Gemfields shares surge 13% as it flags a return to profitability
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GEMFIELDS, the supplier of coloured gemstones shot up by 13 percent on the JSE after it flagged a return to profitability during the half-year ended June 2021.
Gemfields, which is focused on mining emeralds at the Kagem mine in Zambia and the Montepuez Ruby Mining (MRM) in Mozambique, expects a $23.8 million (R364m) net profit after tax for the six months ended June compared to a $56.7m net loss after tax.
The group said its key operations, MRM and Kagem, generated revenues of $58.9m and $31.2m, respectively, during the six-month period to June, up from zero in MRM and $15m in Kagem.
“Gemfields’ 2020 auction schedule was severely hampered by the many travel, quarantine and congregating restrictions put in place internationally to mitigate the Covid-19 contagion.
“Gemfields, therefore, had to adapt and find alternative ways of hosting gemstone auctions.
“After the success of Gemfields’ inaugural series of smaller, multi-city, online-based auctions for high-quality emeralds in November and December 2020, Gemfields continued with the same format for its auctions of emeralds and rubies during the first half of 2021,” said the group.
Gemfields adapted to digital activities after the Covid19 pandemic resulted in the immobilisation of gemstone auctions.
The group said during the year ended December 2020 clients were severely impeded in carrying out physical inspections of its gemstones, a critical step in purchasing coloured gems.
Due to Covid-19, the principal operations in Zambia’s Kagem mine were suspended for a year, while the group operated the MRM for just four months in 2020.
Fabergé recorded revenues doubled to $4.9m from $2.5m in 2020.
“The increase in revenue is primarily due to the opening up of key countries for Fabergé after the Covid19 restrictions in 2020 which hampered Fabergé’s ability to deliver sales during various national lockdowns,” said Gemfields.
The group said a review of Gemfields’ shareholding in Sedibelo Platinum Mines had resulted in a fair value write up of $7.7m to $37.3m.
Headline earnings per share, which includes Sedibelo’s fair value gain, is expected to be R0.24 ($0.016) from a R0.57 ($0.04) headline loss per share, which also excluded an impairment charge against the Fabergé intangible asset. Earnings a share are expected to be R0.24 ($0.016) for the six months ended June 30, 2021, from R0.74 ($0.05) loss per share in 2020.
Gemfields shares closed 13.10 percent higher at R2.59 on the JSE yesterday.
BUSINESS REPORT ONLINE