Gemfields sold 5.7 million carats of sapphire, corundum and rubies under its latest auction, conducted over three days earlier this month.
In July, Gemfields announced it had appointed former De Beers chief executive Bruce Cleaver as its new board chairman. With operations in Zambia and Mozambique, the gem miner also appointed two other new non-executive directors.
For its commercial quality sapphire, corundum and rubies auction – held from September 2 to 4 – Gemfields bagged $2.3 million (R40.93 million) in revenue after selling a total of 5.7 million carats. The auctioned gems were sold at an average price of $0.41 a carat
“The majority of the auction’s offering consisted of corundum and sapphire, which are considered by-products of MRM. Despite the commercial nature of these goods, the auction saw strong attendance and robust demand,” said Adrian Banks, managing director for Gemfields.
In July, the company said stronger demand for rubies and emeralds had helped it accumulate $121m in revenue for the first half period to the end of June against the backdrop of depressed diamond prices.
Banks said yesterday that “the significant volume of the lower-priced rough sold, will support the factories in the cutting centres” of Chanthaburi in Thailand and Jaipur, India.
The gemstones sold under Gemfields’ latest auction were extracted by its 75% owned Montepuez Ruby Mining Limitada in Mozambique. The remaining 25% shareholding in Montepuez is controlled by Mwiriti Limitada.
Proceeds of the auction will be fully repatriated to the Mozambican unit, with all royalties due to the Government of the Republic of Mozambique being paid on the full sales prices achieved at the auction, Gemfields said.
“We thank and congratulate the Government of Mozambique and our partners at Mwiriti – both of whom attended the auction – on what are very healthy results for material of this quality,” said Banks.
Amid lower diamond prices, there has been strong demand and support for gemstones. Global diamond producer, De Beers, which is being demerged from Anglo American, has had to “intentionally lower production” in response to “weaker rough diamond demand” across global markets.
However, another diamond producer, Petra Diamonds, is expecting diamond prices to improve.
As at the end of June 2024, Gemfields had cash and cash equivalents of about $22.3m, while at the time, outstanding debt in the company amounted to $66.7m, translating to a net debt position of $44.4m.
“The net cash position excludes the outstanding balance of auction receivables of $65.5m as at 30 June 2024. Net cash with auction receivables totals $21.2m,” the company said.
Construction of the second processing plant at the Montepuez ruby mine “remains on budget and on track for completion” by the end of the first half of 2025.
At the Kagem mine, Gemfields has completed the wash plant upgrade process. The mine is now operating at an increased processing rate, it explained.
Gemfields is continuing with its capital investment programme, funded from a mixture of cash reserves and increased debt.
BUSINESS REPORT