Precious gemstones miner Gemfields (LON: GEM) said on Tuesday that it expected to record $39.1 million in net profit after tax for 2019, compared to a net loss of $60.4 million in the previous year.
The company, which returned to trading on the AIM — the London Stock Exchange’s market for juniors — last month, also said it wasn’t sure whether scheduled auctions will take place in 2020 due to coronavirus.
“Due to the current global travel restrictions, the company cannot be certain when or if the ruby and emerald auctions scheduled for the coming months will take place,” it said.
Gemfields said its Montepuez mine in Mozambique, the world’s richest known ruby deposit, generated revenue of almost $122 million in 2019 versus $127.1 million the previous year. Kagem emerald mine, in Zambia, recorded $79 million in revenue last year, up from $60.3 million in 2018.
One of the reasons behind the company’s improved performance is the recent suspension of a 15% export duty by Zambia, which resulted in an impairment reversal of $21.6 million against Kagem, which provides more than one-fifth of the world’s emeralds.
Gemfields also sold its remaining shares in Jupiter Mines, a steel feed company. Ownership of the shares stemmed from a previous company structure, when it was known as Pallinghurst Resources. This earned Gemfields $30.4 million during the period, to which $2.6 million in dividend flow from Jupiter was added prior to its sale and $4.6 million in market gains due to the rise in Jupiter’s shares on a mark-to-market basis.
The company’s luxury Fabergé jewellery brand revenues slipped last year to $10.5 million, down from $13.4 million in 2018.
The effect of the novel coronavirus pandemic on the company’s upcoming auctions is not the only challenge Gemfields has had to face this year. In early February, 11 illegal miners died at Montepuez following a series of tunnel collapses over three days.
About 800 people had trespassed in previous days and, despite mine staff’s warnings, began undercutting the outer edge of the Maninge Nice 3 mining pit, which led to several ground collapse incidents.
Weeks later, attackers torched a vehicle and injured at least three workers and a security contractor.
Montepuez is located in the northern Cabo Delgado province, one of Mozambique’s poorest regions, home to many unemployed young people.
The mine has faced incursions in the past, and Gemfields last year chose to pay £5.8 million (about $7.6m) to community members residing near the Mozambican mine, in a “no admission of liability” move that settled a claim of human rights abuses brought against it by locals.