Gemstone miner Gemfields has suspended all but critical operations at its Montepuez ruby mine (MRM), in Mozambique, as of April 22, as a result of the continued global spread of Covid-19.
Only security, maintenance and other essential services are being rendered to ensure the mine can resume normal operations as soon as it is safe and practicable to do so.
Meanwhile, the miner also reports an increase in illegal mining on the concession, as well as attacks on MRM’s security teams.
This has been exacerbated by the recent release of prisoners in the town of Montepuez, including about 150 illegal miners, as part of the government’s Covid-19 response relating to overcrowded prisons.
In this regard, MRM has introduced additional security measures, increased the size of the security team and deployed patrol dogs. In addition, trained members of its security service providers have been equipped with firearms in accordance with the voluntary principles on security and human rights.
Gemfields has also suspended all expansionary capital expenditure at MRM for the foreseeable future. Planned expenditure relating to the resettlement action plan village will continue in keeping with the goal of achieving occupation by July 2020.
The Gemfields group has cash balances of about $63.2-million, a net cash position of about $33.2-million, as at April 17. In addition, the miner reports that, as of April 22, MRM has access to $30-million of undrawn overdraft facilities.
In terms of UK-based corporate facilities, Gemfields says that, with the UK government having extended the UK lockdown period for three weeks to May 7, all UK staff members, including the board of directors, will switch to a four-day working week and receive a 20% reduction in salary with effect from May 1.
These measures will remain for as long as the UK lockdown measures remain in place.
However, should the UK lockdown restrictions remain in effect after May 31, a three-day working week with a further 20% reduction in salary may become necessary, Gemfields states.
Given the considerable level of uncertainty and to further preserve cash, Gemfields’ share buyback programme has been suspended until further notice.