Gemfields reports interim loss but is better positioned for a stronger second half

Gemfields Group said Friday its free cash flow before working capital movements fell to a negative $22.1 million for the six months to June 30 due to lower auction revenue and capital expenditure at Montepuez Ruby Mining (MRM) in Mozambique.

The JSE-listed miner and marketer of coloured stones said in its interim financial results that total revenue came to $64.2m, well down from R121.41m a year before. The earnings before interest, tax, depreciation and amortisation loss came to $4.9m. The net loss came to $24.58m, compared with the $13.67m profit at the same time a year before.

"This has been a challenging first half marked by gemstone production difficulties at both mines. MRM experienced lower premium ruby output while Kagem Mining suspended mining altogether at the end of 2024, with limited operations resuming only in May 2025, CEO Sean Gilbertson said.

Gemfields’ share price fell 6.2% to 136 cents in thin trade on the JSE on Friday, and the price was 40% below what it traded at 12 months before.

Gilbertson said the beginning of the year was also marred by civil unrest in Mozambique following the disputed general election, and the surprise implementation of the 15% export duty on emeralds in Zambia, a matter since resolved. At Kagem in Zambia, the 15% duty reinstatement in January 2025 was revoked within months, enabling Zambian emeralds to compete globally  again.

“These factors contributed to short-term cash flow pressures and certainly tested the team and the business,” he said.

Net debt by the end of the period stood at $61.2m ($64.4m) versus $16.1m of auction receivables, which are now 100% collected.

Gilbertson said, however, that a series of difficult decisions had yielded a more streamlined and focused organisation with, thanks to the support of the shareholders via a rights issue, a stronger balance sheet, all of which put the company on a better footing for the year ahead.

“Significantly, our new processing plant in Mozambique produced its first rubies earlier this month and is expected to be fully operational during October," he said.

No dividend was declared, versus $0.86 a share declared last year.

Until its sale in August 2025, Gemfields owned Fabergé, an iconic global brand that raised consumer awareness of coloured gemstones. On August 29, Gemfields sold its 100% interest in Fabergé to SMG Capital for $50m.

“With the sale of Fabergé and the discontinuance of other non-core projects, Gemfields is now a more streamlined business, focused on the mining of coloured gemstones,” Gilbertson said. Fabergé was classified as a disposal group held for sale as at June 30, 2025.

Chairman Bruce Cleaver said the group would work to stabilise operations in the coming months, driving greater profitability and improving financial flexibility.

“This will be achieved through disciplined cost controls, increased production and a conservative approach to capital allocation. I am eager to work more closely on developing the overriding strategy, and my fellow board members will pursue improvements in the areas of risk, audit, and ESG,” said Cleaver.

“Our approach to the second half is cautiously optimistic. While market conditions are still far from the highs experienced in recent years, the results from our 2025 auctions to date suggest an encouraging shift in demand sentiment. MRM’s second processing plant, together with the gradual restoration of mining at Kagem, will aid our supply capability,” said Gilbertson.

Speaking about the focus areas for the second half, Gilbertson said operationally, getting MRM’s new processing plant up and running to its design capacity was critical.

“This industry-leading plant is ambitious and is designed to transform production levels of rubies from the mine. The project has not been without its challenges and has experienced delays owing to logistical disturbances during the civil unrest and key parts being damaged in transit. With the plant now in the commissioning phase, we look forward to attaining design capacity,” he said.

Also in Mozambique, proposed changes to the mining law offered an opportunity to address issues negatively affecting MRM, such as tightening controls on illegal mining, trading and smuggling, minimising opportunities for corruption and bribery, and promoting greater transparency.

“Committing these aspirations to law could be game-changing for Mozambique’s receipts from its mineral resources,” he said.

Gemfields has developed a proprietary grading system and a pioneering auction platform to provide a consistent supply of coloured gemstones to downstream markets, a key component of Gemfields' business model that has played an important role in the growth of the global coloured gemstone sector.

Visit:www.businessreport.co.za