JOHANNESBURG - Gemfields has suspended the auctions of emerald and ruby stones as global coronavirus lockdowns put trade on the back foot.
The group said that it had deferred the auctions planned in Singapore for May and June to the last quarter of the year in the hope that global trading would have recovered.
Chief executive Sean Gilbertson said in the group’s 2019 annual report released yesterday that it would take some time for businesses to return to relative normality once the travel restrictions had been lifted.
Gilbertson said the group had suspended all discretionary and uncommitted spend to preserve cash given the delay in auction revenue.
He said the suspension also included Gemfields’ share buyback programme, which was announced last year.
“Gemfields is highly dependent on revenue from gemstone auctions, and any further delay in the 2020 auctions would put severe strain on the group’s finances,” said Gilbertson.
The group said there was uncertainty over the likely cash flows as a result of Covid-19, and the resumption of auctions that may cast significant doubt on the group's ability to continue as a going concern.
The company said, however, it believed that the listing on the Alternative Investment Market (AIM) of the London Stock Exchange would increase the reach of UK, European and international investors, all of whom were expected to benefit from a more convenient entry point into the precious coloured gemstone market.
Group chairperson Martin Tolcher said the AIM listing should improve trading liquidity in time, strengthening the public profile and broker coverage.