Gemfields leaps 8% as second ruby plant nears completion

The construction of Gemfields’ Montepuez Ruby Mine (MRM) second processing plant, which will triple its ore-processing capacity, is nearing completion.

The coloured gemstone miner said on Friday MRM’s second processing plant (PP2) was 95% complete and materially on budget.

After rising as much as 18% in intraday trade, Gemfields’ share price closed 8.77% higher at R1.24, in its biggest one-day gain since April 8.

The plant, which will increase ore processing capacity from 200 tonnes per hour (tph) to 600tph, is expected to produce its first rubies in August.

Final completion of PP2, including the tailings belt conveyor and decanter centrifuge, is expected to occur in September.

Difficulties in obtaining the requisite work permits, particularly in relation to specialist electrical component installation, and transport difficulties, including in relation to a key transformer that was damaged during transit, have delayed final completion.

Gemfields said about 287 trucks related to the construction — out of about 300 — had completed their deliveries to MRM.

The group said it had experienced security and operational issues due to illegal miner incursions.

“The group wishes to commend the sterling efforts of both the MRM team and the principal contractor, Consulmet (Africa), in positively navigating the very challenging circumstances experienced in the north of Mozambique during the 22 months since the project was first announced,” Gemfields said.

The company previously said illegal ruby miners had taken advantage of the unrest that occurred in Mozambique after the disputed elections. It experienced several incidents implicating illegal miners at MTM.

At its Kagem Emerald Mine in Zambia, the group has recommenced focused mining by reopening two production points in the Chama pit with minimal waste mining.

A measured further expansion of mining operations is expected from July and will be further shaped according to developing market conditions. A return to full-scale mining is not expected for some months.

In December last year Gemfields suspended all mining at Kagem for about six months amid falling stone prices due to a Zambian competitor’s oversupply in the second half of 2024.   
Kagem instead focused on processing ore from Kagem’s stockpile, using its upgraded processing plant.

The group said in May emerald production from the processing plant in 2025 so far, in terms of carats recovered, was in line with the company’s expectations, producing a lower proportion of higher-quality or premium emeralds than direct open-pit mining methods.

“Kagem’s recent auction results, including the encouraging commercial-quality auction results released on April 30, has increased management confidence in the current emerald market and the decision has therefore been taken to recommence mining of two key production points in the Chama pit, with minimal waste mining, to recover premium emeralds for Kagem’s future higher-quality auctions,” it said.

The decision to return to full-scale mining would be assessed as market conditions developed.

Gemfields continues to explore strategic options for Fabergé, the iconic and wholly owned luxury brand, after the completion of a rights issue that required the process to be paused. The Times (UK) reported in December that Gemfields was evaluating options for the jeweller it bought 11 years ago as it weighed up cost-cutting measures to help it to “streamline the business”.

In June Gemfields raised $30m (R548m) from investors through a rights issue. The financial lifeline comes after a year in which weaker auction revenues weighed on the gemstone miner’s balance sheet, with net debt having risen to $80.5m in December.

At its latest auction of mixed-quality rubies held on June 2-13, the group reported revenue of $31.7m, selling 69% of the 99,830 carats on offer.

Gemfields MD of product and sales Adrian Banks, said while this was the group’s smallest mixed-quality ruby offering by weight to date and the market was unstable due to geopolitical turbulence, China’s economic difficulties and tariff uncertainty, the auction result demonstrated the resilience of rubies.

The auction included rubies from a newer area of MRM, which previously had not been represented at auction in meaningful quantities, including a notable 36-carat ruby, which sold well, becoming the third-most-valuable single gemstone lot in MRM’s history, it said.

“Demand and pricing for fine-quality rubies remain strong. Notably, the secondary-type rubies recently recovered from a newer section of MRM, exhibiting different characteristics, were generally well received by auction customers,” he said.

With Jacob Webster

mackenzieJ@arena.africa