Gemfields share price soars by 7%
Gemfields’ stock soared nearly 7% on the JSE yesterday after the supplier of coloured gemstones said that its first ruby auction of the year brought in $95.6 million (R1.6 billion), the company’s all-time high auction income.
In intraday trading on Monday, the shares were trading at R3.55.
The Gemfields Group, headquartered in London and traded on the Johannesburg and London Stock Exchanges, specializes in emerald mining at the Kagem mine in Zambia and the Montepuez Ruby Mining (MRM) in Mozambique.
According to the report, the ruby auction consisted of seven separate mini-auctions held in Bangkok from May 30 to June 17.
The rough rubies were extracted from the mining licence held and operated by MRM, which is 75 percent owned by Gemfields and 25 percent by Mozambican partner Mwiriti Limitada.
The auction saw 49 companies placing bids and generating record revenues of $95.6m with an overall average value of $246.69 per carat.
According to Gemfields, following the viewings, the auctions took place via an online auction platform specifically adapted for Gemfields, which permitted customers from multiple jurisdictions to participate in a sealed-bid process.
“The auction saw 94.1 per cent of the number of lots, and 63.5 per cent of the offered carats, being sold,” it said.
Gemfields said the auction proceeds would be fully repatriated to MRM in Mozambique, with all royalties due to the government of the Republic of Mozambique paying on the full sales prices achieved at the auction.
Gemfields managing director of product and sales Adrian Banks said: “Our first auction of rubies in 2022 has delivered truly glittering results, setting a new revenue record for any Gemfields auction at $95.6 million. When combined with Kagem’s two emerald auctions so far this year, Gemfields auction revenue in the first half of 2022 stands at $181 million versus our prior first-half record of $93 million, set in 2018.
“While we would caution that second-half revenues are unlikely to match the remarkable first half, the auction results again underscore the extent of the step-change being experienced in the market. We thank and congratulate our hard-working teams, our partners, our host governments, and of course our clients,“ Banks said.
According to the group, the auction contained a selection of grades that were typically offered at MRM auctions of mixed-quality rubies.
The group said the average price of $246.69 per carat was a new record for any mixed-quality ruby auction.
“Of the 119 lots offered, 112 were sold, 63.5 per cent of the carats offered at the auction were sold,” it said.
Gemfields said the 16 auctions of MRM rubies held since June 2014 generated $827.1m in total revenues.
According to Gemfields, following the viewings, the auctions took place via an online auction platform specifically adapted for Gemfields, which permitted customers from multiple jurisdictions to participate in a sealed-bid process.
Last week, Gemfields said that MRM’s operations were not affected by the attacks in the Ancuabe region that reportedly killed two employees of the Ancuabe Graphite Project, allegedly by rebels linked to the Islamic State.
In its latest company results posted in April, Gemfields reported an excellent set of results for 2021, rebounding well from the impact of Covid-19, which in the past had disrupted operations.
The group also reported high revenue cash flow generation, benefiting from the Covid-19-related demand. This record-high revenue and the high price per carat achieved during 2021 showed a positive development in both travel and product demand.
