Gemfields Pulls Out of Colombia and Sri Lanka

Gemfields Pulls Out of Colombia and Sri Lanka

London–Gemfields announced recently that it is abandoning plans to begin mining emeralds in Colombia and sapphires in Sri Lanka.

In Colombia, the company had entered into agreements to acquire controlling interests in two emerald projects located predominantly in the Boyacá state.

In Sri Lanka, Gemfields had a joint venture with East West Gem Investment Limited that would have added sapphires to the portfolio of colored gemstones it mines.

CEO Ian Harebottle said in a statement that the company believes its current portfolio of assets in Africa, as well as other expansion opportunities in Zambia, Mozambique and Ethiopia, are all “likely to deliver considerably higher returns, with shorter payback periods, than some of the other jurisdictions it had previously been evaluating.”

The company currently owns a 75 percent state in the Kagem emerald mine in Zambia, a 75 percent stake in the Montepuez ruby mine in Mozambique and a 50 percent stake in the Kariba amethyst mine in Zambia.

It also owns 100 percent of Oriental Mining SARL, a company incorporated in Madagascar with exploration licenses covering emeralds, rubies, sapphires, tourmalines and garnets, and acquired 75 percent of Web Gemstone Mining in Ethiopia, which holds an emerald exploration license. Drilling commenced at the latter last summer and preliminary groundwork for a bulk sampling exercise scheduled for July is underway.

The company announced that it was withdrawing from Colombia and Sri Lanka at the same time it released its financials for its third quarter ended March 31.

At Kagem, production during the three-month period was down, totaling 4.5 million carats of emerald and beryl with an average grade of 193 carats per ton. This is compared with 7.1 million carats with an average grade of 297 carats per ton in the same period last year.

The company attributes the difference to the “varied nature” of the emerald mineralization, exceptionally high rainfall, and a renewed focus on opening new areas for future production.

Total operating costs for the mine were $9.6 million, compared with $11.2 million a year ago.

The lower production at Kagem is expected to reduce targeted total production for the 2017 financial year to between 20 and 25 million carats, the company said, but added that it believes it still will deliver on the longer-term production ramp-up in the coming years. (Gemfields has said before that it would like to expand the emerald mine to reach an annual production of more than 40 million carats within the next few years.)

An auction of predominantly higher quality rough emeralds from the Kagem mine was held in Lusaka, Zambia in February. The sale brought in revenues of $22.3 million, with an average realized value of $63.61 per carat.

The next auction of predominantly commercial quality rough emeralds from Kagem is taking place in Jaipur, India through Thursday.

Meanwhile, at the company’s ruby mine, Montepuez, production was down year-over-year, from 2 million carats to 1.2 million carats. Gemfields said this is largely due to the lower grade but higher value ore being processed, noting that the quantity of premium quality rubies recovered increased by 92 percent.

Total operating costs at Montepuez for the three-month period were $6.5 million.

Since production at the site will focus on processing predominantly lower grade but higher value ore for the remainder of the financial year, Gemfields said the targeted total production is now estimated at 8 -10 million carats, down from the previous guidance of 10 to 12 million carats.

The next mixed quality auction of rough rubies and corundum is slated for June in Singapore.

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