JOHANNESBURG – Gemfields, the global supplier of African emeralds and rubies, on Friday said that interim losses had mounted by 556 percent during the six months to the end of June on the Covid-19 pandemic and it would potentially approach shareholders for a rights issue to raise funds.
Gemfields swung to a net loss after tax of $56.7 million (R925.28m) at the end of June compared with a profit after tax of $12.4m in the first half of 2019 on travel restrictions and the restrictions on the movement of goods, which impeded both the mining operations and the overall market for its products. “The loss in the current period resulted from the impact of Covid-19 on operations, which caused severely reduced revenues, which fell significantly more than the cost savings initiated by the group at the start of the second quarter of 2020,” it said the group.
Gemfields said it was able to host only one auction during the period in the Kagem mine in Lusaka, Zambia in February, yielding revenues of $11.4m from the sale of commercial quality emeralds.
Mozambique’s Montepuez Ruby Mining Limitada (MRM) was unable to hold its usual June mixed quality ruby auction as a result of the various Covid-19 restrictions and as a result, generated no revenue for the period.
During the same period in 2019, the Mozambican and Zambian operations generated revenues of $50m and $33.2mn, respectively.
Chairperson Martin Tolcher said the Covid-19 pandemic had resulted in significant disruption for Gemfields as well as the wider gemstone sector.
“It has unquestionably been the biggest challenge Gemfields has faced to date,” said Tolcher.
Gemfields has previously said it was aiming to host gemstone auctions at the end of December.
Tolcher said should hosting gemstone auctions by the end of December remain unfeasible, additional cash maintenance measures would be implemented. The group was preparing fundraising options, including a possible rights issue, he said.
“Clearly, such an outcome is to be avoided if at all possible and Gemfields has several cash-augmenting initiatives being progressed. These include, for example, additional debt, a sale of Sedibelo and modified approaches to achieving gemstone sales, whether by “shuttle viewings” or increased direct sales,” said Tolcher.
Revenue fell 83 percent to $15m from $89ma year earlier with the company’s earnings before interest, taxes, depreciation, and amortization (Ebitda) loss of $22.5m.
Gemfields said the Covid-19 pandemic and its effect on global markets had also resulted in the group recognising a fair value loss of $12.5m on the revaluation of its investment in the Sedibelo mine and $11.5mimpairment of the Fabergé.