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GEMFIELDS GROUP LIMITED - Lusaka Emerald Auction Results

Release Date: 23/08/2019 07:05
Code(s): GML     PDF:  
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Lusaka Emerald Auction Results

(Incorporated in Guernsey)
(Guernsey registration Number: 47656)
(South African external company registration number 2009/012636/10)
Share code on the BSX: GML.BH ISIN: GG00BG0KTL52
Share code on the JSE: GML
("Gemfields" or the "Company")

Lusaka Emerald Auction Results

      Gemfields is pleased to announce the result of an auction of predominantly commercial quality rough emerald held
      in Lusaka, Zambia from 19-22 August 2019. The emeralds were extracted by Kagem Mining Ltd in Zambia (“Kagem”,
      which is 75% owned by Gemfields and 25% by the Industrial Development Corporation of Zambia). The proceeds of
      this auction will be fully repatriated to Kagem in Zambia, with all royalties due to the Government of the Republic of
      Zambia being paid on the full sales prices achieved at the auction.

      Highlights – Emerald Auction

           •    Auction revenues of USD 18.6 million
           •    Of the 35 lots offered, 26 were sold (74%)
           •    Average price of USD 4.75 per carat
           •    37% (*) of the carats offered were sold
           •    The 33 auctions of Kagem gemstones held since July 2009 have generated USD 608 million in total revenues

      The auction saw 34 companies placing bids, generating total revenues of USD 18.6 million with an overall average
      value of USD 4.75 per carat. The auction saw 37% of the offered carats being sold (or 74% of the number of lots

      Gemfields’ 33 auctions of emeralds and beryl mined at Kagem since July 2009 have generated USD 608 million in
      total revenues. The results of the five most recent commercial quality Kagem auctions are summarised in the table

        AUCTION RESULTS                     May ‘17               Feb ‘18             Jul-Aug ‘18             Feb ‘19               Aug ‘19
     (COMMERCIAL QUALITY)                   AUCTION              AUCTION               AUCTION               AUCTION               AUCTION

                                           15-18 May             19-22 Feb          30 Jul – 2 Aug          18-20 Feb             19-22 Aug
Dates                                         2017                  2018                2018                  2019                  2019
Location                                  Jaipur, India         Jaipur, India      Lusaka, Zambia        Lusaka, Zambia        Lusaka, Zambia
                                          Commercial            Commercial           Commercial            Commercial            Commercial
Type                                         Quality               Quality             Quality               Quality               Quality
Carats offered                            3.10 million          3.73 million         2.89 million          4.15 million        10.68 million (*)
Carats sold                               3.10 million          3.55 million         2.59 million          2.46 million          3.92 million
No. of companies placing bids                  33                    31                   22                    24                    34
Average no. of bids per lot                     9                     5                    6                     5                     6
No. of lots offered                            23                    21                   21                    23                    35
No. of lots sold                               23                    19                   17                    16                    26
Percentage of lots sold                       100%                  90%                  81%                   70%                   74%
Percentage of lots sold by weight             100%                  95%                  90%                   59%                 37% (*)
Total sales realised at auction         USD 14.5 million      USD 10.8 million     USD 10.9 million      USD 10.8 million      USD 18.6 million
Average per carat sales value           USD 4.68/carat        USD 3.05/carat       USD 4.21/carat        USD 4.39/carat        USD 4.75/carat
      (*) Unlike the other auctions tabulated above, August 2019 included beryl. The single lot of beryl (of 5 million carats) was unsold.
The specific auction mix and the quality of the lots offered at each auction vary in characteristics such as size, colour
and clarity on account of variations in mined production and market demand. Therefore the results of each auction
are not always directly comparable.

Adrian Banks, Gemfields’ Managing Director of Product & Sales, commented:

“We are pleased that the green shoots of recovery in the emerald sector first observed at our May 2019 emerald
auction in Singapore have continued to grow this week in Lusaka. The Indian market, which is particularly important
when it comes to commercial quality emeralds and which has been navigating challenging conditions for some time,
appears to have turned the corner and we hope will continue to go from strength to strength. This auction saw the
highest number of participating companies at any of our commercial quality auctions held in Lusaka, and we
congratulate Caibaocheng on becoming the first Chinese customer to win at any Gemfields emerald auction.

As usual, and given our long-term vision and loyalty to the true value of Zambian emeralds, we have elected to retain
auction lots that we believe command higher prices than those presently offered by the market.

Kagem’s biggest impediment remains the 15% Zambian export duty imposed on emeralds since 1 January 2019. When
combined with the pre-existing 6% mineral royalty tax, Zambian emerald exporters must now pay an effective 21%
turnover tax on their revenues. The financial impact is being acutely felt by incumbent producers like Kagem, severely
inhibiting money available for capital investment in growth and handing the tactical advantage to other emerald-
producing countries like Brazil and Colombia, neither of which have any export duty on emeralds. We continue to
liaise with the key government departments in seeking resolution and remain hopeful that a solution will be found”.

Additional information on Gemfields

Gemfields is a world leading supplier of responsibly sourced coloured gemstones. Gemfields is the operator and 75%
owner of both the Kagem emerald mine in Zambia (believed to be the world’s single largest producing emerald mine)
and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the
world). In addition, Gemfields also holds controlling interests in various other gemstone mining and prospecting
licenses in Zambia, Mozambique, Ethiopia and Madagascar.

Gemfields’ outright ownership of Fabergé - an iconic and prestigious brand of exceptional heritage - enables
Gemfields to optimise positioning, perception and consumer awareness of coloured gemstones, advancing the wider
group’s “mine and market” vision.

Gemfields has developed a proprietary grading system and a pioneering auction and trading platform to provide a
consistent supply of coloured gemstones to downstream markets, a key component of Gemfields’ business model
and has played an important role in the growth of the global coloured gemstone sector.

Further information on Gemfields Group Limited can be found at
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23 August 2019

Investec Bank Limited

Date: 23/08/2019 07:05:00
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