LONDON, January 22, 2018 /PRNewswire/ --
In the forests of Colombia, a record-breaking discovery was made. A 1759-carat emerald was uncovered from the Coscuez mine. It is now part of the collection of the Banco Nazionale of Columbia. The massive jewel could be worth as much as $17 million, based on current per-carat estimates. And the mine where it was found has only been partially excavated. Which means there could be hundreds, maybe thousands more emeralds locked away under the ground.
The timing couldn't be better for the company that just took this proven mine over. That's because the increase in demand for colored gems is outpacing the increase for diamonds. As demand for colored gems surges, prices for rubies, emeralds and sapphires have shot up. Prices have already increased by over 100% in the last decade. Included in today's commentary: Teck Resources (NYSE : TECK ), Eldorado Gold Corp. (NYSE : EGO ), Newmont Mining Corp (NYSE : NEM ), Agnico Eagle Mines Ltd (NYSE : AEM ), Turquoise Hill Resources (NYSE : TRQ ).
As new supplies from the world's top colored gem mines come on line to meet demand, the market could grow by five times, from $2 billion to $10 billion in the coming decade.
That's excellent news for Fura Gems (FURA) a rising star in the world of colored gemstones and owner of the Coscuez mine.
The company has assets in Colombia and Mozambique, a superb management team with a great track record for success, and growing opportunities to take advantage of demand in colored gemstones.
Another "Guinness sized" find would make Fura Gems international news. Here's why investors are taking a serious look at Fura Gems(FURA) now. before they are a well known producer of colored gems":
#1 The Smart Money is Flooding in to Colored Gems: What People Don't Know About Diamonds
The diamond market grew thanks to organization. Large companies like De Beers set up integrated operations to grow the sector, minimizing costs and linking supply to demand. Diamonds also benefitted from a straight-forward valuation system.
Demand for diamonds is historically a little inflated. The popular slogan "A Diamond is Forever" was invented by De Beers in the 1940s.
As a result of such developments, "diamond money" has always surpassed "colored gems" money. From a global market worth $23 billion, diamonds account for $13-14 billion and jade $3-6 billion. Colored gems make up only $1.5-2.5 billion.
But that could be about to change. The idea that diamonds are worth more than other gems is a myth. As demand for diamonds declines, colored gems are poised to take over more of the market.
Diamonds can be manufactured, raising questions about their value. Many diamonds that are mined come from "blood diamond" mines in Sub-Saharan Africa and elsewhere, attracting international attention placing pressure on diamond distributors.
De Beers has faced two straight cycles of declining sales. Signs are pointing to a continue slump in the diamond market, as tastes move to other colored gems.
So, as diamonds falter, colored gemstones are ready to pick up the slack.
#2 Colored Gemstone International Demand is Rising
Colored gems are rising in popularity. Throughout the world, they are prized for their beauty, sophistication and style.
Outside of older markets in the United States and Europe, colored gemstones have become wildly popular in China, India and South Asia.
In China, consumption of jewelry doubled between 2009 and 2014, with colored gems rising in popularity even as diamonds held most of the market.
From 2006 to 2013, price increases of rubies and sapphires out-paced diamonds. Marketers noted the rising interest in colored stones, and prices have been rising rapidly.
A report from marketer Gem Rock Auctions shows that demand for colored stones, particularly emeralds, has been rising while demand for diamonds has largely stagnated.
Many rubies sell for more than white diamonds at auction, and prices for emeralds and other colored gems have risen by 100% in the last decade, according to a report from the Natural Resource Governance Institute.
While the market for colored gemstone sales is only $1.5-2.5 billion, with prices rising and demand increasing, that figure could increase by 500% in the next decade, as colored gems displace diamonds.
But the colored gems industry is being held back. It's a fragmented, divided industry with 90% of mining operations in the hands of small-scale, local concerns.
The industry is under-capitalized and suffers from a lack of technological expertise and investment. Huge amounts of money are squandered through corruption, graft and mismanagement.
So far, no company has emerged as the "De Beers of colored gemstones." If the "diamond playbook" were applied to emeralds, rubies and sapphires, costs could be slashed and full advantage taken of the market opportunities for colored stones.
Fura Gems (FURA) is looking to seize that opportunity, and it has a management team ready to take on the challenge.
#3 A Team That With a History of Billion Dollar Gem Projects
The team at Fura Gems (FURA) is aiming to put the "diamond playbook" to the test.
CEO Dev Shetty came to Fura from Gemfields Plc. He joined Gemfields when the country was struggling, hemorrhaging money as profits sagged and debt piled up.
Shetty turned Gemfields around, bringing the company from a $201 million net loss in 2009. By 2015 the company had a market valuation of $525 million.
Shetty was instrumental in bringing Gemfields into Colombia and Ethiopia. He also helped the company develop its mine in Zambia, believed to be the world's largest source of emeralds.
Shetty's predecessor Jamie Lalinde continues to sit on the board, offering advice to management from his twenty years of banking experience. Lalinde has worked stints at Chase Manhattan, Merril Lynch and Citibank, as well as years in the Mexican and Colombian mining sector.
Shetty is backed by a strong advisory team with great name recognition. On the advisory board is world-renowned broadcaster Larry King, legendary investor Jim Rogers and international businessman Michael Spektor.
#4 A $50 Million Company With Growth Potential
Fura Gems (FURA) possesses immense capacity for future growth. From its current $38 million market cap, Fura could become a much bigger company if the assets it's acquired prove out.
The jewel in Fura's crown is the Coscuez mine, which it just acquired in a $10 million deal. The deal gives Fura a controlling stake on a plot of 46 hectares, an area that has been consistently producing quality emeralds for over four hundred years.
It's where the massive 1759-carat Guinness Emerald, which alone could be worth as much as $17 million, was discovered. And Coscuez is only partially explored, meaning there could be an inventory of emeralds locked away in its orre.
A well-cut emerald can be worth as much as $9,800 per carat. One 18-carat emerald ring sold at auction in June 2017 for $5.5 million!
With a huge reservoir of ore waiting to be dug up, the Coscuez mine, which once supplied 77% of the emeralds in all of Colombia, could again be an excellent source of emeralds. Colombia itself has produced only about 20% of its total emerald reserves.
Getting hard figures for colored gemstones can be tricky, but with a $10 million initial investment and applying modern mining techniques, Fura is hoping to be able to duplicate Gemfields' experience in Mozambique: Gemfields earned $225 million in gem sales from seven auctions, and that's just in the first five years.
That means that Fura, with good properties and excellent know-how, could grow significantly... especially if they luck into a major find that makes international headlines.
Fura also has an interest in Mozambique rubies, and has set its sights on the Indian market, the third largest jewelry consumer on earth. The company is "actively looking for opportunities," according to Shetty
#5 Fura Gems Could Be The Mining Sector's Play of 2018
The age of diamonds has peaked, and Fura Gems (FURA) is aiming to take the diamonds playbook and applying it to the growing colored gemstones market.
With the famed Coscuez mine, the dynamic leadership of Dev Shetty and growing international interest in colored gems, Fura is working to build upon its small market cap.
Just compare it to what Shetty was able to do with Gemfields: he took a company that was losing $200 million a year, and within five years brought it to a market valuation of $525 million.
And with the Guinness Emerald as its poster-boy, there's a chance Fura Gems will soon be front-page news. The Guinness Emerald alone could be worth $17 million. Imagine if the same Coscuez mine had another emerald like that.
Savvy investors will know to pay attention to Fura Gems (FURA) now, before the gem rush really gets going.
Other major miners:
Teck Resources (NYSE : TECK ): While Teck isn't huge in luxury markets, the company's diversified mining portfolio certainly pushes it ahead of the pack. Zinc, one of the company's major resources, hasn't been Teck's best friend of late, but that looks set to change in the medium term, as supply continue to dwindle and as we hear news that the world's top producer of the metal-Glencore-isn't planning to bring shuttered mines back online. Supply will remain tight.
Eldorado Gold Corp. (NYSE : EGO ): This Canadian mid-cap miner has assets in Europe and Brazil and has managed to cut cost per ounce significantly last year. Due to a steep loss in 2016, the company has seen its share price tank this year. Analysts, however, are getting bullish on this stock again as gold prices are rising.
Newmont Mining Corp (NYSE : NEM ) Founded over 100 years ago, Newmont Mining Corporation is one of the leading mining companies in the world. The company holds assets in Peru, Australia, Ghana, Indonesia, Mexico, and around the United States. Primarily focusing on gold and copper, Newmont has steadily carved out a name for itself among those in the industry.
In Q1 2017 alone, the company secured over 1.2M ounces of gold, and with a $21-billion market cap, Newmont has shown no signs of slowing, making the company an excellent bet for investors.
Agnico Eagle Mines Ltd (NYSE : AEM ) Canadian based gold producer, Agnico Eagle Mines is an especially noteworthy company for investors. Why? Between 1991-2010, the company paid out dividends every year. With operations in Quebec, Mexico, and Finland, the company also is taking place in exploration activities in Europe, Latin America, and the United States. This is certainly a company with tremendous potential that grows better by the day.
Turquoise Hill Resources (NYSE : TRQ ) is a mid-cap Canadian mineral exploration and development company headquartered in Vancouver, British Columbia. Its focus is on the Pacific Rim where it is in the process of developing several large mines
By. Meredith Taylor
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