PALLINGHURST Resources said a recent auction of rubies from its Montepuez operation in Mozambique showed strong market support for the semi-precious stone with some $71.8m in revenue generated.
“The health of market demand for Mozambican rubies mined by MRM (Montepuez Ruby Mining) and marketed by Gemfields is amply demonstrated by these record-breaking auction results,” said Sean Gilbertson, CEO of Pallinghurst and Gemfields. Gemfields will become Pallinghurst’s principle business once it has completed major strategic shift in which its shares in Jupiter Mines and Sedibelo Platinum will be sold.
As part of the restructure, unveiled on March 20, Sean Gilbertson was appointed CEO of Pallinghurst replacing Arne Frandsen who is employed by by Pallinghurst Capital Partners. Gilbertson is already CEO of Gemfields following last year’s controversial delisting of the company. His father, Brian, became non-executive chairman.
Pallinghurst said that on a “quality-for-quality” basis, the per carat prices of $122/c for the rubies average demonstrated “… particularly strong demand”. Some 82 of a total 86 lots offered were sold and “…provided a high level of comfort in respect of Gemfields’ understanding of the current market demand profile, which was further supported by customer feedback received during the auction”. Some 588,656 carats out of the 629,893 carats offered – about 93% – were sold.
The performance or ruby sales will provide Gemfields with some relief following disappointing sales numbers from its emerald operations in Zambia last month. The poor numbers were blamed on “… the fallout of the Nirav Modi fraud” – a reference to $2bn in fraudulent transactions at India’s state-run Punjab National Bank (PNB) in February.
The auction, held in Lusaka from May 15 to May 18, generated $10.3m in revenue and set a record price per carat for a single auction, but only 56% of carats offered were sold. Gilbertson said the smallest quantity of higher quality emeralds were offered at any of Gemfields’ auctions to date, and saw only a little over half of the gems sold. 31 companies participated in the auction.
“The bulk of our emerald customers hail from India, where the gemstone and jewellery sector is suffering from the fallout of the Nirav Modi fraud. Given the ensuing losses sustained by Indian banks, access to finance has become challenging for many companies in the Indian gem and jewellery industry,” he said on May 21.
Shares in Pallinghurst were about 4.5% higher on the Johannesburg Stock Exchange at around noon, reversing a difficult four week period in which the share shed 23%. On a 12-month basis, shares in Pallinghurst are 19% weaker.