The world’s single-largest producing emerald mine. The 41 square kilometre licence area is located in the Ndola Rural Emerald Restricted Area and lies south of Kitwe and west of Ndola, in Zambia’s Copperbelt Province. It is 75% owned by Gemfields and 25% owned by the Government of the Republic of Zambia. The mine comprises three open pits.
For more information on Gemfields, please visit: www.gemfields.com
Kagem produced 204,600 carats of premium emerald for the year ended 31 December 2019.
Total auction revenues of USD79.0 million were generated from four auctions during 2019.
In 2007, Gemfields Group Limited (formerly Pallinghurst Resources Limited) (“GGL”) identified the coloured gemstone sector as an “overlooked” industry that offered a unique investment opportunity. Demand for coloured gemstones by the jewellery and fashion sectors was increasing, but supply was constrained and fragmented due to the lack of large, reliable producers able to consistently deliver sufficient quantities of gemstones. Pallinghurst saw an opportunity to unlock value by bringing capital, scale and professionalism to the industry, to which end it assembled a consortium of Pallinghurst Co-Investors, including the Group.
Kagem, an emerald mine in the “Copperbelt” region of northern Zambia, currently producing nearly a quarter of the world’s emeralds, was the consortium’s first acquisition in the sector. Kagem had been producing emeralds for nearly 20 years but was performing badly due to a combination of poor management, theft, shareholder conflicts and a lack of capital. Through a series of transactions, the consortium acquired 75% of Kagem, with the balance held by the Government of the Republic of Zambia. In pursuing its vision for consolidating the sector, the consortium acquired majority control of AIM-listed Gemfields plc (“Gemfields”) by selling Kagem to Gemfields in a reverse takeover during 2008.
The Mbuva-Chibolele licence is located on the Fwaya-Fwaya–Pirala Belt in the NRERA within the Kafubu area of the Copperbelt Province of Zambia, on the southern banks of the Kafubu River. It lies along the west-southwest strike from the nearby Fwaya-Fwaya emerald mining zone adjacent to the Kagem licence area. This pit was kept under care and maintenance from 2007 onwards so as to focus on operations at Kagem. However, following GGL’s acquisition of Gemfields, a decision was made to expand the Group’s emerald footprint and, accordingly, operations at Mbuva- Chibolele were resumed in late 2017.
During October 2019, in accordance with the Licence Transfer Agreement between Gemfields Mining Limited and Kagem, the Chibolele, Kamakanga and Arinus licences held by Gemfields Mining Limited were transferred to Kagem. The transfer was approved by the Ministry of Mines and Mineral Development. In February 2020, the remaining eight licences included under the same Licence Transfer Agreement were approved by the Ministry of Mines and Mineral Developments and transferred.
Gemfields implemented an innovative grading and auction system for selling its rough gemstones. The auctions are held in secure locations with the material separated into homogenous lots and certified as either having been produced by Gemfields or obtained by Gemfields from third parties. The world’s leading rough gemstone buyers submit sealed bids for individual lots. A sale occurs if the highest bid received exceeds a pre-determined, but undisclosed, reserve price. The auctions have brought a level of professionalism and transparency previously not seen in the industry.
As there was no industry standard for evaluating rough coloured gemstones, Gemfields established its own grading system to assess each gem according to its individual characteristics (size, colour, shape and clarity). This approach has been instrumental in providing buyers with confidence in the consistent quality of the material on offer. Gemfields used this grading system to develop two auction classes, one offering higher quality gemstones and the other for the larger volume of lower quality gems.
Since its first auction in July 2009, Gemfields has seen increased demand for its responsibly sourced and transparently supplied emeralds, highlighting the success of its formalised and consistent method of marketing rough coloured gemstones by auction.
Gemfields’ 35 auctions of emerald and beryl mined at Kagem since July 2009 have generated US$647 million in aggregate revenues. Gemfields continues to experience significant demand for its responsibly sourced emerald and beryl with successive auctions regularly achieving record per carat prices and auction proceeds.
During the year, Kagem continued work in three sectors of the Chama pit (F10, Chama and FF-Mboyonga) exposing the emerald bearing rock for mining. In addition, certain sections of the pit were further cleared and deramped, allowing a consistent production profile at the main pit. The efficiencies achieved from redesigning the pit have continued, with a larger, more efficient fleet being deployed in the pit.
Fibolele continued to provide an additional source of production and the extension of the strike length to 600 metres during the year exposed more emerald and beryl-yielding contacts. Fibolele has produced 15.6 Mct since 2012 with 3.08 Mct being recovered in 2019.
Gemstone production for the year was 36.3 Mct of emerald and beryl, with 204,630 carats of premium emerald. This is a slight fall from the prior year and is partially due to a drop in the grade of ore available at the wash plant which fell from 235 gm/tonne in 2018 to 173 gm/tonne in 2019.
Overall, the Chama pit, on a standalone basis, has shown significant improvement in grade from 194 carats/tonne (“ct/t”) in 2018 to 226 ct/t 2019.
In addition to the steps taken to upgrade the security system in and around the pits in the previous years, in 2019 high-resolution digital surveillance CCTV cameras were installed, radio communications were improved, and permanent patrol teams were formed and deployed. The main emphasis this year was on sustaining the efforts taken earlier and also on improving the protection of the sort house by commissioning a new palisade fence to enhance security.
With increased production during the year, health and safety risk and environmental degradation have also increased. However, this has been well managed with a constant focus on hazard identification and risk assessment for various tasks being undertaken. Kagem maintained its ability to conduct mining in a responsible, transparent and safe manner with minimal impact on the natural environment. Kagem continues to aim for a zero-harm (injury-free) culture where health and safety are not only considered critical to the operation but are also ultimately the responsibility of each individual employee.
Kagem completed the construction of new toilet blocks for a local community school, Kapila, and at the end of the period, Kagem commissioned the construction of a local community school. No other major health, agricultural or educational projects were undertaken this year in view of the cash constraints facing the business.
Through its successful auction system, Gemfields has cemented its position as the world’s leading supplier of both rubies and emeralds.
Teams from both Gemfields and Kagem worked tirelessly throughout the year to address the export tax, engaging in regular dialogue with the relevant ministries and technocrats in Zambia.
Gemfields is honoured to announce the discovery of ‘Inkalamu’, the Lion Emerald, a 5,655 carat Zambian emerald crystal with remarkable clarity and a perfectly balanced golden green hue.
Please click below to download the ‘Inkalamu’ press statement.
The global coloured gemstone market continues to grow soundly and Gemfields has the potential to expand through its existing emerald and ruby businesses, its recently acquired projects and to apply its successful model to other coloured gemstones.