GEMFIELDS will commission a second processing plant at its ruby mine Montepuez in Mozambique in September, the company said on Friday.
Shares in the company gained 17% in early Johannesburg trade. The company has endured a difficult year on several fronts. On a 12-month basis, shares in Gemfields are about 52% weaker, and 15% lower year-to-date.
The plant’s final completion was delayed owing to logistical difficulties including obtaining work permits especially in relation to specialist electrical installation.
There were also transport difficulties when a key transformer was damaged in transit, the company said. Some 287 trucks related to the construction – out of an estimated 300 – had completed their deliveries to Montepuez, it said.
There were also “security and operational issues arising from … high levels of illegal miner incursions”. First rubies from the plant will be produced in August roughly 22 months after plans for the project was first unveiled.
Once completed, 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,” said Gemfields CEO Sean Gilbertson in September last year. This would provide the company “with the flexibility we need to better understand ore from other ruby-containing areas on our vast licence”, he said.
Gemfields reported strong demand for fine-quality rubies on June 16 despite market turbulence. This was following an auction earlier in the month which generated $31.7m in revenue. “Demand and pricing for fine-quality rubies remain strong,” said Adrian Banks, Gemfields MD of product and sales.
Gemfields also said that its emerald operation in Zambia, Kagem, had restarted mining with the reopening of two production points in the Chama pit. A “measured further expansion of mining” is expected from July.
While progress from there would turn on market conditions, Gemfields did not expect a return to full scale mining at Kagem “for some months”. Gemfields paused production at Kagem after the market was flooded with goods from a rival company.
Commenting on Fabergé, its luxury gemstones brand, Gemfields said the Group “continues to explore strategic options” without providing details.
This process had been halted in order to complete a $30m rights issue. The company issued about 556 million shares at a price of at R1.068 per new share on the basis of 10 new shares for every 21 existing shares held.
Owing to its production interruptions, Gemfields has been losing cash. Results for the year to end-December published today show that Gemfields made an operating loss of $97.9m (2023 – $17.4m profit) and a net loss of $100.8m ($2.8m loss).
