Gemstone miner Gemfields expects a significant detrimental impact on its operations, revenues and business during 2020 and possibly beyond from the Covid-19 pandemic.

As of March 30, all but critical operations at the Kagem emerald mine, in Zambia, have been suspended for what the company hopes will be a period not exceeding one month.

Gemfields’ operations in Mozambique, including the Montepuez ruby mine, are poised to implement similar suspensions should developments require; however, these remain unaffected at this time.

Exploration projects in Madagascar have also been suspended. Gemfields’ offices in London and Jaipur are closed, with personnel working remotely.

Fabergé’s directly operated retail operations at Harrods in London and the Galleria Mall in Houston, in the US, are closed. The mono-brand Fabergé boutiques operated by partners in the Dubai Mall and in Kiev, in the Ukraine, are also closed.

In addition, about 80% of the multi-brand retailers that Fabergé sells to are presently closed.

Similarly, some 80% of the workshops that supply Fabergé are closed, including Fabergé’s own timepieces workshop in Geneva.

In 2019, some 93% of Gemfields’ revenue was derived from six gemstone auctions at which clients were able to carefully inspect the gems before bidding.

Widespread travel restrictions dictate that Gemfields cannot presently host auctions. Once the travel restrictions are lifted, additional time will be required before life and business returns to relative normality.

There is also a risk that travel restrictions may be extended or reintroduced should a second wave of virus infections take hold in key countries.

Owing to the prevailing levels of uncertainty, Gemfields is unable to provide reliable guidance as to when it might be able to host its next auctions.

The emerald and ruby auctions originally scheduled for May and June respectively are highly likely to be rescheduled for the second half of the year.

Should market circumstances not recover adequately, it is also conceivable that the subsequent emerald and ruby auctions originally scheduled for November and December may be cancelled altogether.

At February 29, the Gemfields group had cash balances of about $73.5-million, a net cash position of about $43.5-million and undrawn overdraft facilities of $30-million.

In addition to its cash position, Gemfields notes that is has additional comfort in the fact that well-bought gemstones have for centuries been regarded as a store of value and a guard against turbulent times.

This was also evidenced during the 2008 financial crisis when gemstone prices proved quite resilient when compared to equity indices.