Gemfields in search for more rubies

AIM-listed Gemfields announced on Friday (7 December) that it has entered into a conditional agreement to acquire a controlling interest in an additional ruby deposit located adjacent to the company's Montepuez ruby mine‚ in the Montepuez district of the Cabo Delgado province in Mozambique.

The deal involves the initial acquisition of 75% of one exploration licence with a one year option to acquire 75% of a second licence‚ covering 18‚400 and 14‚900 hectares respectively.

The consideration for each Mining Title is US$1.75m.

The Mining Titles are expected to provide a platform‚ alongside the Montepuez deposit‚ for the expansion and development of Gemfields' Mozambique operations

Small scale and informal mining within the targeted licences has already taken place and the vendor‚ EME Investimentos S.A‚ is now‚ by way of this agreement‚ seeking to expand operations. The Mining Titles both share boundaries with the mining concessions of Montepuez Ruby Mining Lda (MRM)‚ in which Gemfields has a 75% shareholding.

Under the terms of the agreement Gemfields will hold 75% of a new company‚ with the vendor holding 25%. Subject to government approval‚ the Mining Titles will be converted to mining concessions issued in the name of the new company.

Ian Harebottle‚ chief executive of Gemfields‚ said: "The conditional agreement has the potential to significantly expand our footprint in what we believe to be an exciting large scale ruby province.

"We are particularly pleased to be able to provide this update to our shareholders given the considerable progress we have already made.

"The early indicators from the ongoing bulk sampling at our adjacent Montepuez project are encouraging. We have received positive support from both the regional and national Mozambican authorities for our activities to date and I have little doubt that this‚ our second project within Mozambique‚ is unlikely to be the last and that the continued expansion and development of our Mozambican operations will prove to be a key element of Gemfields' continuing growth strategy," Harebottle said.