carats offered.

Seven Montepuez auctions held since June 2014 have generated a total of $225.7 million.

The auction of rough rubies and corundum saw 39 companies placing bids. The auction offered high and commercial grade rough rubies, both treated and untreated. All treated lots were offered using industry accepted treatment techniques and on a fully disclosed basis.

"The quality and quantity of the goods placed on offer was developed in response to market feedback which showed growing demand for rough rubies suited to the production of high quality jewelry as well as larger volume production runs, thereby allowing a broad cross-section of product to be placed on offer," the firm said. "The improved reliability of supply and the consistency of the Gemfields grading system continues to be well received by the company's clients as it facilitates reduced risk, improved manufacturing efficiencies and an increased ability to meet consumer demand.

"Given [that] the quality mix offered at this auction comprised a blend of varying qualities and sizes of material, a direct top-line comparison with the results of previous auctions is not feasible. On a quality for quality basis however, the per carat prices achieved continue to indicate good overall global demand when compared to previous auctions.

"The auction results, which saw 58 of the 76 lots offered being sold, provided a high level of support for the Company's understanding of the current market demand profile, which was further supported by customer feedback received during the auction."

Gemfields' aggregate consolidated revenues from all rough gemstone auctions for the financial year to date stands at approximately $41.1 million. Gemfields' auctions of rough gemstones from the Kagem emerald mine in Zambia and from the Montepuez ruby deposit in Mozambique have generated $662.9 million in total revenues.

Ian Harebottle, CEO of Gemfields, commented: "We are very pleased with the results of Gemfields' seventh Montepuez ruby auction despite some of our customers being unable to attend while they adjust to the regional demonetization policy changes they've experienced over the past few weeks.

"The prices achieved at this auction, combined with the high percentage of the value sold, fully support our view of ongoing solid demand for responsibly sourced Mozambican rubies across key markets and categories. The recent prices obtained for fine cut-and-polished Mozambican rubies by international auction houses further underscore the exciting trajectory for rubies from Mozambique."