https://www.miningweekly.com
Business|Exploration|Export|Financial|Gemfields|Gold|Mining|Platinum|Gemstones|Rubies|Operations
Business|Exploration|Export|Financial|Gemfields|Gold|Mining|Platinum|Gemstones|Rubies|Operations
business|exploration|export|financial|gemfields|gold|mining|platinum|gemstones|rubies|operations

Gemfields delivers varied interim results, remains intent on London listing

Gemfields chairperson Brian Gilbertson

Gemfields chairperson Brian Gilbertson

Photo by Creamer Media

20th September 2019

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

Font size: - +

Dual-listed Gemfields, which remains intent on listing on the Aim, delivered a “profitable, but varied” performance during the first half of the year, ended June 30, chairperson Brian Gilbertson said on Friday.

He explained that, when compared with the first half of 2018, total rock handling had increased by about 20%, but the recovery of emeralds and rubies in the premium category had decreased by about 37% as the gemstone producer navigated areas yielding lower premium-carat grades.

Despite the lower grades, the producer’s flagship operations in Mozambique and Zambia generated revenues of $50-million and $33.2-million, respectively, in contrasting market circumstances.

Gemfields, however, continues to experience strong demand for its Mozambican rubies, with one lot at the June auction having set a new, all-time price-per-carat record for any Gemfields auction, according to Gilbertson.

The producer’s Kagem emerald mine, in Zambia, meanwhile, continues its run of emerald recovery, albeit at somewhat lower levels than in the first half of 2018. Production at Kagem in the premium emerald category reached 80 900 ct and overall production amounted to 15.6-million carats in the first six months of this year.

Progress continues to be made on the amalgamation of Mbuva-Chibolele and other wholly-owned Zambian licences into Gemfields’ 75%-owned Kagem operation in order to “create a larger company with greater economies of scale that is better equipped to smooth out volatile qualities and grades by having a larger number of operating pits”.

Production at Chibolele for the period was three-million carats, which Gilbertson said supported the encouraging signs observed to date at that operation.

Montepuez Ruby Mining (MRM) produced 1.1-million carats, of which just 34 500 ct were in the premium ruby category, during the six months under review.

Owing to the nature of coloured-gemstone geology, Gilbertson advised that it was common to experience considerable volatility of both grade and quality, and that the Gemfields team remained confident that premium-grade ruby production would improve from the muted levels experienced during the first half of the year.

Meanwhile, Kagem’s most significant challenge at present was the 15% Zambian export duty imposed on emeralds since January 1.

According to Gilbertson, the 15% export duty “shuts the door” on foreign investment in the Zambian emerald sector, and the financial impact was being acutely felt by incumbent producers like Kagem.

“We continue to liaise with the key government departments in seeking a solution and remain hopeful that one will be found,” he said.

Further, Gemfields’ luxury jewellery subsidiary Fabergé achieved revenues of $3.8-million in the period under review, at a sales margin of 45%, up from 39% for the comparative period, and a loss after tax of $3.4-million.

Fabergé’s concession at Harrods, the London department store, recorded a 67% increase in sales after the lease on Fabergé’s standalone store in Mayfair came to an end.

Overall, Gemfields generated earnings before interest, taxes, depreciation and amortisation (Ebitda) of $33.1-million and recognised free cash flows of $9.7-million.

Capital expenditure of $14.6-million was primarily made up of spend at MRM ($9.9-million), Kagem ($2.1-million) and Megaruma Mining ($1.9-million), with the remainder incurred across the other exploration and development assets.

Megaruma Mining holds two ruby-mining titles, 7049C and 7057C, located in the Montepuez District of Mozambique. These titles each share a boundary with the existing MRM deposit and cover an area of about 190 km2 and 150 km2, respectively.

During the period, the group paid $8.7-million and $7-million in corporate tax and mineral royalties, respectively, as well as $1.9-million toward Zambia’s new export duty.

As at June 30, Gemfields was in a net cash position of $35.5-million, with $18.1-million of this relating to receipts from its Jupiter Mines investment during the period.

The sale of Gemfields’ minority stake in Jupiter was consistent with its strategy of focussing on African coloured gemstones, Gilbertson said.

The sale is structured in two phases, with the first phase completed in June and the second phase scheduled for November.

Meanwhile, Gemfields’ platinum group metals (PGM) investment, a 6.5% stake in Sedibelo Platinum Mines, has entered its eleventh year of production.

At December 31, 2018, the producer changed its valuation methodology to a market-multiple approach.

During the period, the dollar-based PGM basket price experienced an upward tick in value, mainly attributable to a change in the fortunes for palladium and rhodium.

However, the financial performance of Sedibelo had not seen the same improvement, Gilbertson lamented. The company produced a loss before interest, taxes, depreciation and amortisation of $5.1-million.

Meanwhile, during the period under review, Gemfields entered into a joint venture agreement with Mwiriti, the company’s existing partner in MRM, in order to progress opportunities in the gold exploration sector through 12 greenfield licences presently held by Mwiriti.

The transaction is expected to complete in the fourth quarter once all conditions precedent have been met.

Gemfields also completed the disposal of its 50% interest in Kariba Minerals, an amethyst mine in Zambia.

Operations in Ethiopia remain on hold until the prevailing political and social conditions permit a resumption of the producer’s work there.

LISTING CONSIDERATION

Gilbertson confirmed that Gemfields remained intent on listing on London’s Aim market during the second half of this year.

“We will maintain our primary listing in Johannesburg and will look to relinquish our Bermuda listing, seeking to bring those shareholders listed on our Bermudan register over to the Aim,” he said.

Commenting on the rationale, Gilbertson noted that Gemfields believes that in bringing the Gemfields brand back to the London market, it will help to improve the liquidity of the producer’s stock as well as reach a wider pool of international investors.

“The potential to increase our public profile and broker coverage should give a wider audience a deeper understanding of the company’s operations and prospects,” he said.

This move is on the back of Gemfields’ 2018 financial statements having been negatively impacted by a number of exceptional items and associated costs.

As the producer moves forward without the influence of those items, and as it continues to focus on its core business, Gilbertson said Gemfields expected to be better positioned to deliver consistent returns to shareholders, particularly if the matter of the 15% export duty in Zambia could be resolved.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Schauenburg SmartMine IoT
Schauenburg SmartMine IoT

SmartMine IoT has been developed with the mining industry in mind, to provides our customers with powerful business intelligence and data modelling...

VISIT SHOWROOM 
Hanna Instruments Image
Hanna Instruments (Pty) Ltd

We supply customers with practical affordable solutions for their testing needs. Our products include benchtop, portable, in-line process control...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.093 0.143s - 91pq - 2rq
Subscribe Now