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Regular private and institutional buyers of rough emeralds in Singapore will have to leave the Southeast Asian Lion City and fly over five thousand miles to the African state of Zambia if they want to purchase the vitreous green mineral mined from the world’s largest emerald mine.
Mila Kunis, spokeswoman for Gemfields (LSE:GEM), maybe disappointed to find out they have postponed its Singapore auction to a later date. To counter the news, the AIM-listed company said today it will be hosting the emerald auction in Zambia’s capital and largest city, Luzaka, following a request from Zambia’s Ministry of Mines, Energy, and Water Development.
Gemfields originally scheduled to hold the auction last June 10th to 15th but had to cancel the said event in response to a statement of the then Minister Yamfwa Mukanga at a press conference in April of this year “seemingly restraining” Kagem and other producers from auctioning their finds outside of the country.
The statement prompted Gemfields, the 75% owner of the Kagem emerald mine to put the auction on hold and initiated a dialogue with the Zambian government, which holds the other 25% interest in the said mine.
In a statement earlier today, Gemfields said it received a letter from the Ministry of Mines to hold the auction in the country and announced that the auction will be held on July 15th to 19th.
“We have been asked by the Ministry of Mines to host an auction of higher grade emeralds within Zambia as part of a consultative process,” Gemfields Chief Executive Ian Harebottle said in a statement.
Harebottle said the Ministry assured them there is no ban on overseas auction and that the company’s response to the said request is part of the firm’s collaboration with the co-owner of the Kagem mine.
The proceeds of the auction, however, will be carried over to the next financial year as the company’s annual calendar ends every June 30th, which will result in a 46% drop in annual revenues.
During the previous year, the company generated some US$77.9 million in revenues from four auctions in contrast with this year’s US$44 million total revenue from only two auctions as a result of the cancellation.
Gemfields expects that the company will still be allowed to hold auctions outside of Zambia as there is now law prohibiting overseas auctions.
“It remains our hope that a framework solution which allows Kagem to maximise its revenues will soon be found,”Harebottle concluded.
Shares of Gemfields skidded 1.1% to 23 pence in early Monday trading on the London Stock Exchange.
