At the occasion of the publication of the Gemfields audited Annual and Accounts for the 2024 Annual Report, Sean Gilbertson, CEO of Gemfields, commented, “2024 witnessed our 50th Zambian emerald auction, the 10-year anniversary of our first ever Mozambican ruby auction and a new chapter of capital projects in Gemfields’ growth trajectory as a world-leading responsible miner of coloured gemstones.
Market conditions through 2024 were more challenging than we could have anticipated. Revenues at both emerald and ruby auctions were materially lower than the Group experienced in recent years due to three principal factors.
Those three are;
a) disturbed emerald market dynamics arising from the oversupply of Zambian emeralds at discounted prices by a competing Zambian emerald producer during the second half of 2024, compounded by conflicting auction dates and so giving rise to a poor Zambian emerald market outlook for the first half of 2025;
b) lower-than-expected production of premium rubies at, Montepuez Ruby Mining (MRM); and c) a weaker luxury and gemstone market generally, given economic difficulties in China and widespread geopolitical turbulence.
Furthermore, the Group faced significant operational challenges in relation to civil unrest and associated supply chain interruptions in Mozambique as a result of the contested general election in October 2024. Our increased risk profile was reflected in a significant reduction in our share price. In line with the Company’s commitment to the safety and security of its personnel, mining operations at MRM were temporarily paused towards the end of the year following an attempt to invade MRM’s residential area.
Management views the present challenges as transient. While our planning of Gemfields’ growth programme did not envisage the requirement of additional funds from shareholders, the scope and scale of the difficulties we have encountered contemporaneously has unfortunately necessitated a change in approach.
In order to navigate this turbulent period and complete the construction of the second processing plant at MRM, a project we consider to be pivotal to the Group’s future, management undertook an extensive programme of cost cutting across the Group, as announced in a strategic update towards the end of 2024, including the suspension of mining at Kagem in light of the poor emerald market.
We also confirmed we would consider options outside of the Group for our wholly owned luxury jeweller Fabergé as a means of addressing a forecast near-term working capital shortfall. I remain of the opinion that Gemfields’ mining operations are world-class assets and that the Group’s strategic goals remain wholly relevant. Once fully operational, MRM’s second processing plant is expected to triple the processing rate and therefore add considerably to the mine’s ruby production and revenues.
The coloured gemstone market is expected to recover and continue its medium to long-term upward trajectory. I am confident that there is an exciting growth phase for Gemfields on the other side of this near-term funding shortfall.
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