Gemfields Group Limited (GGL) is now in a strong position to support the planned growth of its underlying mining operations in Zambia and Mozambique, as well as to further develop its Faberge business and progress its bulk sampling in Ethiopia, it said in a report to shareholders for the six months ended June 30.
GGL’s Kagem emerald mine and Montepuez Ruby Mining (MRM) ruby mine provide the bedrock for its vision of becoming “the De Beers of coloured gemstones”, the miner said on Friday.
The mines are supported in that vision by a unique and industry-leading auction platform, by developments in proof-of-origin technology and by active marketing campaigns to drive demand for coloured gemstones, chairperson Brian Gilbertson commented.
The mines, he added, have enjoyed good production during the period, with two emerald auctions and one ruby auction held.
Kagem and MRM generated revenues of $21.1-million and $71.8-million, respectively, in what was a contrasting period for the markets for the two gemstones, the company pointed out.
During the period, GGL lamented that the emerald market suffered from the tightening of liquidity and regulatory oversight in India, following the reaction to the Nirav Modi scandal and a deflating property market in Jaipur.
The ruby auction, meanwhile, resulted in a second year of record results.
Overall, during the period, GGL generated earnings before interest, taxes, depreciation and amortisation of $30.7-million and recognised negative free cash flow of $1.7-million.
Revenues, the company said, were used to fund expansionary capital expenditure at MRM, to update an ageing fleet at Kagem and to fund the development of the new projects in Ethiopia and Zambia.
During the six months under review, GGL paid $9.2-million and $8.4-million in corporation tax and mineral royalties, respectively.
At June 30, GGL was in a net cash position of $31.6-million following the receipt of about $64-million from the Jupiter Mines initial public offering and the repayment of Faberge’s Gordon Brothers loan facility during the period.
Additionally, in bringing GGL’s “mine and market” vision to life, Faberge recorded revenues of $7-million for the period. This, the miner enthused, is an all-time high against historic, like-for-like periods.
The operating sales margin for the period also improved significantly and an increasing emphasis on e-commerce has been rewarded by triple-digit growth in online sales.
Operating costs were reduced, including by Faberge’s decision to withdraw from the BaselWorld fair.
As such, GGL noted that Faberge’s operating loss also showed a significant improvement.