Sedibelo Platinum write-down forces ruby miner into the red

Rubies lie exposed at the bottom of a mine pit at Gemfields Montepuez mine

THE decline in platinum group metal (PGM) prices last year weighed heavily on Gemfields, the ruby and emerald miner which has a 6.45% stake in Sedibelo Platinum Mine.

Commenting in a trading statement ahead of its full year results announcement on Monday (March 25), Gemfields said it wrote down Sedibelo for $28m which resulted in a taxed profit loss for the period of $2.8m.

This was despite registering its second best revenues from gem sales of $89.9m even after lower production resulted in the suspension of one auction of emeralds.

Sean Gilbertson, CEO of Gemfields said the performance financially was not a reflection of the general health of the company which was benefiting from a major improvement in the emerald and ruby market.

“The write down 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,” the company said. Sedibelo is non-core to the Gemfields business it added.

Gemfields was seeking to sell its stake in Sedibelo but a 40% decline palladium prices and a 62% fall in the rhodium price hit valuations and severely hamstrung the sector as a whole. According to a report by RMB Morgan Stanley free cash flow burn across the sector was in full evidence.

Northam’s Eland mine as well as the Canada, Bafokeng and Rustenburg operations of Impala Platinum were all cash flow negative with the latter losing $100m after accounting for stay in business capital. Sibanye-Stillwater burned the most however. It reported an outflow of about $170m from its PGM mines after sustaining capital.

In November, Sedibelo’s Pilanesberg Platinum Mines (PPM) closed owing to inflationary pressures and “limited access to capital markets”, according to a letter seen by Miningmx from Erich Clarke, CEO of PPM to employees and contractors.

PPM is situated on the western limb of the Bushvled Complex. The mine consists of the Sedibelo Central, Magazynskraal, and Kruidfontein farms, described by Sedibelo Resources as ‘The Triple Crown’. PPM has an estimated resource base in excess of 60 million 4PGE ounces and is considered one of the world’s largest undeveloped PGM deposits

Gilbertson said 2023 represented a period of reinvestment in Gemfields including the construction of a second processing plant at Montepuez Ruby Mine in Mozambique.

Consulmet (Africa) Ltd will build the plant which will triple production from Montepuez to a rate of 600 tons an hour and enable the company to process its “sizeable” stockpile. The second plant would also bring to the market additional size and colour variations of rubies and allow for the expansion of Montepuez’s exploitation.