Gemfields Evaluates Options for Nairoto Gold Prospect in Mozambique
Gemfields, a leading ruby and emerald miner, is considering seeking a partner or exploring a potential sale for its Nairoto gold prospect in Mozambique, depending on drilling results.
During the company’s annual results announcement on Monday, CEO Sean Gilberton emphasized that while Gemfields is not inclined to become a long-term gold production company, it remains open to strategic partnerships or divestment of the Nairoto project.
The decision regarding Nairoto will be heavily influenced by the drilling and assay results, particularly from the TL5 section of the project.
Despite initial interruptions due to the COVID-19 pandemic, Gemfields has invested approximately $20 million in the prospect since 2020.
“We believe it is worth continuing our investment in Nairoto, as indicated by our ongoing expenditure. We are committed to providing stakeholders with drilling results in the coming weeks to provide insight into the project’s potential,” stated Gilberton.
Gemfields seeks to rejuvenate its performance following disappointing results for the fiscal year ending December 2023, which saw a decline in profits despite recording its second-highest revenue ever.
With a major investment of $49 million earmarked for its Montepuez ruby mine in Mozambique, Gemfields anticipates driving into net debt this year.
Nevertheless, the company remains committed to paying dividends, with a $10 million final dividend declared, payable in June.
Despite these challenges, Gemfields faces market valuation issues, trading at a significant discount to its net asset value. Gilberton acknowledged this disparity, citing historical events such as the attempted takeover by Fosun in 2017.
While Gemfields’ low market valuation may raise speculation about a potential takeover, Gilberton remained cautious, stating, “It is extraordinarily hard to predict. I’m afraid my crystal ball is not good enough… We leave it to the stars.”
As Assore, an investment firm owned by the Sacco family, steadily builds a 29.2% stake in Gemfields, the company remains focused on optimizing operations and delivering value to shareholders to narrow the discount gap.
