Gemfields to post robust interim revenue but is unaware of force behind 49% share price hike

GEMFIELDS, the London- and Johannesburg-listed ruby and emerald mining and marketing firm, said it expected “robust” interim numbers but it could not shed light on the 49% gain in its share price since the beginning of July.

Commenting in a statement today, it noted the recent improvement in valuation “… and confirms that there is no disclosable unpublished price-sensitive information relating to the company at the present time”.

It expected revenue to total $95m for the six months ended June after its Zambian emerald and Mozambique ruby mines re-opened following the lifting of Covid-19 restrictions. The firm narrowly avoided liquidation at the end of 2020 after being prevented from selling any of its gems for most of the year.

Unlike its diamond brethren, the company is unable to sell gemstones digitally owing to the nature of the goods.

“The buyers still have to sit and physically interact with the gemstone. It is much better to let the customer sit together, talk together, and bounce ideas off one another,” said Gemfields CEO Sean Gilbertson during a year-end results conference call held in March.

Gemfields reported a net loss of R1.4bn for the 12 months ended December. Compared to the previous year’s R566m profit, that’s a reversal in fortune year-on-year of roughly R2bn. The performance supports Gilbertson’s remark that the company had endured a “grisly” year in 2020.

Gemfields said today that its African mines “remain materially uninterrupted”, and that it expected to hold three further gemstone auctions this year.

“The company expects to announce robust financial performance for the six months ending 30 June 2021 as a result of the strength of the gemstone auctions held in March and April 2021, combined with the cost-cutting measures,” it said.

In April, Gemfields said it had generated $31.4m in emerald sales prompting its MD of product and sales, Adrian Banks, to say the firm was “back in business”.

Gemfields added in its statement today that notwithstanding the “welcome” improvement in share price, its share price still traded at a significant discount to its net asset value.

At its virtual annual general meeting, Gemfields shareholders rejected a resolution that would have granted its board power to issue up to 5% of the company’s share capital at the higher of R3/share or the prevailing 30-day volume-weighted average price.

The rand-dominated 3/share floor price proposed in that resolution remains a significant premium to today’s closing share price, the company said.

By David McKay, Miningmx.

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