Stronger demand for rubies and emeralds helped Gemfields accumulate $121 million (R2, 2 billion) in revenue for the first-half period to the end of June against the backdrop of depressed diamond prices.
Gemfields is a market leader in coloured gemstones specialising in emeralds mined from Zambia and rubies from Mozambique.
De Beers, which is being demerged from Anglo American, has had to “intentionally lower production” in response to “weaker rough diamond demand” across global markets. Another diamond producer, Petra Diamonds is expecting diamond prices to improve.
Gemfields has, however, been benefiting from the stronger emerald and ruby prices for the half year period to June 2024.
“Total auction revenues comprised $121 million (R2, 2bn) with continued demand for rough emeralds and rubies,” said the company on Friday.
Revenue was generated from Gemfields 75%-owned Kagem emerald mine, the 75%-owned Montepuez ruby mine and Fabergé, the iconic luxury brand.
Emerald auction revenue from Kagem however dipped from $64.9 million (R1, 18bn) in the first half of 2023 to $52.2m (R950 million) while revenues for ruby auctions for the Montepuez mine also dipped to $68.7m (R, 125bn) compared to $80.4m (R1, 46bn).
As at the end of the period under review, Gemfields had cash and cash equivalents of about $22.3m (R405, 8m) outstanding debt in the company amounted to $66.7m (R1, 2bn) translating to a net debt position of $44.4m (R808m).
“The net cash position excludes the outstanding balance of auction receivables of $65.5m (R1, 19bn) as at 30 June 2024. Net cash with auction receivables totals $21.2m (R385, 8m) ,” the company said.
Construction of the second processing plant at the Montepuez Ruby “remains on budget and on track for completion” by the end of the first half of 2025.
At the Kagem mine, Gemfields has completed the wash plant upgrade process. The mine is now operating at an increased processing rate, it explained.
Gemfields is continuing with its capital investment programme, funded from a mixture of cash reserves and increased debt.
However, the $10 million (R182m) returned to shareholders so far this year “reflect the good results in 2023,” it said.
Gemfields is planning its next commercial-quality emerald auction in the third quarter of 2024, followed by a higher-quality emerald auction and a mixed-quality ruby auction in the last quarter of the year.
It said the Fabergé luxury brand operation’s goal remains focused on “the reduction of its dependency on funding from Gemfields via careful cost control” as it drives towards profitability.
The average realised price of rubies sold by the company under its June auctions amounted to $316.95 (R5 751) per carat.
The June 2024 auctions have brought the total auctions undertaken by the company since June 2024 to 22. This has also pushed up the total revenue from gemstone sales since June 2014 to $1.1 bn (R20 2bn).
Earlier this month, Gemfields announced that it had appointed former De Beers CEO, Bruce Cleaver as its new board chairman. With operations in Zambia and Mozambique, Gemfields made further changes to its board of directors, announcing that Cleaver will be taking over as board chair in addition to the appointment of two other new non executive directors.
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