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."

PROMOTED VIDEO
News
business
News
Mick Jagger performing at Glastonbury
people
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Sport
Germany's Andre Greipel crosses the finish line to win the sixth stage of the Tour de France cycling race over 194 kilometers (120.5 miles) with start in Arras and finish in Reims, France
tour de franceGerman champion achieves sixth Tour stage win in Reims
Extras
indybest
Arts and Entertainment
Characters in the new series are based on real people, say its creators, unlike Arya and Clegane the Dog in ‘Game of Thrones’
tv'The Last Kingdom' is based on historical events
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Linux Systems Administrator - UNIX, Linux, Shell, Bash

£50000 - £60000 per annum: Harrington Starr: Linux Systems Administrator - UNI...

UNIX Systems Administrator - Oracle DBA, UNIX, Scripting

£40000 - £45000 per annum: Harrington Starr: UNIX Systems Administrator - Orac...

Linux Systems Administrator - (Support, Linux, UNIX)

£40000 - £55000 per annum: Harrington Starr: Linux Systems Administrator - (Su...

Build & Environment Management Team Leader 12 months c. 550 p/d

£500 - £550 per day: Deerfoot IT Resources Limited: Build & Environment Manage...

Day In a Page

The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

Grindr founder Joel Simkhai: 'I've found love on my dating app'

Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

Is it time to ditch autocorrect?

Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
10 best girls' summer dresses

Frock chick: 10 best girls' summer dresses

Get them ready for the holidays with these cool and pretty options 
Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

Westminster’s dark secret

Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

A History of the First World War in 100 Moments

Dulce et decorum est: a life cut short for a poet whose work achieved immortality
Google tells popular music website to censor album cover art in 'sexually explicit content' ban

Naked censorship?

The strange case of Google, the music website and the nudity take-down requests
Howzat! 8 best cricket bats

Howzat! 8 best cricket bats

As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

David Luiz falls from leader figure to symbol of national humiliation

Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil