Precious gemstone miner Gemfields posted its first interim loss since the onset of the Covid-19 pandemic last week, after operational challenges halved its revenue in the first six months.
Gemfields reported a $24.58m loss for the six months to end-June, compared to a $13.66m profit in the previous first half, after Mozambican civil unrest and heightened competition in Zambia weighed heavily on the group’s performance.
“This has been a challenging first half marked by gemstone production difficulties at both mines,” Gemfields CEO Sean Gilbertson said.
Since October, the group has faced operational challenges stemming from post-election protests in Mozambique, including delays to the construction of a second processing plant at its Montepuez Ruby Mine (MRM), which is expected to triple the operation’s processing rate, boosting ruby production and revenue.
Heightened competition in Zambian markets, together with a 15% levy on gemstone exports which has since been lifted, also saw the group suspend mining operations entirely at its Zambian Kagem Mining site for the first five months of this year.
Short-term pressures
“These factors contributed to short-term cash flow pressures and certainly tested the team and the business,” Gilbertson said. “However, a series of difficult decisions has yielded a more streamlined and focused organisation with a stronger balance sheet, all of which puts us on a better footing for the year ahead.”
In recent months, the company has enjoyed a vote of confidence in the form of a $30m cash injection from investors after it issued 556-million new shares on the JSE in April.
Last month, in a last-ditch attempt to unlock much-needed funding, the group also signed the sale of Fabergé for $50m, marking the end of its nearly 13-year ownership of the iconic luxury brand.
MRM’s second processing plant, having been delayed by an attack by insurgents towards the end of last year, is also expected to start contributing fully to the group’s portfolio next month, with the plant having produced its first rubies earlier in September.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.