Fura Gems aims to revive fabled Colombian emerald mine

By Peter Kennedy

When Princess Eugenie wore an emerald tiara at the latest royal wedding on October 13, 2018, she briefly highlighted an aspect of mining that doesn’t get much attention.

Hoping that will change is Dev Shetty, President and CEO of Fura Gems Inc. [FURA-TSXV; FUGMF-OTC; BJ43-FRA], a company that is focused on reviving one of the world’s most prolific emerald producers.

The famous Coscuez Mine in Colombia has earned that reputation after being in production for over 400 years, and yielding some of the world’s finest emeralds, including the 7,000-carat Emilia Emerald Crystal, the largest ever discovered.

Accounted for 95% of Colombia’s emerald production in the 1970s, Coscuez has largely been a small-scale artisanal operation.

But thinking that it can significantly ramp up production, Fura bought a majority interest in the mine in October 2017, agreeing to pay $10.2 million for a 76% of the issued and outstanding shares of Colombian mining company Esmeracol S.A. (which owns 100% of the Coscuez license).

Fura acquired the majority interest from Emporium HS S.A.S., a private Colombia-based company with the intention of increasing production via technology and procedural upgrades. The ultimate goal is to build an emerald supply chain in Colombia.

Emporium HS S.A.S., continues to hold a 21.71% stake in the operation which produced 34,078 carats of emeralds between the fourth quarter 2012 and the second quarter of 2017.

During an interview with Resource World Magazine, Shetty said the company plans to focus exclusively on the sale of rough gemstones. It will not be involved in the subsequent processes such as cutting and polishing.

“Most of my clients are polishers of gems,” said Shetty, who spoke to Resource World while he was attending the Second Word Emerald Symposium in Bogota, Colombia. “We don’t get into cutting and polishing. Cutting and polishing is a different ballgame. It is very capital intensive.”

Fura is a member of the Forbes & Manhattan Group, a Toronto-based merchant banking group.

Prior to embarking on this project, Shetty had worked as COO with Gemfields Group Ltd., [GML-JSE], the world’s largest publicly-listed producer of ruby and emeralds, and a miner of gemstones in Zambia and Mozambique.

After gaining the rights to the Colombian mine, the company initiated a bulk sampling program at Coscuez in March 2018 in a bid to gain a better understanding of the orebody and as well as the mining methods that will prove to be the most productive.

In a recent press release, the company said this effort has been a success.

It said the completion of Phase 1 of the Bulk Sampling Program has assisted in the validation of various assumptions for the development of the next phase and large-scale mining plan.

“Within a short period of six months since the launch of the bulk sampling program, we have gained a comprehensive understanding of the geology, possible mining methods and we have developed a culture of workplace safety,” said Shetty

A total of 9,737 tonnes of material was mined from different levels and workings of the mine, out of which 6,396 tonnes of mineralized body have been identified. Of the 6,396 tonnes of mineralized body, a total of 1,800 tonnes of high-priority mineralized body has been washed, recovering 12,845 carats of emerald, equating to a grade of 7.14 carats per tonne.

Shetty is pleased that sampling on a number of levels has produced a good mix of high, medium and lower quality emeralds (including a 25.97-carat rough emerald which has been named the “ARE Emerald” in honour of a mythic Colombian figure who is thought to be responsible for the creation of the primary sources of emeralds in Colombia’s Boyaca region where  Coscuez is located.

The company hopes to complete the balance of the 20,000 tonnes of planned bulk sampling by March of 2019.

Aside for the mine in Columbia, Fura is involved in the exploration and mining of rubies in Mozambique through its 80% effective interest in the four ruby licences (4392, 3868, 3869 and 6811), covering 39,425 hectares, that it acquired in November 2017. It has subsequently agreed to acquire additional licenses that are located in the same geological best as licenses held by Gemfields.

The company’s long term goal is to build an operation with 6 million carats per year of capacity, at a cost of roughly US$16 million. Therefore, the value of the company is dependent on the price of emeralds and rubies.

Gemstone quality is dependent on the “Four Cs”: colour clarity, cut and carat. The variability across the four Cs results in a wide range in pricing. The US$ price of rubies, for example, can range between single digits to millions.

Whilst control of the global diamond supply is dominated by large international mining corporations such as the De Beers Group, coloured gemstone miners are largely artisanal or individual miners, making the coloured gemstone mining industry a highly fragmented market.

It is believed that between 80% and 90% of the coloured gemstone market (excluding diamonds) is controlled by state-owned/small-scale artisanal miners, while the remaining market share is held by a few corporate miners, of which Gemfields is the dominant player.

Geographically, the production of coloured gemstones is concentrated in a small number of countries, with ruby production dominated by Mozambique and Myanmar, and emerald production dominated by Colombia and Zambia.

On October 15, 2018, Fura shares traded at 35 cents, leaving the company with a market cap of $43 million based on 120.8 million shares outstanding. The 52-week range is $1.13 and 33 cents.