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Gemfields swings to profit after reopening mines

Montepuez is an open-pit mine, considered the world’s most lucrative ruby operation. (Image courtesy of Gemfields.)

Precious gemstones miner Gemfields (LON: GEM) (JSE: GML) has swung to a first-half net profit after it reopened mines and demand for its emeralds and rubies surged. 

The company, which returned to the London Stock Exchange’s market for juniors last year, posted a $23.8 million net profit, which compares to a loss of $56.7 million in the same period last year as revenue increased 548% to $97.2 million. 

Gemfields, which operates the Kagem emerald mine in Zambia and the Montepuez ruby mine in Mozambique said half year revenues rose from $15,000 to $97,236. 

‘We are delighted to announce our return to strong operational and financial performance after the covid-induced horrors of 2020″

Chief executive Sean Gilbertson

“We are delighted to announce our return to strong operational and financial performance after the covid-induced horrors of 2020,” chief executive Sean Gilbertson said in the statement. 

He attributed the positive results to the hard work put in by its employees. “With the mines back in full-swing, a much-improved cash position and the step-change in market demand we’ve witnessed in our recent auctions, we are palpably excited about the remainder of 2021.” 

Last month, the company posted an all-time record revenue for commercial-quality emeralds sold at auctions of $23.1 million. 

On Sep. 24, South African businessman Christo Wiese left Gemfields’ board. He owns a 13.7% stake in the company, which could now be up for grabs. Wiese’s resignation coincides with a move by billionaire Desmond Sacco, who owns iron ore miner Assore, who this week increased its interest in Gemfields.

Assore started to build its stake this month, initially buying 5% of Gemfields from Fidelity International. Further purchases followed until reaching a 12.74% stake this week. At R3.20 (about 22𝇍) a share, Assore paid about R289-million ($20m) for its additional holding, taking its total investment in the gem miner to about R477-million ($32.4m).

Eyes on Asia 

Gemfields has stepped up efforts to market its emeralds and rubies in China after a report highlighted the “huge potential” for ethically sourced gems in that market. 

Top diamond miners are already directing efforts in the same direction. The Natural Diamond Council (NDC), which groups the world’s seven leading producers, launched in May its first advertising campaign targeting the Asian and US markets. 

NDC also inked a deal with China’s top jewellery retailer Chow Tai Fook to boost demand for mined rocks.