Gemfields to hold $30m rights issue as it plunges into far worse-than-expected losses

Emerald and ruby producer Gemfields is to hold a $30m rights issue at a deep discount to its current share price as it moves to shore up its finances in the face of severe losses and grim market conditions.This follows comments from CEO Sean Gilbertson in September last year that the company might have to look at “further financing options” as profits plunged at the interim reporting stage.Results for the year to end-December published today show that Gemfields made an operating loss of $97.9m (2023 – $17.4m profit) and a net loss of $100.8m ($2.8m loss).Gemfields also reported a major deterioration in its balance sheet which showed net debt of $80.4m at end-December from a net cash holding of $11.1m a year previously.Gilbertson attributed Gemfields’ losses to a number of factors including operating problems at the group’s mines in Zambia and Mozambique and overall weak international gem market conditions.He commented, “market conditions through 2024 were more challenging than we could have anticipated. Revenues at both emerald and ruby auctions were materially lower than the group experienced in recent years.”One of the main factors was that the emerald market was hit by an oversupply of Zambian emeralds at discounted prices from a competing Zambian producer. Gilbertson said this “has created a poor market outlook for the first half of 2025. “Gemfields experienced lower-than-expected production of rubies from its MRM mine in Mozambique while the overall market for luxury goods and gemstones was weaker because of economic difficulties in China and widespread geopolitical turbulence.Gilbertson also cited “significant operational challenges in relation to civil unrest and associated supply chain interruptions in Mozambique as a result of the contested general election in October 2024. Our increased risk profile was reflected in a significant reduction in our share price.”In response Gemfields implemented an extensive cost-cutting programme which included suspension of mining at its Kagem emerald mine in Zambia.Gilbertson added, “while our planning of Gemfields’ growth programme did not envisage the requirement of additional funds from shareholders, the scope and scale of the difficulties we have encountered contemporaneously has unfortunately necessitated a change in approach. The Board has recommended a proposed rights issue to address the short-term funding requirements of the group.”Gilbertson maintained that, “management views the present challenges as transient.  I remain of the opinion that Gemfields’ mining operations are world-class assets and that the group’s strategic goals remain wholly relevant.“Once fully operational MRM’s second processing plant is expected to triple the processing rate and therefore add considerably to the mine’s ruby production and revenues.“The coloured gemstone market is expected to recover and continue its medium to long-term upward trajectory. “The rights issue is aimed at raising $30m and is fully underwritten by Gemfields two largest shareholders which are Assore International Holdings and Rational Expectations.Assore and Rational have also made “pre-funding arrangements” with Gemfields to loan the company $13.3m to provide Gemfields with “an immediate working capital injection pending the completion of the proposed rights issue.”The South African price for the rights issue will be at R1.068 per new share on the basis of 10 new shares for every 21 existing shares held. Gemfields shares closed at R1.5 on Thursday on the JSE ahead of today’s announcement and dropped 13% to open trading this morning at around 130c.The post Gemfields to hold $30m rights issue as it plunges into far worse-than-expected losses appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com