Profits from half-year operations for the period to end June in Gemfields fell from $36.4 million to $26.4m after revenues and earnings before interest, tax, depreciation and amortisation slowed down.
Sean Gilbertson, CEO of Gemfields, said on Friday that the company had operated against a difficult operating environment for the period under review.
“Gemfields is working through a complex year, balancing the availability of cash with the considerable investments we’re making at the Kagem emerald mine in Zambia, the Montepuez ruby mine in Mozambique and our development assets,” he said.
Construction of MRM’s $70m second processing plant was, however, on time and within budget for completion before the end of this year.
On completion of this, Gemfields is looking forward to tripling its ore processing capacity. This would help “to unlock our considerable stockpile, bring to market additional size and colour variations of rubies and provide us with the flexibility we need to better understand ore from other ruby-containing areas” on its deposits.
However, in the half year to June, revenues in the company fell from $153.6m to $127.9m. Ebitda also weakened from $72.9m to $49.6m while free cash flow before working capital movements for the six months to end June 2024 of about $3.3m was due primarily to significant investment programme.
The company’s net debt position as at the end of the period under review stood at $44.4m before the $65.5m of auction receivables that had entirely been collected now.
After the group’s current investment programmes, Gemfields was anticipating increased revenues
During the interim period to June, Gemfields conducted two emerald auctions.
“Despite slightly weaker sentiment from some customers, all three auctions delivered healthy results with the emerald auctions achieving $52m and the ruby auction achieving $69m,” said the company.
Its Fabergé unit earned $6.6m million over the same period and “has a solid customer base and continues to unlock significant promotional opportunities” for the company’s coloured gemstones.
“The weakness seen at our September commercial-quality emerald auction brings some uncertainty but we consider it unlikely that the November higher-quality emerald auction or the December mixed-quality ruby auction will yield below par results of a similar scope. If there are any material setbacks, we are of course prepared to take additional measures, including cost reduction measures and further financing options,” explained Gilbertson.
Gemfields has also written down its 6.54% shareholding in platinum group metals (PGM) company Sedibelo Resources, whose operations remain suspended.
As at the end of last year, Gemfields’ stake in Sedibelo was worth $4m. However, this has now been completely written off.
“The write-down reflects the fact that there has been no further positive news from Sedibelo, that their operations remain suspended and Gemfields management’s view that the prospects in the medium term remain dim,” said Gemfields.
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