Gemfields profits leap as sales double

Gemfields, the AIM-listed emerald miner, posted a 140 per cent leap in profit before tax and exceptional items for the year ended June 30th after revenue from emerald and beryl sales more than doubled.

Revenue for the period came in at $83.7m (2011: $40.2m), while the total cost of sale rose $7.0m to $22m and pre-tax profit totalled $47.8m (2011: $19.9m). Reported pre-tax profit soared to $248.9m. Basic earnings per share rose from $0.05 to $0.37.

Chairman Graham Mascall said: "While the global economy remains uncertain, demand for ethically sourced rare coloured gemstones continues to increase across all major markets, including the USA, Europe, India and China. We are thus confident that this, coupled with Gemfields' proven operating efficiencies and accelerated expansion, sales and marketing initiatives, will support continued growth throughout the coming year.

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"Furthermore, our efforts to increase the production levels at each of our mines and to bring online certain targeted acquisitions, should serve to reduce our operating risks and ensure healthy production volumes for each of our core products. With sales being well supported by our ability to expand our existing and proven marketing initiatives across a broader target market, and given the various strategic initiatives that we have planned for the coming year, we remain encouraged by the opportunities that are available to us and their potential to secure our continued growth into the future."

Annual production actually fell 36% year-on-year to 21m carats (2011: 31m), reflecting the focus on waste removal during the first half of the year, while the average grade for the year fell from 478 carats per tonne to 205, a direct result of the lower grade areas being mined during the waste moving programme.

The programme has opened additional areas of ore for future production and this is expected to have a positive effect on the forthcoming year's production levels.

Average monthly operating costs rose to $1.34m from $1.07m the previous year. A total of 8.7m tonnes of rock was handled, compared to 3.9m the prior year.

Cash at the year-end rose to $36.7m from $13.6m at the same date in 2011.

The share price rose 5.99% to 42p by late morning.

NR