Gemfields announces $15m interim payout, seeks approval for $10m share buy-back

Sean Gilbertson, CEO, Gemfields

GEMFIELDS today declared an interim dividend of $15m following “sparkling” results which CEO Sean Gilbertson colourfully remarked were akin to pulling “a very well-groomed bunny out of the hat”.

It also announced it would seek shareholder approval in the fourth quarter of this calendar year for a $10m buy-back of its shares, which have gained 14% in the past 12 months.

“Gemfields’ shareholders waited some 17 years for their first dividend and, with that milestone having been announced but six months ago, we are delighted today to be able to declare a non-routine interim dividend of $15m in recognition of the sparkling results delivered for the first six months of 2022,” said Gilbertson in notes to the firm’s results published today.

The company announced a maiden dividend totalling $20m in March.

Gemfields previously stated in a trading update it expected a doubling in taxed profit. It detailed today a 50% increase in earnings and headline earnings for the six months ended June of three US cents per share.

The dividend declaration is equivalent to a payout of about 1.3 US cents per share. Shares in the company, which mines and markets emeralds and rubies , closed 7.5% weaker in Johannesburg on Wednesday.

The interim numbers were achieved on the back of a return to Gemfields’ normal auction schedule at which the sales numbers were record-breaking. As a result, free cash flow before working capital totalled $86.5m for the six months. Gemfields ended with gross debt balance of $29.7m as of June 30.

Commenting in his chairman’s statement, Martin Tolcher said Gemfields had received notification of a maximum £400,000 damages claim on behalf of 29 individuals related to the group’s Kagem emerald mine in Zambia. Further claims on behalf of another 69 people were also expected, he said.

“We reiterate that Gemfields and Kagem take allegations of this nature extremely seriously. The companies involved are working with external lawyers and will continue to defend themselves in a robust manner,” said Tolcher.

Following an unbundling process of an associated company, Sedibelo Platinum Mines,  Gemfields now has a direct 6.54% in the company, renamed Sedibelo Resources. Tolcher said the “near-term strategy” was an orderly sale of its stake most likely when Sedibelo Resources lists ths year – thought to be the strategy.

Commenting on the group’s outlook, Tolcher said the record sales of the first half were unlikely to be repeated in the current six months period. However, he said Gemfields intended to stick with discretionary dividend payments, although he raised a flag on the impact of cost inflation on consumables, fuel especially.