Gemfields delivered "mixed" results in the third quarter as the firm downgraded annual production goals at two mines. However, the precious stone miner said demand for coloured gems continues to thrive.
In a trading update for the three months to the end of March, Gemfields said its Kagem mine in Zambia produced 4.5m carats of emerald and beryl with an average grade of 193 carats per tonne, a steep drop from the 7.1m carats averaging a grade of 297 carats per tonne of the previous year.
Operating costs at Kagem were $9.6m (£7.5m), down from $11.2m the previous year, as the firm downgraded its total production expectations for the year to between 20m and 25m carats.
At the firm's Montepuez ruby mine in Mozambique, production was 1.2m carats of ruby and corundum with an average grade of seven carats per tonne. That's compared with 2m carats averaging 30 carats per tonne the previous year.
Operating costs were $6.5m, up from $5.8m in 2016, and target annual production was lowered to between 8m to 10m carats.
Shares dropped 6.35 per cent to 38.98p at the market open.
Why it's interesting
Gemfields said heavy rainfall, the "varied nature" of the emerald mineralisation and a focus on opening new areas for future mining resulted in the lower production at Kagem.
The miner said Montepuez performed "extremely well" with a significant increase to the quantity of ore and quality of gemstones produced.
Despite the production downgrades at both mines, Gemfields reassured its auction schedule will not affected. The next auction from Kagem is set for next week, and from Montepuez is set for June.
In February, the Alternative Investment Market (Aim) miner's shares fell nearly eight per cent when it said auction delays due to demonetisation in India will drag down full-year revenue and core earnings.
What Gemfields said
Chief executive Ian Harebottle said: "From an operational perspective the quarter under review delivered mixed results but we remain delighted that demand for coloured gemstones continues to increase as the sector strengthens."
Importantly, the lower production experienced during the quarter at both Kagem and Monetpuez, and the changes to the targeted total production figures for financial year 2017, will not impact on the company's upcoming auction schedule.
"I look forward to sharing with you the outcome of our next auction of predominantly commercial quality emeralds and beryl, scheduled to take place in Jaipur, India, later this month, and the continued improvement in the coloured gemstone sector."