Gemfields is seeking shareholder approval to issue $30-million (R579m) worth of new shares in a last-ditch effort to address its short-term funding dilemma caused by civil unrest in Mozambique.
The company said on Friday the proposed rights issue would see Gemfields issue 556,203,396 new shares and would be underwritten by Assore International Holdings and Rational Expectations, the firm’s two largest shareholders.
If granted shareholder and regulatory approval, JSE-listed Gemfields would offer 10 new shares for every 21 existing shares at a price of R1.0680 for SA investors or 4.22p for UK buyers.
Since October, the group has faced significant operational challenges stemming from post-election protests in Mozambique, with the increased risk profile putting pressure on Gemfields’ share price.
On top of supply chain disruptions, an attack by insurgents on its Montepuez Ruby Mine (MRM) forced it to temporarily pause mining operations toward the end of last year, preventing the planned construction of a second processing plant at MRM.
To protect the business, the group implemented sweeping cost cutting measures, including the suspension of operations at Kagem, its Zambian emerald mine, and putting its wholly owned subsidiary Fabergé up for sale.
In a trading statement on Friday, Gemfields said its efforts failed to address the near-term working capital shortfall and did not yield the certainty of funds necessary within the desired time period.
Gemfields' latest annual results recorded an adjusted headline loss of $0.018 per share last year, driven by lower production and significant impairment charges across its operations.
The miner reported revenue down to $213m for the year to end-December from $262m in the previous year.
“I remain of the opinion that Gemfields’ mining operations are world-class assets and that the group’s strategic goals remain wholly relevant,” said Gemfields CEO Sean Gilbertson.
“Once fully operational, MRM’s second processing plant is expected to triple the processing rate and therefore add considerably to the mine’s ruby production and revenue.
“The coloured gemstone market is expected to recover and continue its medium to long-term upward trajectory. I am confident that there is an exciting growth phase for Gemfields on the other side of this near-term funding shortfall,” said Gilbertson.
The group also said on Friday that its headline loss per share for the year to end-December was expected to widen to 39.1c from 16c a year ago.
Its net debt position was $80.5m, before auction receivables of $33.9m.
In Zambia, Kagem Mine, in which Gemfields holds a 75% stake, paused mining from the start of 2025, using its upgraded wash plant to process its significant stockpiles.
Emerald exports were paused at the start of the year after Zambia reintroduced a 15% export duty, but that was revoked by the government in February.
The Kagem mine accounts for about 25% of global emerald production. In 2024, the mine produced about 10-million carats of emeralds alongside 30-million carats of beryl — one of the most popular and expensive gemstones.
Gemfields’ share price on the JSE fell 22% to R1.16 on Friday, giving the company a market cap of R1.355bn.
With Jacqueline Mackenzie
Correction: April 12 2025
The headline in this article has been corrected to show the Gemfields rights issue totals $30m.
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