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Reuters – Gemstones miner Gemfields Resources Plc on Tuesday forecast a loss for the year ending June 30 as it sees performance significantly lower than expected due to weakening markets and a fall in gemstone prices.
The Zambia-focused company also said it was reducing the scale of operations at Kagem, the largest Emerald mine in Zambia, and minimize capital expenditure until the prospects for a recovery in the gemstone market become clearer.
Gemstones shares were down 33.3 percent at 3 pence at 0856 GMT on the London Stock Exchange.
“The current global financial crisis and the sharp falls in gemstone prices experienced since October 2008 have resulted in significant uncertainty about emerald prices and demand for the remainder of 2009,” the company said.
For the first half ended Dec. 31, 2008, the Kagem mine produced 14.7 million gemstone carats, comprising emerald and beryl, and 40,122 tones of gemstone-bearing ore.
Gemfields, which posted a pretax loss of $30.6 million for the year ended June 30, 2008, had said in December that it expected a boost in its margins from an anticipated rise in the selling prices for colored gemstones.
Gemfields, which has not made significant sales of rough or polished stones to date but built an inventory, said it would start the sale of polished stones in the second quarter of 2009, with some rough sales expected in the first quarter.
Gemfields presently has $16 million in cash and estimates the value of its inventory at $18 million, it said.
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