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Business|Construction|Financial|Gemfields|Mining|Platinum|Resources|Gemstones
Business|Construction|Financial|Gemfields|Mining|Platinum|Resources|Gemstones
business|construction|financial|gemfields|mining|platinum|resources|gemstones

Gemfields swings to a loss on PGM investment writedown, but gemstone business flourishes

22nd March 2024

By: Sabrina Jardim

Creamer Media Online Writer

     

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Gemstone miner Gemfields has recorded its second highest yearly revenues in 2023, on the back of record prices being paid for its rough coloured gemstones sold at auction.

Gemfields CEO Sean Gilbertson notes, however, that production of premium rough gemstones has been weaker at its two key operating assets – the Kagem emerald mine in Zambia, and Montepuez Ruby Mining (MRM) in Mozambique – compared with 2022.

“We look forward to completing our first auction of the year later on today, with a commercial-quality emerald auction taking place in Jaipur, and our next higher-quality emerald and mixed-quality ruby auctions to take place in the second quarter.

“2023 also saw the start of a period of considerable investment across the group, from our position of financial strength at the end of 2022. We are confident that the short-term impact of this investment on our financial results and performance will lead to a stronger and genuinely transformed business, particularly at MRM, where construction is ongoing for a second processing plant,” he says.

Kagem and MRM generated revenues of $89.9-million and $151.4-million, respectively, in 2023. The total auction revenues in 2023 is the second highest in the group’s history and indicated that the demand for coloured gemstones remains strong, despite having one less higher-quality emerald auction in the year.

Gemfields’ Fabergé subsidiary recorded revenues of $15.7-million, compared with $17.6-million in 2022, owing to a softer luxury market.

However, a review of Gemfields’ 6.54% shareholding in South African platinum group metals (PGM) mining company Sedibelo Resources has resulted in a fair value writedown of $28-million to $4-million.

“The writedown of the asset reflects the reduced public market valuations for comparable PGM companies and the reduced operating and financial results for Sedibelo over the period. Sedibelo is noncore to the Gemfields business,” the company notes.

Gemfields notes that it is “reasonably certain” that, after taking this writedown into account, its net loss after tax will be $2.8-million for the year ended December 31, 2023, compared with the $74.3-million net profit reported for 2022.

The loss is driven primarily by the Sedibelo unrealised noncash writedown and the withdrawn higher-quality emerald auction, the production of which will be offered for sale this year, and is not a reflection on the overall strength of the Gemfields business, Gemfields states.

The company expects to report a loss a share of $0.008, compared with earnings of $0.048 in 2022.

The company’s headline loss a share, which includes Sedibelo’s fair value loss, is expected to be $0.009, compared with headline earnings a share of $0.048 in 2022.

The company’s financial results are expected to be released on March 25.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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