Gemfields earned $10.8 million (R190.7m) in revenue from its latest auction of commercial quality rough emeralds held from August 27 to September 13, 2024.
About 46 lots were offered for sale, of which 28 were sold, representing about 61% of the slots. The company realised average prices of $4.47 per carat for the latest auction.
On Monday, however, Adrian Banks, Gemfields managing director, said the “luxury-good, diamond and gemstone markets are experiencing distinct headwinds as conflicts, elections, economic uncertainty in China and broader economic turbulence” take their toll on the industry.
“Today’s overall result is weaker than expected, exacerbated in part by a competing emerald producer scheduling their own auction to finish in early September 2024, in the middle of ours, and selling through their emeralds at what customers reported as low prices,” said Banks.
The rough emeralds recently sold by Gemfields were extracted by Kagem, in which it holds a 75% interest, and the remainder owned by the Industrial Development Corporation of Zambia.
Gemfields said proceeds from the auction would be repatriated to Kagem in Zambia, with all royalties due to the government paid on the full sales prices achieved at the auction.
The company was, however, committing to responsible auctioning of its gemstones by withholding lots when fair pricing is not attainable.
“Gemfields remains committed to acting responsibly by withholding auction lots when fair market prices are not achieved, as is demonstrated by the lots we withdrew from our auction which comprised both considerable volume and value,” Banks said.
“We hope that market conditions improve as we work towards the auction of higher-quality emeralds scheduled for November 2024.”
The 49 auctions of Kagem gemstones that Gemfields has held since July 2009 have generated about $1 billion in total revenue
Last month, the company sold 5.7 million carats of sapphire, corundum and rubies.
In July, Gemfields announced that it had appointed former De Beers CEO Bruce Cleaver as its new board chairperson. With operations in Zambia and Mozambique, the gem miner also appointed two other new non-executive directors.
Amid lower diamond prices, there has been strong demand and support for gemstones. Global diamond producer, De Beers, which is being demerged from Anglo American, has had to “intentionally lower production” in response to “weaker rough diamond demand” across global markets.
However, another diamond producer, Petra Diamonds, is expecting diamond prices to improve.
As at the end of June 2024, Gemfields had cash and cash equivalents of about $22.3m. At the time, outstanding debt in the company amounted to $66.7m, translating to a net debt position of $44.4m.
“The net cash position excludes the outstanding balance of auction receivables of $65.5m as at 30 June 2024. Net cash with auction receivables totals $21.2m,” the company said.
Construction of the second processing plant at the Montepuez ruby “remains on budget and on track for completion” by the end of the first half of 2025.
BUSINESS REPORT