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Glittering result: Gemfields coins it as first auction of year breaks all-time record, netting R1.6bn

Emeralds from the Kagem mine in Lufwanyama, Zambia. Picture: File

Emeralds from the Kagem mine in Lufwanyama, Zambia. Picture: File

Published Jun 21, 2022

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Gemfields share price leapt by almost 7 percent on the JSE yesterday after the supplier of coloured gemstones announced that its first auction of rubies this year, netted $95.6 million (R1.6 billion) - an all-time high auction revenue for any of its auctions.

The shares traded at R3.55 on Monday intra trade.

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The Gemfields Group, based in London and listed on the Johannesburg and London Stock Exchanges, is focused on mining emeralds at the Kagem mine in Zambia and the Montepuez Ruby Mining (MRM) in Mozambique.

It said the ruby auction comprised seven sequential mini-auctions held in Bangkok during the period May 30 to June 17.

The rough rubies were extracted from the mining licence held and operated by MRM, which is 75 percent owned by Gemfields and 25 percent by Mozambican partner Mwiriti Limitada.

The auction saw 49 companies placing bids and generating record revenues of $95.6m with an overall average value of $246.69 per carat.

According to Gemfields, following the viewings, the auctions took place via an online auction platform specifically adapted for Gemfields, which permitted customers from multiple jurisdictions to participate in a sealed-bid process.

“The auction saw 94.1 percent of the number of lots, and 63.5 percent of the offered carats, being sold,” it said.

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Gemfields said the auction proceeds would be fully repatriated to MRM in Mozambique, with all royalties due to the government of the Republic of Mozambique paid on the full sales prices achieved at the auction.

Gemfields managing director of product and sales Adrian Banks said: “Our first auction of rubies in 2022 has delivered truly glittering results, setting a new revenue record for any Gemfields auction at $95.6 million. When combined with Kagem’s two emerald auctions so far this year, Gemfields auction revenue in the first half of 2022 stands at $181 million versus our prior first-half record of $93 million, set in 2018.

"While we would caution that second-half revenues are unlikely to match the remarkable first half, the auction results again underscore the extent of the step-change being experienced in the market. We thank and congratulate our hard-working teams, our partners, our host governments, and of course our clients,“ Banks said.

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According to the group, the auction contained a selection of grades that were typically offered at MRM auctions of mixed-quality rubies.

The group said the average price of $246.69 per carat was a new record for any mixed-quality ruby auction.

“Of the 119 lots offered, 112 were sold, 63.5 percent of the carats offered at the auction were sold,” it said.

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Gemfields said the 16 auctions of MRM rubies held since June 2014 generated $827.1m in total revenues.

According to Gemfields, following the viewings, the auctions took place via an online auction platform specifically adapted for Gemfields, which permitted customers from multiple jurisdictions to participate in a sealed-bid process.

Last week, Gemfields said that MRM’s operations were not affected by the attacks in the Ancuabe region that reportedly killed two employes of the Ancuabe Graphite Project, allegedly by rebels linked to the Islamic State.

In its latest company results posted in April, Gemfields reported an excellent set of results for 2021, rebounding well from the impact of Covid-19, which in the past had disrupted operations.

The group also reported high revenue cash flow generation, benefiting from the Covid-19 related demand. This record-high revenue and the high price per carat achieved during 2021 showed a positive development in both travel and product demand.

BUSINESS REPORT

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