Small Talk: Gemfields sparkles as the emerald business picks up

The market has suddenly become rather keen on Gemfields, the emerald producer which is listed on the Alternative Investment Market (Aim) After treading water for months, it saw its shares shoot up by nearly 200 per cent in the final quarter of last year.

The new year has so far proved less exciting – but that may be because investors were awaiting the company's interim results, which are due this morning. So, what are the prospects? Pretty good, if the scribblers at Canaccord Genuity are to be believed.

They expect the figures to underpin their full-year estimates, forecasting first-half revenues of nearly $30m, with about $12m in earnings before interest, tax, depreciation and amortisation.

Their confidence is based on some strong fundamentals. Looking back at the total number of emeralds produced and the total sold since Gemfields made its market debut, and factoring in the first-half production numbers released earlier, analysts reckon the group's emerald inventory currently stands at about $30m.

Moreover, the business is debt-free, with $15.6m in reported cash. All this against the backdrop of a rising market for gemstones, according to the company's recent auction of mostly high-quality rough emeralds in South Africa at the end of last year. The event was attended by more than 30 buyers from India, Israel, Germany and the US.

In all, 870,000 carats were placed on offer and, of those, Gemfields managed to shift 750,000, generating sales of $19.6m. To get a sense of the haul, it is worth noting that sales from that one auction were more than the $18.7m accumulated at three auctions held during the year to the end of June put together.

A number of factors drove the auction, including the quality of the stones on offer, but also the rising demand for emeralds from the Indian subcontinent. No surprise, then, that the next event is set to be held later this month in Jaipur, the capital of India's western state of Rajasthan. The location is fitting, given its history as the seat of many a regal dynasty.

Gemfields itself deserves some credit for the strong market environment. As Canaccord points out, the emerald and indeed the wider gemstone business has historically suffered from fragmented and inconsistent supply from the mines to the cutters and polishers who prepare the final product.

"The lack of consistent product has caused the marketing spend for coloured gemstones to lag that for diamonds, for instance," it said. "The net result has been structurally lower emerald and other coloured gemstone prices."

Gemfields is pitching to change this by providing a stream of consistent supply, with its Kagem mine in Zambia making up for about 20 per cent of the global supply of emeralds.

That, along with the strong and well-managed inventory and a new grading system based on size and quality, is aiding the market, according to Canaccord Genuity.

Given the success of the recent auction in South Africa, and following this morning's results, all eyes will be on the next auction, where Gemfields will offer mostly lower-quality material.

Investment firm in reverse takeover

It is not often that a company manages to quadruple its market capitalisation over the course of two weeks. But that is what happened with Infrastructure India, the investment firm which was re-admitted to trading on the Aim index this week following the reverse takeover of the Indian assets of the Guggenheim Global Infrastructure Company (GGIC).

Following a fund-raising and after the re-admission, GGIC has more than 40 per cent of Infrastructure India.

Three of its executives have also taken up places on the Infrastructure India board, with one partner, Sonny Lulla, becoming the chief executive officer of the Aim-listed investment business.

He was joined by Tom Tribone as chairman and Robert Venurus as a non-executive director. Other changes saw the previous chairman, Rupert Cottrell, become deputy chairman, while Timothy Walker remains on the board as a non-executive director.

"The recent fundraising, in which GGIC also participated, puts the company in a strong position in the market to make the most of the extensive opportunities available to it," Mr Lulla said when the shares went back on Aim. "We look forward to the future with confidence."

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Fans hold up a scarf at West Ham vs Liverpool
footballAfter Arsenal's clear victory, focus turns to West Ham vs Liverpool
New Articles
i100... she's just started school
ebooksAn unforgettable anthology of contemporary reportage
New Articles
Life and Style
Couples have been having sex less in 2014, according to a new survey
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
New Articles
i100... despite rising prices
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam