THE MINING YEARBOOK 2021
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GEMFIELDS READY TO BRING BACK THE STYLE TO RUBY AND EMERALD INDUSTRY A horrible 2020 with Covid-19 turned worse for Gemfields CEO Sean Gilbertson when jihadists besieged parts of northern Mozambique. Having survived, Gemfields is looking to return with style. BY BRENDAN RYAN
s Gemfields jinxed? It’s a serious question when you look at the track record of the group founded by mining industry legend Brian Gilbertson and listed on the Johannesburg Stock Exchange (JSE) in 2007 as Pallinghurst Resources, just in time for the 2008 global recession. Restructured and renamed Gemfields in 2018 and run by son Sean Gilbertson, who listed the company on AIM in London, Gemfields promptly ran straight into a brick wall when the Covid-19 pandemic erupted early in 2020. Now throw in a potentially disastrous development out of left field - the Islamist jihadi insurrection in the Mozambican province of Cabo Delgado, where the group’s major Montepuez ruby mine is located - and you get the idea. “Long-suffering” does not begin to describe the original Pallinghurst Resources shareholders after what they have been through. The share price has been heading south since 2007, when it traded at a high of around R10 after listing on the JSE, but slumped to 230c by March 2008. Since then, the downward trajectory has eased, but Gemfields hit an all-time low of 103 South African cents a share in August last year, from where it has recovered slightly to around 160c as of early June. And don’t mention the discount to net asset value (NAV). That has been an albatross around the group’s neck for years, which both Brian and Sean Gilbertson have been unable to remove, with NAV sitting at 513c as of December 31. But there is good news, according to Sean Gilbertson, who tells Miningmx that the situation facing Gemfields looks vastly improved from the position that ruled in March this year - when the 2020 annual report was released - and Gemfields had to warn shareholders about various “material uncertainties” that could have serious financial consequences. Chief among these was the impact of the closure of the Kagem emerald mine and the Montepuez ruby mine for a year and the worry that Gemfields would not - because of Covid-19 - be able to hold the regular auctions of its ruby and emerald stocks, which would hammer expected cash revenues during the first six months of 2021. “The critical things are that, as of today [early June], both Kagem and Montepuez are back up and running at full capacity. Then we brought in $90.3m in revenues from auctions of emeralds and rubies during March and April and that has gotten us back onto our feet after the kneecapping we got in 2020.” Gilbertson says that, unlike diamonds, “virtual auctions” do not work for gemstones and the buyers have to get their hands on the gems to do their own assessments. So, instead of holding “regular auctions” - where around 150 buyers are brought into one room over a period of days to assess the gemstones - Gemfields held a series of “mini-auctions” where the gems were taken to a number of different cities, such as Tel Aviv, Dubai, Singapore, Bangkok and Jaipur.
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