Gemfields has enjoyed a vote of confidence from investors over the past two months, with the majority of its newly issued shares having been bought up since their release in early April.
In a statement on Friday, the company said it had received valid acceptances for 82.4% of its 556-million new shares on the JSE, providing a $30m (R540m) cash injection to the business.
The remaining new shares were acquired by underwriters Assore International Holdings and Rational Expectations, which are the firm’s two largest shareholders.
The financial lifeline comes after a year in which weaker auction revenue weighed on the gemstone miner’s balance sheet, with net debt having risen to $80.5m in December.
In its latest annual results, the group reported a headline loss per share of 39.1c, widening from 16c a year ago thanks to heightened competition in Zambian markets and lower production of premium rubies in Mozambique.
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.
Sweeping cost cutting measures, including the suspension of operations at Kagem, its Zambian emerald mine, were unable to arrest the decline, with the group’s share price having shed about 60% in the past 12 months.
However, recent developments point to an improved outlook for the miner.
In February, the Zambian government suspended a 15% levy on gemstone exports, allowing Kagem to resume exports.
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.
Additionally, the construction of a second processing plant at its Montepuez Ruby Mine (MRM) is expected to triple the operation’s processing rate, significantly boosting ruby production and revenue.
Having been delayed by an attack by insurgents towards the end of last year, MRM’s second processing plant is now on track to complete construction before the end of the first half of the year, Gemfields said in a statement last week.
In recent months, the group has reported increasing demand and improved sentiment after selling $23.6m worth of rubies and emeralds at its latest auctions.
Gemfields MD of product and sales said that the latest results marked a notable improvement on the disappointing commercial-quality auction held in September 2024.
After gaining as much as 5.6% in early trade, Gemfields’ share price was flat at R1.10 by lunch time. It has lost 28% so far this year.
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