GEMFIELDS CEO Sean Gilbertson said on Friday the company was prepared to cut costs and seek additional finance if there was a repeat of poor gemstone auctions this year.
He was commenting in notes to the firm’s interim results announcement in which the company posted a 24% year-on-year decline in net profit to $13.7m.
During the period three auctions (two of emeralds and one of mixed quality rubies) produced “healthy results” despite a deterioration in market sentiment. But weak sales in September “brings some uncertainty”, said Gilbertson.
He added that while it was unlikely a high quality emerald auction and mixed quality ruby auction in November would be as disappointing “… we are of course prepared to take additional measures, including cost reduction measures and further financing options”.
Gilbertson’s comments were made in the context of significant reinvestment in Gemfields processing facilities. It recently completed an upgrade at its Kagem emerald facilities in Zambia and is in the throes of a $70m tripling of throughput in a second processing unit at Montepuez Mining Company’s (MRM’s) Montepuez ruby mine in Mozambique. The expansion would be complete by the second half of next calendar year.
As a result of the expansion, Gemfields moved into $44m of net debt as of June 30 from net cash of $61.8m at the close of the half-year in 2023. However, this was before allowing for $65.5m of auction receiveables which “are now 100% collected”, it said.
“Walking this narrow path is difficult,” said Gilbertson of the heavy reinvestment programme, adding that it made for “a complex year”.
Once completed, however, the second processing facility at Montepuez would enable the mine to more quickly process “considerable stockpiles” as well as “bring to market additional size and colour variations of rubies and provide us with the flexibility we need to better understand ore from other ruby-containing areas on our vast licence”.
Gemfields declared a dividend of 0.86 US cents per share for the six month period. This compares to a payout of 2.88 US cents per share in the previous period.
Shares in Gemfields were 3.9% higher in London where they principally trade. On a year to date basis, the share is just over 10% lower.
