Johannesburg- and London-listed gemstone miner Gemfields has informed shareholders that Sean Gilbertson will, by mutual agreement with the board, step down as CEO and as a director of the company with effect from July 15.

CFO David Lovett will take up the position of interim CEO in addition to his existing duties, while nonexecutive chairperson Bruce Cleaver has agreed to dedicate additional time to support the business and the management team.

“The board would like to thank Sean for his contribution to the company and wishes him well in his future endeavours,” the company says.

The board, advised by the nominations committee, will in due course begin a formal process to identify a permanent successor.

Gemfields says the board believes this interim arrangement provides continuity of leadership and ensures ongoing focus on the company’s operational and strategic priorities.

Meanwhile, the company has also reported on the security and production challenges facing its 75%-owned Mozambique Ruby Mine (MRM) operation, as well as the results of its latest auction.

Gemfields’ first Trade Select ruby auction, held from June 22 to 29 and featuring a broader mix of ruby qualities, as well as newly introduced sapphire categories, generated revenue of $23.1-million.

It notes that 82 of the 89 lots on offer were sold (92.1%), while 348 409 ct of the 374 008 ct on offer were sold (93.2%).

The average sales price was $66.30/ct.

"We are pleased with the outcome of our inaugural ‘Trade Select’ ruby auction,” says Gemfields product and sales MD Adrian Banks.

He explains that the ‘Trade Select’ format was developed to occur between Gemfields’ traditional mixed-quality ruby auctions and the smaller mini-auctions introduced during 2025.

By bringing selected grades and categories together in a focused offering, Banks says, the format provides greater flexibility in matching available production with market demand, while also broadening customer participation.

“It was encouraging to receive positive feedback from customers regarding both the auction format and the composition of the offering. While market conditions remain challenging in certain sectors of the coloured gemstone market, customer attendance was strong and bidding demonstrated continued demand across the categories offered.

“I would like to thank the MRM team in Mozambique for their considerable efforts in preparing and delivering this auction despite the many challenges they face. We now look forward to building on these results as preparations begin for MRM's next mixed-quality ruby auction, presently scheduled for October,” he comments.

MRM UPDATE

As set out in an announcement of May 22, Gemfields says MRM has experienced lower-than-expected ruby production, primarily driven by declining recovered grades.

The company points out that premium rubies typically account for more than 70% of MRM’s revenue but constitute less than 5% of the weight of rubies produced and sold.

In the year to December 31, 2025, the overall premium ruby grade at MRM was 0.06 ct/t. For the five months to May 31 this year, the overall premium grade decreased to 0.03 ct/t.

In the Mugloto domain, which has produced the bulk of MRM’s revenue and constitutes 78% of the ore processed to date, the premium ruby grade was 0.03 ct/t in the 2025 financial year. The premium ruby grade from the Mugloto domain, however, decreased to 0.02 ct/t in the first five months of this year.

In addition to the declining grades, Gemstones says MRM has not been able to mine and process the most favourable areas of the concession on account of heavy rainfall during the first quarter of this year and commissioning issues with MRM’s Second Processing Plant (PP2).

As a result, the company says there will be a material adverse impact on the inventory available for MRM ruby auctions for at least the remainder of this year.

Operationally, the company says it is undertaking additional targeted bulk sampling in areas considered prospective for higher-grade material, with the aim of enhancing grade outcomes.

In parallel, Gemfields and MRM are maintaining cost management disciplines initiated in late 2024.

PP2

PP2 has been operating since September 2025, although final commissioning under the fixed-price construction contract is only expected during the third quarter of this year.

While the plant has demonstrated its ability to achieve and exceed its design throughput rate, Gemfields says final commissioning remains subject to stabilisation, remedial and optimisation activities.

The issues encountered include higher-than-anticipated wear of certain components, including the primary scrubber liners; original-equipment manufacturer (OEM) construction defects in the secondary scrubber, requiring a full rebuild and delivery of a replacement scrubber, which is expected to arrive on site in August; and choking in various components necessitating changes to the orientation and lining of chutes and feeders; and the availability of critical spares.

Gemfields says these issues have had a material impact on plant availability and consistency of operation but are being actively addressed as part of the final commissioning and stabilisation process.

MRM SECURITY SITUATION

Further, Gemfields notes that, from April 30, assorted villages ranging from 15 km to 35 km from MRM endured attacks attributed to insurgents. The company says these attacks saw churches and village homes burnt and resembled attacks seen elsewhere in Mozambique’s Cabo Delgado province.

Fighting between local forces and the attackers was also reported in the village of Mesa located 29 km east of MRM Village.

MRM paused operations for about 20 hours as a precautionary measure, restarting on May 1.

The village of Naniviji, 25 km south-east of MRM was also attacked and saw a number of homes burnt on May 13.

On May 13, Gemfields say government authorities announced the arrest of a number of “false terrorists” in Ancuabe.

The company says perpetrators appear to have exploited the prevailing security concerns by imitating the presence of insurgent groups, prompting residents to flee before looting property and setting fire to homes.

In addition to the risk of organised insurgent groups, Gemfields says threats also arise from locally driven criminal activity, the presence of illegal ruby mining syndicates and broader destabilising factors in the region, including difficulties in delivering adequate rule of law.

The company notes that conditions have since improved moderately and operational activity has returned to relative normal, with ongoing developments being closely monitored.

The company says MRM, nevertheless, continues to experience high levels of illegal mining intrusion, with about 700 individuals entering daily.

“These intrusions pose a considerable safety risk to MRM’s personnel, contractors and community members, and also degrade MRM’s ruby resources and recovery grades,” the company says.

VAT

Gemfields also reports that MRM is owed $28.3-million in value-added tax (VAT) refunds as at June 30, which, together with the increased VAT burden arising from new legislation, has had a materially negative impact on MRM’s cash flow.

The company says that, while it has consistently engaged with authorities to recover the VAT, it has not received any VAT refunds since October 2024 and is considering all available options to expedite the recovery of the historical VAT.

Mozambique introduced new VAT legislation on January 1, which materially increased the VAT burden falling on MRM but also put in place a special regime for qualifying extractive companies.

Gemfields explains that MRM qualifies for the special regime which is designed to ensure that qualifying extractive industries are able to have their VAT reliably reimbursed in accordance with a defined timetable.

The first reimbursement due to MRM under the new VAT rules, being MRM’s VAT claim for January, is due for refund on August 7, in the amount of $370 000.

“Reliable reimbursement of MRM’s input VAT is of considerable importance to MRM’s future cash flow,” the company says.

Gemfields says declining grades, PP2 commissioning challenges, security-related disruption, illegal mining activity and delayed VAT receipts are collectively expected to adversely impact on production, quality mix and cash flow, adding that Gemfields and MRM are continuing to monitor the situation closely while engaging with government authorities and carrying out available contingency planning.