JOHANNESBURG - Gemfields has suspended its share buyback programme to preserve cash due to uncertainty created by the coronavirus pandemic.
“Given the considerable level of uncertainty and to further preserve cash, the share buyback programme has been suspended until further notice,” the coloured gemstone miner and marketer said yesterday.
The share buyback was implemented after shareholders gave it a thumbs up last May, after directors felt the group was undervalued.
Gemfields said it had also beefed up security at the Montepuez Ruby Mine in Mozambique (MRM), after the government released illegal miners from jail, as a result of the coronavirus outbreak.
The group said yesterday all but crucial operations had ceased. It said security, maintenance and other essential services would continue in order to ensure that the mine was well placed to resume normal operations as soon as it was safe and practical to do so.
“Given recent episodes of illegal mining activity on the concession, attacks on MRM’s security teams and the recent release of prisoners in the town of Montepuez, including about 150 illegal miners, as part of the government’s Covid-19 response relating to overcrowded prisons, MRM has introduced additional security measures. It has also increased the size of the security team and deployed patrol dogs,” the company said.
In February, Gemfields announced that at least 11 illegal miners had died following a series of tunnel collapses over three days.
The group said that it had suspended all expansionary capital expenditure at MRM for the foreseeable future.
It said all UK staff members, including the board would switch to a four-day working week and receive a 20percent pay cut from next month, until the lockdown was lifted.
“Should the UK lockdown restrictions remain in effect after May 31, a three-day working week with a further 20 percent reduction in salary might become necessary,” it said.
It said that the group’s cash balances were $63.2million (R1.19billion) on Friday, and the net cash position was $33.2m.
Gemfields said it also had an undrawn overdraft facility in Mozambique of $30m.
Gemfields share prices gained 9.68 percent to R1.70 at the close of the JSE yesterday.