GEMFIELDS is to sell iconic jewellery brand Fabergé for $50m in a development that helps bolster the miner’s under-pressure balance sheet.
The buyer is US-based private investment company SMG Capital. Of the consideration, $45m will be paid in cash to Gemfields with the balance in installments as per 8% annual royalties on revenue generated by Fabergé.
Gemfields launched a strategic review amid a number of headwinds including oversupply in the emerald market which forced the company to halt production at its Kagem mine in Zambia for four months this year. The mine was restarted in May.
In additon, the company is hoping to complete the expansion of its Mozambique ruby mine Montepuez by adding a second processing facility at a cost of $70m.
Owing to its production interruptions, Gemfields has been losing cash. Results for the year to end-December published in June showed it made an operating loss of $97.9m (2023 – $17.4m profit) and a net loss of $100.8m ($2.8m loss).
The combined effects of these developments spelled major pressure for Gemfields. Net debt as of June 30 totalled $59.6m which includes $30m from a deeply discounted rights issue earlier in the month (but excluding $16.1m from a recent auction).
Gemfields said that the sale of Fabergé and the halting of other non-core projects had made the company “more streamlined … with a strengthened balance sheet”.
Sean Gilbertson, CEO of Gemfields said the deal represented “the end of an era” for Gemfields. He added: “Fabergé has played a key role in raising the profile of the coloured gemstones mined by Gemfields.
We will certainly miss its marketing leverage and star power.”
Fabergé, which was founded in 1882 by Peter Carl Fabergé, was acquired by Pallinghurst Resources in 2007 to compliment the firm’s unlisted subsidiary Gemfields into which it was incorporated in 2011.
Brian Gilbertson, then chairman of Pallinghurst, predicted that the value of Fabergé would jump sixfold to $1bn in about three years with “relatively little investment”, according to a report at the time by Bloomberg News.
Share in Gemfields have fallen 14% year-to-date.
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.
