Gemfields to restart mines after covid-triggered layoffs

Precious gemstones miner Gemfields (LON: GEM) (JSE: GML) said on Monday is ready to resume production at its two flagship mines in Africa, nearly a year after it had to halt operations in response to covid-19.

The company confirmed that both its Kagem emerald mine in Zambia and its Montepuez ruby mine in Mozambique would restart production “in a phased manner” in March, with operations ramping up to full scale by the end of April.

Gemfields, which returned to the London Stock Exchange’s market for juniors a year ago, suspended all but critical operations at Kagem and Montepuez on March 30 and April 22, respectively.

“After a grisly 2020 for Gemfields, there is palpable excitement across our worldwide team at the prospect of restarting production this month at our Kagem and MRM mines,” chief executive Sean Gilbertson said in the statement.

Auctions interrupted

As well as shutting down production, Gemfields has not held a regular auction since February last year.

The company’s typical auction schedule consists of five to six events per year. Two of them feature mixed quality rubies and three to four are reserved for emeralds, both higher and commercial quality.

Gemfields managed to carry out a series of mini-auctions for emeralds during November and December. Despite the efforts, revenue from sales fell by 89% last year to $22.4 million. That compares to the roughly $200 million auctions brought in the year before.

This year, the miner plans to use an interim auction model, beginning on March 15, returning to its regular auction format in the fourth quarter.

Montepuez is the world’s richest known ruby mine, which generated revenue of almost $122 million in 2019.

The operation is located in the northern Cabo Delgado province, one of Mozambique’s poorest regions, home to many unemployed young people.