Gemfields rises on resource update

Shares in emerald miner Gemfields rose over nine per cent on Tuesday after the company announced a JORC compliant indicated mineral resource of 2.75m tonnes of emerald and beryl at 365 carats per tonne.

The company also unveiled a JORC compliant inferred mineral resource of 9,200 tonnes of emerald and beryl at 24.5 carats/tonne. The JORC code is the set of standards set out by the Joint Ore Reserves Committee for the reporting of reserves and resources to the public.

The projected life-of-mine (LOM) is 20 years, producing around 34m carats per annum. The company is about to begin work to accelerate underground construction and development in the full year 2014-15.

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Projected nominal cash flow over the LOM is around $855m, with capital expenditure over the LOM forecast at $113.2m.

Ian Harebottle, Gemfields' Chief Executive Officer, said: "Today we have achieved a key milestone in the continual development of Gemfields. The study shows that extending the current open pit mine at Kagem to a large-scale underground operation will be economically enhancing to the company and to our shareholders. The study covers only Kagem's existing principal pit on the Fwaya-Fwaya belt, which is one of several known emerald bearing belts available within the Kagem licence area.

"The study shows that the existing pit can be further developed as a high grade, low cost mine with robust project economics and a rapid payback period. The company currently caries no value for the resource but with today's updated estimate will look to correct this in due course.

"We will now look to accelerate the development and implementation of a large-scale underground project at our flagship operation on the Fwaya-Fwaya belt, while continuing to assess the potential future development of the additional belts available within the greater mining licence area."

The company is continuing extensive diamond core-drilling and bulk-sampling work through the Kagem mining licence area on the remaining known, but as yet un-proven, emerald bearing deposits.

The share price rose 9.33% to 41p by 12:51.

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