5 February 2013

Zambia: Kagem Mine U.S Output

Emerald production at the Gemfields owned Kagem Mine in Lufwanyama District, has increased by 6.5 per cent to 14.5 million carats from last year's figure of 8.8 million carats, chief executive officer Ian Harebottle has said.

Production figures moved up to 14.5 million carats during the period July to December, 2012 from 8.8 million in the same period in 2011, which was the highest capacity achieved to date during the rainy season.

He said demand for ethical emeralds has continued to remain firm across all major markets as was clearly indicated by the prices per carat achieved during the Company's recent higher quality rough emerald auction held in Singapore from October 29, to November 2, 2012.

Mr Harebottle said the grade for the quarter was 288 carats per tonne (222 carats per tonne in the quarter to 2011).

He said unit production costs for the quarter of US$0.66 per carat (USD 0.87 per carat in the quarter to December 31 2011).

The cash rock handling unit costs were US$ 3.43 per tonne (USD 3.21 per tonne in the quarter to December 31,2011), while unit ore production costs were US$ 189 per tonne (US$ 193 per tonne during the same period.

Mr Harebottle said Kagem's large-scale and ongoing overburden removal programme to open up new areas for future ore production continues to progress as planned with over 2.2 million tonnes of rock having been moved in the past quarter.

The stripping ratio increased by 14 per cent from 84 to 96 as larger areas of over burden, were mined in order to further increase the levels of ore available for future mining and as the push-back project was accelerated.

He said management expected an overall increase in operating efficiencies and performance as the stripping ratio stabilises in the medium term and as Kagem was able to mine both waste and ore more efficiently.

Approximately 1.3 million tonnes of waste were moved by the contractor during the quarter compared to 1.7 million tonnes in the previous quarter, with cash rock handling unit costs increasing to US$ 3.43 per tonne in the current quarter (compared to US$ 3.29 in the prior quarter).

"At December 31, 2012, Gemfields had cash of US$ 27.9 million and total debt outstanding of US$ 7.9 million," he said.

Gemfields' trial underground mining project achieved 37.3 metres of horizontal advance and completed nine blasts in the completion of the first identified stope during the quarter ending December 31, 2012 as opposed to 90.4 metres in the quarter ending September 2012.

A total of 1,352 tonnes of ore was produced during the quarter compared to 1,460 tonnes in the prior quarter with no waste rock removal.

Mr Harebottle said approximately 266,345 carats were produced by the underground operation in the quarter as opposed to 75,190 carats in the prior quarter.

The carat improvement is due to the increased ore mined in the stope.

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