Take a peek into a jewelry store, and diamonds, emeralds, rubies and sapphires are pretty much all you’re likely to see. These are the gemstones most widely considered to be “precious,” and those that most often come to mind when someone mentions the word “gemstone.”
Although they may well represent the best known and most valuable gemstones by type, overall they comprise only a minute fraction of the large and diverse family of coloured gemstones. There are literally dozens of gemstone minerals found worldwide. They come in a dazzling variety of colours (sometimes more than one colour in a single stone) and many of them rival or exceed the value of a top-quality diamond, particularly in the finer grades. Some are found at many locations around the world, others, in only one area, and some in only a single deposit! For the rarer among them, top-grade cut stones over a few carats in size may exceed US$10,000 per carat (one-fifth of a gram), rendering diamonds almost commonplace by comparison.
And there are new gemstones being discovered all the time. For example, I attended this year’s Tucson Gem and Mineral Show — the world’s largest annual gem and mineral show, equivalent to our own Prospectors and Developers Association of Canada convention but spread across a dozen convention centres and hotels across Tucson over a period of almost two weeks, and attracting upwards of 70,000 people annually. There, I met an ex-Newmont geologist who, in the course of his gold exploration work in Indonesia, came across an area of fossilized coral limestone that had been silicified by hydrothermal fluids related to a nearby volcanic centre. As a result, the delicate textures of the coral had been perfectly preserved. It had been stained a subtle orange-red (by iron oxides), and its silica content allowed it to be polished to a glossy lustre.
This intrepid geologist, upon learning of the potential gemstone value of his discovery — something to which most of us in the exploration business would pay absolutely no attention — resigned his position with Newmont and staked a claim around the limestone. He is now managing a thriving business, selling his gemstone product all over the world. In the process, he is generating more annual income than 95% of all listed junior mining companies.
With rare exceptions, most gemstone deposits are still being mined by individuals, small groups of artisanal miners, or small private companies. It’s usually done with primitive equipment and methods, and on a small scale.
The mainstream mining industry is hardly involved at all, despite the tremendous wealth that these colourful little commodities can bring, in most cases with a capital investment a small fraction of what you’d have to put up to develop even a small, open-pit metallic deposit. Perhaps this oversight is due to a lack of awareness — slowly changing, thankfully, as a result of factors I have reviewed in a previous article in this series. Perhaps the change is due to an investment psychology that seems to prefer the remote possibility of a significant capital gain from a constantly diluting exploration company, versus the significant possibility of a more modest, sustained capital gain from a profitable, self-financing mining company.
Although there are no Canadian-listed public companies exploring for coloured gemstones other than the few I mentioned in the second installment of this series (T.N.M., June 23/03), there are numerous private companies that are, all across the country. In the public realm, there are but a few overseas ventures.
Perhaps the most notable among them, and probably the most successful as well, is African Gem Resources, or AFGEM as it is more widely known. A South African company listed on the Johannesburg exchange (afg: jse), AFGEM has secured mining rights to most of the world’s known resources of tanzanite, a bright purple-blue variety of the mineral zoisite, found only in the Merelani Hills of northeastern Tanzania. These rights were acquired in late 1998 through a bidding process after which a privately financed feasibility study was undertaken. In 2000, the company obtained a public listing on the Johannesburg stock exchange and raised more than 80 million rand (US$11 million), whereupon mine development began. In January 2003, mine development was completed and commercial production initiated.
Through its control of more than 60% of the world’s tanzanite resources, AFGEM has grown from just over 100 to almost 300 employees, from revenues of under R10 million to more than R70 million (US$1.4 to almost US$10 million), and from a share price of under US$1 to close to US$20. At the same time, tanzanite has gone from an obscure African gemstone to a popular and expensive one that may found in the front window of Tiffany’s and most of the world’s other high-end jewelry boutiques.
Patchy
Given the patchy nature of many gemstone deposits (comparable to an extreme nugget effect), it is often difficult to determine a reliable resource estimate. AFGEM is already in production but is still only quoting a resource (as opposed to a reserve) on its web site (www.africangem.com): the combined inferred and indicated resource is almost 7 million tonnes grading 4.4 grams per tonne.
Prices for rough tanzanite begin at around US$50 per carat, or US$250 per gram. Of course, AFGEM is not selling any rough; rather, it is adding value through cutting and polishing themselves, then wholesaling to the major jewelry chains around the world. Retail prices for cut tanzanite can range from as low as US$200 per carat to over US$1,000; wholesale prices, probably around half that. So it’s a fair guess that AFGEM realizes a net price of somewhere in the range of US$150-250 per carat, or US$750-1,250 per gram, rendering this tanzanite deposit roughly equivalent to a 3-million-ounce gold deposit by value. Not bad.
Tanzanite is only found in what amounts to a single deposit, so AFGEM can exert some marketing control in the same fashion De Beers does with diamonds. Nevertheless, there are similar opportunities with numerous other gemstone commodities, none of which appear to be receiving any attention by publicly listed mining companies — even when the gemstones occur along with metallic deposits that the companies may in fact be pursuing.
A case in point is turquoise, a hydrous copper phosphate and an exotic copper mineral typically found above, and adjacent to, primary copper sulphide deposits, particularly in arid environments. It is often found with any number of other exotic copper minerals, such as chrysocolla and bisbeeite among others, most of which have significant value as gemstones when found in a sufficiently pure state. Even at lower grades, the gemstone value of these copper minerals often far exceeds their copper metal value — yet in most cases they end up on the leach dump.
Turquoise is one of the oldest gemstones known to man, with a history of use dating back several thousand years. The oldest mines are found in Egypt and Iran, but it is also found all along the Western Cordillera and in many other arid settings, most often in association with porphyry copper deposits. The southwestern U.S. contains several economically important deposits, as does Mexico; the colour and texture of turquoise in these locations are different from the pure-sky blue of Persian turquoise, and generally less expensive.
Renaissance
Turquoise is enjoying something of a renaissance in popularity following a prolonged downturn, largely as a result of widespread enhancement and counterfeiting (simulant and imitation turquoise), which has led to market disenchantment. Small cabochons of turquoise (in the 1-cm-diameter range) can have a retail price of between US$2 and US$20 per gram, depending on quality, or roughly US$900-9,000 per lb. That compares with US81 per lb. for copper metal itself.
Topaz, tourmaline, and garnet are three minerals that, similar to beryl and corundum, come in a variety of colours, many of which are considered to be discrete gemstones in their own right. Some are fairly common; others are both rare and incredibly expensive. Many can be found in a single deposit, often in association with pegmatites that have intruded ultramafic rocks (particularly topaz, tourmaline, beryl, and a number of other coloured gemstone species).
Topaz is an aluminum fluoro-hydroxyl-silicate that comes in a variety of colours, including yellow, orange, pink, and pale blue. It is commonly thought of as a sky-blue gem, but it was not until this century that blue topaz became widespread on the gem market; the deep-blue colour popular today is virtually all heat-treated (the same goes for most pink topaz). The most valuable variety of topaz is intense golden orange-yellow in colour, known as imperial topaz.
Pegmatites
The most economically significant location is the large and fabulously mineralized pegmatites of the Minas Gerais district of Brazil, perhaps the world’s greatest gemstone district. Cut and polished topaz can retail from as little as US$10 to more than US$1,000 per carat, with imperial topaz reaching retail prices in excess of US$2,000 per carat for large, top-quality pieces.
Similarly, tourmaline, a complex boro-silicate, is a mineral that comes in a variety of colours. Prices for the rarest — an intense chrome-coloured, blue-green variety known as Paraiba — can reach more than US$20,000 per carat for extra fine stones over 2 carats in size. So far, Paraiba tourmaline has been found only in the state of Paraiba, in northeastern Brazil. Other varieties, also common to the pegmatite deposits of Minas Gerais and elsewhere, come in shades of blue, green, pink, red, golden, and yellow, in both clear and chatoyant types, and can fetch prices ranging from as low as US$10 to more than US$1,000 per carat for well-cut stones.
Garnets are also found in abundance in various metamorphic settings, as well as in kimberlite pipes. Faceted pieces cut from nice and clear, deep purple-red pyrope can be sold for upwards of US$50-100 per carat, whereas “rhodolite” — about half-way along the solid solution series between pyrope and almandine, and a bit more pinkish-red — can fetch prices of more than US$250 per carat.
Cut and polished orange-yellow spessartite garnet sells at retail prices of up to US$2,000 per carat for larger, top-quality pieces (more than 5-10 carats, or 1-2 grams). Cut and polished tsavorite, the chromium- and vanadium-bearing, emerald-green grossular garnet found in Kenya and Tanzania, can fetch prices in excess of US$6,000 per carat (top quality, over 5 carats), with even small stones selling for US$150-1,500 per carat.
Demantoid is another chrome-bearing, emerald-green variety of garnet, with the best quality stones coming from a district in the Ural Mountains of Russia, where it was discovered in 1868. Prices for cut demantoid can easily exceed a few thousand dollars per carat, particularly in the larger sizes and higher qualities.
None of the coloured gemstones, with the partial exception of tanzanite, is sufficiently controlled and marketed on a global scale, as is the case with diamonds. As a result, prices tend to be somewhat less stable from year to year, reflecting vagaries in production and popularity. Nonetheless, long-term price trends are invariably upward, and with the increase in treated, synthetic and imitation stones, combined with an improving global economy, price trends for natural, untreated gemstones are forecast to appreciate even further. (China and India are just coming on-stream and represent a potential market that dwarfs the rest of the world combined.) Unlike price trends for many metals, the future for gemstones is bright indeed.
In my next and final article in this series, I will review a few more coloured gemstone species, including a number of rare varieties, summarize some of the main geological settings for coloured gemstones, and conclude with a look into where the coloured gemstone industry seems to be heading.
— The author is a professional geoscientist and certified gemologist active in all kinds of mineral exploration, including metals, diamonds and coloured gemstones.
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