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Gemfields announces reduction in mining scale at Kagem emerald mine

Gemfields announces reduction in mining scale at Kagem emerald mine
Written by Nchima Nchito Jr
Saturday, April 04, 2009 4:01:01 PM

GEMFIELDS has announced the reduction of the scale of mining at its Kagem Emerald Mine and the writing down of the mines value to Zero.

Gemfields is a London listed company which is part of the Pallinghurst Resources and considered to be one of the world’s largest emerald mines, with 25 per cent owned by the Zambian government. The Kagem emerald mine, where the Zambian government holds a 25 per cent stake, is Gemfields’ principal source of emeralds for its downstream business.

According to mining weekly, the company stated that it had chosen to minimise all nonessential capital, project development, and exploration expenditure until the market prospects for recovery in the gemstone market became clearer.

“The ongoing uncertainty in the global economy, the loss-making performance during the period and the lack of reliable emerald prices make it difficult to justify forecasts showing a positive cash flow with reasonable certainty. This in turn complicates valuing the mine,” it stated.

Gemfields stated that it had opted to take a conservative approach in estimating the emerald prices achievable for the reminder of 2009.

“The company’s performance has been, and would likely continue, to be significantly lower than projected at the time of its listing on the AIM, and would result in operating loss for the financial year ended June 2009,” Gemfields stated.

During the six months ended December 2008, Gemfields reported a loss of US $186.5 million.

Meanwhile, Gemfields stated that it would actively pursue its strategy for integrating the supply chain and improving the marketing of coloured gemstones during the coming year. It is hoped that the efforts would increase the demand for the company’s products, thereby supporting an increase in prices and achievable margins.

“We remain optimistic, however, that our current focus on reducing operating costs and improving mining efficiencies and our efforts to support brand awareness will ensure that Gemfields is well placed to reap the benefits when global conditions improve,” stated company chairperson Graham Mascall.

Labels: EMERALDS, GEMSTONES, KAGEM, PALLINGHURST RESOURCES

posted by MrK @ 3:01 PM