Proactiveinvestors United Kingdom Gemfields PLC https://www.proactiveinvestors.co.uk Proactiveinvestors United Kingdom Gemfields PLC RSS feed en Tue, 23 Jul 2019 04:15:12 +0100 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) <![CDATA[News - Gemfields shares to be compulsorily acquired by Pallinghurst ]]> https://www.proactiveinvestors.co.uk/companies/news/181152/gemfields-shares-to-be-compulsorily-acquired-by-pallinghurst-181152.html Pallinghurst is to exercise its right to compulsorily acquire the Gemfields PLC (LON:GEM) shares from those shareholders who have not yet accepted its takeover offer.

Gemfields is advising the hold-out shareholders to accept the offer, as they will get their recompense sooner than they would were they to wait for the compulsory acquisition procedure to run its course.

Gemfields shares are set to de-list from AIM on 28 July.

READ Game over for Gemfields as it confirms plans to de-list from AIM

 

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Wed, 19 Jul 2017 14:16:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/181152/gemfields-shares-to-be-compulsorily-acquired-by-pallinghurst-181152.html
<![CDATA[News - Game over for Gemfields as it confirms plans to de-list from AIM ]]> https://www.proactiveinvestors.co.uk/companies/news/180116/game-over-for-gemfields-as-it-confirms-plans-to-de-list-from-aim-180116.html It’s the end of the AIM road for Gemfields PLC (LON:GEM) and its investors after the ruby and emerald miner applied to cancel its listing on the junior market.

At the request of new majority owner Pallinghurst – which now owns more than 75% of Gemfields – the miner’s AIM shares will be cancelled on 28 July.

Current shareholders have until 18 July to accept Pallinghurst’s nil-premium, all-share offer or wind up having a stake in an unlisted company.

Gemfields said the de-listing will reduce the liquidity and marketability of any shares not sold to Pallinghurst and advised investors to “seriously consider” accepting the offer.

The company, which is the world’s largest supplier of coloured gemstones, has repeatedly called Palllinghurst’s “derisory” and “unsolicited”.

Shares dipped 1.5% this morning to trade at 32.5p.

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Fri, 30 Jun 2017 09:07:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/180116/game-over-for-gemfields-as-it-confirms-plans-to-de-list-from-aim-180116.html
<![CDATA[News - Gemfields shares slump as Pallinghurst gets enough support to de-list the miner ]]> https://www.proactiveinvestors.co.uk/companies/news/179898/ Shares in Gemfields PLC (LON:GEM) slumped on Tuesday after Pallinghurst Resources revealed it has enough support from shareholders to push ahead with its plans to de-list the emerald and ruby miner.

Pallinghurst already owns a 47% stake in Gemfields and said on Monday evening that it had received acceptances from investors representing a further 28% of the shares in issue.

With just over 75% of Gemfields shareholders now agreeing to sell their stakes to Pallinghurst, the South Africa-listed company has enough backing to push ahead with its plans to de-list Gemfields.

READ: Pallinghurst shareholders overwhelmingly approve takeover bid

The news comes a day after Pallinghurst shareholders voted in favour of the deal, which removed the last potential stumbling block and nullified a rival offer from Chinese conglomerate Fosun Gold.

The only question that remained was whether or not Pallinghurst could get enough backing from Gemfields investors to cancel the firm’s AIM shares, but this issue it has now put to bed.

Pallinghurst feels Gemfields has underperformed

Pallinghurst – run by former BHP Billiton plc (LON:BLT) boss Brian Gilbertson – lodged its “unsolicited offer” for Gemfields last month, claiming that the emerald and ruby miner had underperformed in recent years.

It wanted full control of Gemfields, arguing that the miner continues to be constrained by limited access to equity and debt capital, low liquidity in the trading of its shares, and a high cost base, which had affected its profitability.

Under the terms of its offer, each Gemfields shareholder is entitled to receive 1.91 new Pallinghurst shares for each Gemfields share, which works out at roughly 37p a share.

The firm believes the overhaul and integration of Gemfields would allow it to perform to its full potential.

Today’s news is unlikely to have gone down well with the current Gemfields board, which has repeatedly called the nil premium, all-share bid a “derisory” offer that undervalues the company.

The offer is open to Gemfields shareholders until 18 July.

Gemfields shares lsumped 13% to 31p on Tuesday afternoon.

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Tue, 27 Jun 2017 13:04:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/179898/
<![CDATA[News - Pallinghurst shareholders overwhelmingly approve Gemfields takeover bid ]]> https://www.proactiveinvestors.co.uk/companies/news/179842/ Pallinghurst Resources has received the overwhelming support of its shareholders to press ahead with its bid to acquire the rest of Gemfields PLC (LON:GEM) it doesn’t already own.

South Africa-listed Pallinghurst needed the backing of at least 50.1% of its investors to back the all-share, nil-premium offer.

Despite suggestions last week that it might struggle to get this number, Pallinghurst actually received a whopping 96% of the vote.

Given that it already has 61.25% of Gemfields shareholders on board as well, above the 60% minimum, the offer is now wholly unconditional.

It also means that the rival bid from Fosun Gold is null and void as the Chinese conglomerate was only interested if it could get at least 50% of the miner.

Market sources said Fosun was now weighing its future options following the vote.

“With more than 96% of the voting shares in favour of the Gemfields acquisition, Pallinghurst's management has been given a clear and emphatic mandate,” said Pallinghurst chief executive Arne Frandsen.

“As management, we value and respect this vote of confidence from our shareholders, and will carry out this mandate without delay.”

Pallinghurst looking for 75% of Gemfields investors to support its bid

Pallinghurst is currently the biggest shareholder in Gemfields, with a 47.1% stake.

Another 14% or so of Gemfields investors have so far accepted its offer of 1.91 Pallinghurst shares in return for each Gemfields share – which works out roughly at 38.1p a share.

At the moment, that’s only enough for it to be the majority shareholder. What it is hoping for is that more Gemfields investors will take it up on its offer between now and 18 July – the deadline for acceptances.

If it can get to 75%, that would allow it to formally de-list Gemfields from AIM, collapse its own investment structure, simplify its management arrangements and possibly convert into a mining company.

Gemfields advising shareholders to take no action

Shortly after the announcement, the Gemfields board released a response, where it once again said the offer “significantly undervalues” the company.

It also noted that, as yet, Pallinghurst doesn’t have the 75% required to de-list Gemfields and “strongly” advised shareholders to take no action.

Gemfields shares dipped 4% in late afternoon trading to 35.5p.

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Mon, 26 Jun 2017 16:06:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/179842/
<![CDATA[News - Gemfields bidding war tipped to rumble on even if Pallinghurst investors back nil-premium offer on Monday ]]> https://www.proactiveinvestors.co.uk/companies/news/179684/gemfields-bidding-war-tipped-to-rumble-on-even-if-pallinghurst-investors-back-nil-premium-offer-on-monday-179684.html Next week looks set to be a pretty big one for Gemfields PLC (LON:GEM) and its investors.

Pallinghurst Resources’ nil-premium offer already has the backing of 61.25% of Gemfields shareholders, which is more than the 60% required to make the bid unconditional.

Now South Africa-listed Pallinghurst – which already owns 47% of the emerald miner – needs the backing of its own shareholders, who are set to vote on the deal on Monday (26 June).

Pallinghurst claims to have enough investor support

Pallinghurst has repeatedly said it has irrevocable undertakings – i.e. binding, irreversible agreements – from 50.3% of its shareholder base, which would be enough to push the deal over the line.

Should that be the case, Pallinghurst would have the necessary backing from both sides to take majority control of Gemfields.

It would also nullify a rival 45p a share cash offer from Fosun Gold, which the Chinese conglomerate has previously said is only valid if it can take at least a 50% stake in Gemfields.

So that should be that. If Pallinghurst gets 50.3% of the vote which it claims is in the bag, its offer would be successful and Fosun’s bid would fall away.

But some think the vote and subsequent deal might not be that straightforward.

Both Gemfields and Fosun have this week disputed Pallinghurst’s level of support, claiming that “there is the possibility that Pallinghurst will not receive the necessary majority to pass the ordinary resolution”.

‘All to play for’ regardless of Monday’s vote outcome

The word from people close to the deal is that, despite Pallinghurst’s claims, Monday’s vote is far from a forgone conclusion.

Perhaps most interestingly is that market sources also think the battle for Gemfields could still be ‘all to play for’ even if Pallinghurst does get the majority it needs next week.

The suggestion is that regardless of whichever way the vote falls on the day, it might not be the last we hear of this particular tug-of-war.

For its part, however, Pallinghurst remains confident that it will get the necessary support from its shareholders to increase its stake in Gemfields.

All should become clearer on Monday, albeit for just a short while perhaps.

Share price suggests Pallinghurst win

If the share price is anything to go by, there doesn’t seem to be too much confidence from Gemfields investors that the Fosun offer is a likely victor in this war.

After topping out around the 42p on the news of the offer, shares have fallen back to 39p over the past couple of days just above Pallinghurst’s implied bid of 38.1p or so.

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Thu, 22 Jun 2017 11:56:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/179684/gemfields-bidding-war-tipped-to-rumble-on-even-if-pallinghurst-investors-back-nil-premium-offer-on-monday-179684.html
<![CDATA[News - ‘All to play for’ in the Gemfields tug-of-war as Pallinghurst’s support questioned ]]> https://www.proactiveinvestors.co.uk/companies/news/179623/all-to-play-for-in-the-gemfields-tug-of-war-as-pallinghursts-support-questioned-179623.html It looks like it is all to play for between Pallinghurst and Fosun Gold in their tug of war for Gemfields PLC (LON:GEM).

The emerald and ruby miner has questioned whether Pallinghurst – which already owns 47% of the AIM-quoted company – has the support it needs to press ahead with its offer.

READ: Gemfields advises investors against Pallinghurst offer

Pallinghurst – led by former BHP Billiton plc (LON:BLT) boss Brian Gilbertson – has said it has the support of 61.25% of Gemfields shareholders for its offer, which made its nil-premium offer unconditional.

Pallinghurst shareholders to vote on Monday

However, South Africa-listed Pallinghurst also needs the backing of its own shareholders in order to push the deal over the line.

It needs more than 50% of investors to approve the deal at next Monday’s (26 June) EGM, and reckons it’s received irrevocable undertakings from 50.3%.

Should that be the case, Pallinghurst would have the necessary backing from both sides to take majority control of Gemfields.

It would also nullify Fosun Gold’s 45p a share cash offer, which it has previously said is only valid if it can take at least a 50% stake in Gemfields.

READ: Gemfields reluctantly recommends Fosun offer

Given that Pallinghurst has support that would see it own at least 61% of the miner, the only way for Fosun to get in on the action is if Pallinghurst shareholders vote against the proposed takeover.

How could that happen if Pallinghurst already has the backing of its shareholders?

It all comes down to legalese and how the conditions of the irrevocable undertakings have been written and interpreted.

When Pallinghurst proposed the offer back in May, it said it had the backing of shareholders representing 50.3% and stated that:

“These irrevocable undertakings cease to be binding upon the earlier of: (i) the date on which the Conditions lapse as a result of the failure or non-fulfilment of any of the Conditions; or (ii) the date on which the Offer is implemented.”

Make of that what you will. Pallinghurst is convinced that these are binding agreements, while Fosun and Gemfields think there is a way for some of those shareholders to retract their support.

“Despite the irrevocable undertakings that Pallinghurst has received from certain Pallinghurst shareholders to vote in favour of the ordinary resolution to approve the offer, the Independent Committee believes that (given the terms of the undertakings) there is the possibility that Pallinghurst will not receive the necessary majority to pass the ordinary resolution,” said Gemfields in a statement today.

Either way, sources close to the deal say it’s all to play for come Monday.

City broker thinks Pallinghurst likely to come out on top

City broker Numis Securities believes that the Pallinghurst bid will come out on top, even though it considers the Fosun offer to be a better deal for Gemfields shareholders.

“Whilst we believe that both offers materially undervalue Gemfields and that fair value is our 94p per share, we believe the 45p Fosun cash offer to be the superior alternative,” wrote analyst Justin Chan in a note to clients.

“However, Pallinghurst’s 48% direct shareholding and 73% total direct and indirect holding makes it difficult to imagine a scenario in which Pallinghurst’s bid will not be successful.”

Chan adds that, in his opinion, Pallinghurst should at least match Fosun’s offer, although he notes that “thus far Pallinghurst has operated with minimal decorum with regards to this transaction”.

Shares in Gemfields shed 5% to 40p.

--Updates for share price, broker comment and additional info--

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Wed, 21 Jun 2017 12:38:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/179623/all-to-play-for-in-the-gemfields-tug-of-war-as-pallinghursts-support-questioned-179623.html
<![CDATA[News - Gemfields nudges higher as board recommends new Fosun offer ]]> https://www.proactiveinvestors.co.uk/companies/news/179552/gemfields-nudges-higher-as-board-recommends-new-fosun-offer-179552.html Shares in Gemfields PLC (LON:GEM) nudged higher this afternoon after the ruby and emerald miner’s board recommended an improved cash offer from Chinese conglomerate Fosun.

Fosun – led by billionaire Guo Guanchang – originally proposed a 40.85p a share bid when it approached Gemfields last week, but has now lodged a firm cash offer of 45p which values the company at £256mln.

That’s 18% higher than the nil-premium offer put to shareholders last month by Pallinghurst, which is looking to snap up the 53% of Gemfields it doesn’t already own.

Pallinghurst’s all-share bid currently works out at around 38.1p, which Gemfields has once again labelled as “unsolicited” and “derisory” today.

“Given the challenges that the Pallinghurst offer poses to the independent future of the company…, the Independent Committee intend to recommend that shareholders accept the Fosun offer so as to secure a relatively more attractive outcome for their investment,” AIM-listed Gemfields said in a statement today.

Chief executive Ian Harebottle and chief financial officer Janet Boyce have already pledged to give their backing to the bid.

Given their co-investment arrangements, the two directors have stepped down from the Independent Committee.

Gemfields investors have a choice to make

Pallinghurst – which is run by former BHP Billiton plc (LON:BLT) boss Brian Gilbertson – is at loggerheads with the company, which it feels has underperformed in recent years.

It wants full control of Gemfields, arguing that the miner continues to be constrained by limited access to equity and debt capital, low liquidity in the trading of its shares, and a high cost base, which has affected its profitability.

Pallinghurst had previously said it received irrevocable undertakings from certain investors which meant its offer would have the support of shareholders representing more than 75% of the share capital.

With that level of support, Pallinghurst would be able to de-list Gemfields and merge it into its own operations relatively unchallenged.

However, those irrevocable undertakings cease to be binding when there is a rival offer at a greater than 10% premium (as Fosun’s is) and that hasn’t been matched by Pallinghurst within seven days.

Essentially, Pallinghurst have seven days to match or better the Fosun offer, otherwise the shareholders it originally had on board could side with Fosun instead.

Gemfields shares gained 4.6% to 42.5p.

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Tue, 20 Jun 2017 14:56:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/179552/gemfields-nudges-higher-as-board-recommends-new-fosun-offer-179552.html
<![CDATA[News - Growing demand for rubies sees Gemfields generate record sales at latest Montepuez auction ]]> https://www.proactiveinvestors.co.uk/companies/news/179283/growing-demand-for-rubies-sees-gemfields-generate-record-sales-at-latest-montepuez-auction-179283.html A growing global demand for high-quality rubies has helped Gemfields PLC (LON:GEM) to generate record revenues at the latest auction of gemstones  from its Montepuez ruby  mine in Mozambique.

Gemfields sold US$54.8mln worth of the red-coloured gems at the auction; which was held in Singapore and is the second and final ruby auction this year.

Of the 83 lots offered to the bidding companies, of which there were 54, 78 were sold. In total, just shy of 896,000 carats were sold, at an average price of US$61.13 per carat.

“Achieving revenues of US$54.8 million is an all-time high for any Gemfields auction and a pleasingly 24% increase to our prior auction revenue record,” said Ian Harebottle.

“The prices achieved at this auction, combined with the high percentage of goods sold, highlight our belief in the ongoing increase in demand for responsibly sourced Mozambican rubies across key markets and jewellery categories.

“The response received from our customers was very encouraging and they share our excitement about the future potential for the ruby industry.”

No update on takeover offers

Perhaps unsurprisingly, Gemfields didn’t give any update on the two takeover offers it has received in recent weeks.

The AIM-traded group’s major shareholder, Pallinghurst Resources, lodged its nil-premium offer to take control of Gemfields last month.

The Gemfields board wasn’t too happy with that “unsolicited” approach and labelled it as a “derisory” bid that undervalues the company.

Chinese investment giant Fosun Gold – run by billionaire Guo Guangchang – then put forward a proposed cash offer of 40.85p yesterday, valuing the miner at around £225mln.

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Thu, 15 Jun 2017 07:29:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/179283/growing-demand-for-rubies-sees-gemfields-generate-record-sales-at-latest-montepuez-auction-179283.html
<![CDATA[News - Bidding war on the cards as Gemfields receives more lucrative cash offer from China’s Fosun Gold ]]> https://www.proactiveinvestors.co.uk/companies/news/179207/bidding-war-on-the-cards-as-gemfields-receives-more-lucrative-cash-offer-from-chinas-fosun-gold-179207.html Shares in Gemfields PLC (LON:GEM) boomed this morning as the ruby and emerald miner looks set to be thrust into the middle of a bidding war.

Chinese conglomerate Fosun Gold has approached miner with a more lucrative cash offer than had already been put on the table by its largest shareholder, Pallinghurst Resources.

READ: Gemfields receives nil-premium bid from main shareholder

Fosun – which is run by billionaire Guo Guangchang – is offering Gemfields shareholders 40.85p in cash, which values the miner at around £225mln.

That’s 10% higher than the nil-premium offer put to shareholders last month by Pallinghurst, which is looking to acquire the 53% of Gemfields it doesn’t already own.

Pallinghurst is looking to pay off shareholders with its own shares as part of any deal, and Fosun said its bid was “a compelling cash alternative at a significant premium to the Pallinghurst offer”.

Pallinghurst has so far declined to comment on Fosun's proposed offer. It is thought that the private equity group - as a big Gemfields shareholder itself - is unlikley to consider a sale of its stake while it seeks to push through a deal itself.

Gemfields operates two mines in Mozambique (Montepuez) and Zambia (Kagem) and produces almost a third of the world’s coloured gemstones.

Gemfields at loggerheads with Pallinghurst

Fosun’s interest comes a few weeks after Gemfields largest shareholder, Pallinghurst, lodged its “unsolicited offer” for the emerald and ruby miner.

Pallinghurst – run by former BHP Billiton plc (LON:BLT) boss Brian Gilbertson – is at loggerheads with the company, which it feels has underperformed in recent years.

It wants full control of Gemfields, arguing that the miner continues to be constrained by limited access to equity and debt capital, low liquidity in the trading of its shares, and a high cost base, which has affected its profitability.

Under the terms of its offer, each Gemfields shareholder would be entitled to receive 1.91 new Pallinghurst shares for each Gemfields share.

Based on yesterday’s closing price, that works out at roughly 36.5p a share.

The private equity firm believes the overhaul and integration of Gemfields would allow it to perform to its full potential.

Gemfields and minority investors not happy

Following the offer, Gemfields set up an independent board of directors which essentially included everyone but Pallinghurst’s representative – Gilbertson’s son, Sean.

They advised shareholders against approving the offer, claiming that it “significantly undervalues the company, its unique asset base and its leading position in the coloured gemstone sector”.

READ: Gemfields management fights back against takeover bid READ: Directors advise against Pallinghurst takeover offer

Minority investors have also slammed the bid as “opportunistic”, pointing out that most of Gemfields’ underperformance stems from its loss-making Faberge luxury jewellery unit.

Pallinghurst sold Faberge, famed for its intricate, jewelled Russian Imperial eggs, to the company in a controversial £90mln deal in 2012.

One shareholder told The Telegraph earlier this month: “It is completely outrageous Pallinghurst blaming Gemfields for poor performance after what they did to it saddling it with Faberge.”

Major shareholders seem a little bit more willing to embrace the approach. According to Pallinghurst it has received assurances from shareholders representing more than 75% of Gemfields’ share capital that they would accept the offer.

It’s uncertain whether that is still the case following the new, higher offer put forward by Fosun today. Pallinghurst was unavailable for immediate comment.

Shares are currently up 13.9% to 40.4p.

--Updates for share price and additional info--

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Wed, 14 Jun 2017 08:15:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/179207/bidding-war-on-the-cards-as-gemfields-receives-more-lucrative-cash-offer-from-chinas-fosun-gold-179207.html
<![CDATA[News - Gemfields management team fights back against takeover bid from Pallinghurst Resources ]]> https://www.proactiveinvestors.co.uk/companies/news/178576/gemfields-management-team-fights-back-against-takeover-bid-from-pallinghurst-resources-178576.html Gemfields plc (LON:GEM) is at loggerheads with its biggest shareholder Pallinghurst Resources Limited over the future of the mining company.

The private equity firm wants to buy the remaining shares in Gemfields it does not already own and restructure the business to boost its performance.

Gemfields, however, has tried to fend them off by forming an “independent committee” to respond to the offer. It said a review by the committee determined that the deal “significantly undervalues the company, its unique asset base and its leading position in the coloured gemstone sector”.

The independent committee is made up of chairman Graham Mascall, chief executive Ian Harebottle, chief financial officer Janet Boyce and non-executive directors Clive Newall and Finn Behnken. Gemfields considers the committee to be "free from conflicts of interest in respect of the unsolicited offer".

Shore Capital analyst Yuen Low said: "In other words, it numbers all of Gemfields’ current directors bar executive director Sean Gilbertson, who is essentially Pallinghurst’s man on the board and whose father Brian (Gilbertson) is chairman of Pallinghurst Resources."

Pallinghurst wants overhaul and integration of Gemfields....

Pallinghurst - set up by Gilbertson, the former chief executive of BHP Billiton - on 19 May proposed buying out Gemfields’ minority shareholders in exchange for US$150mln in Pallinghurst shares.

Based on closing prices on May 17 and an exchange rate of R17.14 to £1, the deal valued Gemfields at £211.5m or 38.5p/share.

Gemfields shareholders owning 28% of the company agreed to the offer, which boosted Pallinghurst's holding from 47.09% to 75.26%.

But Pallinghurst wants full control of Gemfields, arguing that the miner continues to be constrained by limited access to equity and debt capital, low liquidity in the trading of its shares, and a high cost base, which has affected its profitability.

Under the terms, each Gemfields shareholder would be entitled to receive 1.91 new Pallinghurst shares for each Gemfields share. Pallinghurst also plans to delist Gemfields from London’s AIM market.

Pallinghurst believes the overhaul and integration of Gemfields would allow it to perform to its full potential.

Arné Frandsen, chief executive of Pallinghurst, told South African mining website Miningmx that the decision to consolidate Gemfields was prompted by the underperformance of its share price over several years. Shares in Gemfields have fallen 13.92% over the past five years and 20.07% over the past 12 months. 

Gemfields minority investors hit back at at "outrageous" takeover offer... 

However, minority investors have slammed Pallinghurst for its “opportunistic” bid, saying most of Gemfields underperformance stems from its loss-making Faberge luxury jewellery unit. Pallinghurst sold Faberge, famed for its intricate, jewelled Russian Imperial eggs, to the company in a controversial £90mln deal in 2012.

One shareholder told The Telegraph earlier this month: “It is completely outrageous Pallinghurst blaming Gemfields for poor performance after what they did to it saddling it with Faberge.”

Another investor said: “It’s brazen. Pallinghurst are effectively buying the company for nothing.”

Unrealised value in Faberge, says SP Angel...

SP Angel, however, thinks there is “tremendous unrealised value” in the Faberge brand.

“While Faberge has been a cash drain since it was acquired by Pallinghurst, and then Gemfields, shareholders should stand to gain significantly if Gemfields sells the Faberge brand in our view,” it said.  

Gemfields was last year said to be weighing a potential sale of Faberge. SP Angel said Pallinghurst “well understands the value of the Faberge brand and how to use it to create value particularly in the event of a potential sale to a brand leader like LVMH, DeBeers, Gucci etc”.

The analyst added: “We currently value Gemfields at 70p per share on its mining business. We reckon there is potential to realise a further 18p per share on the sale of the Faberge business and that a good sale of Faberge by Pallinghurst might effectively pay for the majority of their acquisition of the cash generative mining business.”

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Wed, 31 May 2017 14:29:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/178576/gemfields-management-team-fights-back-against-takeover-bid-from-pallinghurst-resources-178576.html
<![CDATA[News - Gemfields slumps as independent directors advise against takeover offer from Pallinghurst ]]> https://www.proactiveinvestors.co.uk/companies/news/178537/gemfields-slumps-as-independent-directors-advise-against-takeover-offer-from-pallinghurst-178537.html Gemfields plc (LON:GEM) said independent directors have advised shareholders against approving an offer by Pallinghurst Resources Limited to buy all the shares it doesn’t already own in the gemstone company.

Shares fell 1.63% in morning trading as Germfields said a review by an independent committee determined that the deal “significantly undervalues the company, its unique asset base and its leading position in the coloured gemstone sector”.

Pallinghurst, which already has control of 75.26% of the group’s total share capital, has proposed buying out Gemfields’ minority shareholders in exchange for US$150mln in Pallinghurst shares. Pallinghurst has also recommended delisting the natural resources firm from London's AIM market.

Under the terms, each Gemfields shareholder would be entitled to receive 1.91 new Pallinghurst shares for each Gemfields share. 

Pallinghurst offer could dilute Gemfields shareholders, says committee...

Graham Mascall, chairman of the independent committee, said: "The independent committee believes the unsolicited offer has the potential to dilute Gemfields shareholders with inferior assets that offer exposure to more volatile commodities and with less attractive prospects. The unsolicited offer would appear to be driven by Pallinghurst's proposed restructuring which seeks to preserve the Pallinghurst investment managers' own self-interests at the expense of the independent shareholders of Gemfields."

Pallinghurst announced its proposal to buy the outstanding shares of Gemfields on 19 May. Based on closing prices on May 17 and an exchange rate of R17.14 to £1, the deal valued Gemfields at £211.5m or 38.5p/share.

At the time, Gemfields shareholders owning 28% of the company agreed to the offer, which boosted Pallinghurst's holding from 47.09% to 75.26%. The controlling stake will allow Pallinghurst to de-list Gemfields and consolidate it into its group. 

Pallinghurst says Gemfields shares have underperformed...

Pallinghurst has said that a proposed restructuring and integration of Gemfields would allow it to perform to its full potential.

The company has argued that Gemfields was an attractive and unique business but continued to be constrained by limited access to equity and debt capital, low liquidity in the trading of its shares, and a high cost base, and hence depressed profitability.

Arné Frandsen, chief executive of Pallinghurst, told mining website Miningmx that the decision to consolidate Gemfields was prompoted by the underperformance of its share price over several years. Shares in Gemfields have fallen 13.92% over the past five years and 20.07% over the past 12 months. 

“Gemfields has been on Pallinghurst’s books for 15 years and we have been its bank. But we are not getting a response. It is worth half of our value – the Pallinghurst share price is dependent on Gemfields – and its the key reason why shares in Pallinghurst have gone down. I and my shareholders can’t accept that,” Franden said.

Gemfields independent directors advise shareholders to take no action...

Gemfields said in its statement today that the independent committee "continues to strongly advise its shareholders to take no action at this time” and that a further announcement would be made in due course.

The independent committee is made up of directors Graham Mascall, Clive Newall, Finn Behnken, Ian Harebottle and Janet Boyce, whom Gemfields considers to be "free from conflicts of interest in respect of the unsolicited offer".

Shore Capital analyst Yuen Low said: "In other words, it numbers all of Gemfields’ current directors bar executive director Sean Gilbertson, who is essentially Pallinghurst’s man on the board and whose father Brian (Gilbertson) is chairman of Pallinghurst Resources."

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Wed, 31 May 2017 07:38:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/178537/gemfields-slumps-as-independent-directors-advise-against-takeover-offer-from-pallinghurst-178537.html
<![CDATA[News - Gemfields receives nil-premium bid from main shareholder Pallinghurst ]]> https://www.proactiveinvestors.co.uk/companies/news/178042/gemfields-receives-nil-premium-bid-from-main-shareholder-pallinghurst-178042.html Gemfields plc (LON:GEM) responded to the offer made earlier by major shareholder Pallinghurst to acquire all shares it doesn't already own, saying it was reviewing the take-over bid and urged shareholders to take no action.

Pallinghurst already has a 47.09% interest in the gemstone group.

It says it has already received irrevocable undertakings amounting to just over 28% of Gemfields share and, added to its current holding, amounts to 75.27% of the total share capital of Gemfields. Therefore, the offer has become unconditional.

Gemfield board urges no action...

In a brief statement, Gemfields said Pallinghurst had not "engaged" with the firm with respect to the 'unsolicited offer' and the board strongly advises its shareholders to take no action at this time.

Under the terms, each Gemfields shareholder will be entitled to receive 1.91 Pallinghurst shares.

Based on the closing price of Pallinghurst shares on May 17 and exchange rate of R17.14 to £1, this values Gemfields at around £211.5mln or 38.5p a share, which is effectively at a nil-premium. Gemfields shares are currently up 1.64% to stand at 38.75p.

Following the completion of any transaction, Pallinghurst intends to delist Gemfields shares from AIM,  and will consider a premium listing on the LSE’s main board.

Pallinghurst believes the proposed restructuring and integration of Gemfields will enable Gemfields to perform to its full potential.

Gemfields remains an attractive and unique business, it says, but will continue to be constrained by limited access to equity and debt capital, low liquidity in the trading of its shares, and  a high cost base, and hence depressed profitability, says Pallinghurst.

Yuen Low, at broker Shore Capital, notes that according to Pallinghurst, the lack of premium to the offer is because including Pallinghurst co-investors, it effectively has around 73% interest and the combination of the firms would unlock vale which will fairly benefit both sets of shareholders.

Majority of shareholders already accepted..

The majority of Gemfields shareholders have already accepted the offer, with the two largest minority holders having already provided irrevocable undertakings, it said.

With these, and its current holding, Pallinghurst has control of 75.26% of Gemfields total capital.

From the outset, Pallinghurst has been a controlling shareholder of Gemfields, and it was through the investment firm Pallinghurst, led by former BHP boss Brian Gilbertson that, Gemfields got its hands on the famous luxury brand Fabergé (Pallinghurst had a controlling stake)

Gemfields bought the famous egg maker in 2012 in an all-share deal, which valued the historic brand at around $142mln (£89mln).

Pallinghurst had bought the Faberge brand in 2007 for US$38 million from Unilever (LON:UNLV), which had focussed Fabergé mainly on perfumes.

Pallinghurst had intended to relaunch the group as a luxury jewellery maker, using gemstones sourced from its other investments.

Meanwhile, Gemfields was formed and admitted to AIM in 2005 and it bought the Kagem emerald mine, Zambia three years later.

A sparkling emerald auction..

Earlier, Gemfields revealed it had delivered a sparkling result at its latest emerald auction in India, where all of the lots were sold at near-record pricing..

Revenues from the sale in Jaipur between May 15 and 18 came in at $ 14.5mln and the average price realised per carat was US$ 4.68 -  the second highest average price achieved for a commercial quality emerald auction

The firm offered 3.10million carats from its Kagem mine in Zambia and all were sold - a first for such an auction.

Chief executive Ian Harebottle said: "With 100% of the lots sold at near-record pricing, Jaipur has delivered a very positive result indeed.

"We experienced strong demand for Gemfields' emeralds, with a significant number of new customers wishing to attend the auction."

He added that the main driver for the healthy appetite seen by the firm remained the "continued increase in global demand for coloured gemstones".

"This is further supported by an ever-increasing number of discerning customers and high-end brands...," he added.

The auction was Gemfields' third and final auction of Kagem production in the current financial year and saw 33 companies placing bids.

Its 25 auctions of emeralds and beryl mined at Kagem since July 2009 have generated US$ 473.5mln in total revenues.

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Fri, 19 May 2017 07:28:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/178042/gemfields-receives-nil-premium-bid-from-main-shareholder-pallinghurst-178042.html
<![CDATA[News - Gemfields turns focus to high quality assets as it withdraws from Coscuez and Sri Lanka ]]> https://www.proactiveinvestors.co.uk/companies/news/177705/gemfields-turns-focus-to-high-quality-assets-as-it-withdraws-from-coscuez-and-sri-lanka-177705.html Gemfields plc (LON:GEM) has decided to focus on opportunities that will deliver “considerably higher returns” as it withdraws from its Coscuez emerald mine transaction in Colombia and in operations in Sri Lanka.

The company said will turn its attention to its portfolio of high quality assets in Africa and potential expansion opportunities in Zambia, Mozambique and Ethiopia.

The decision to withdraw from its Coscuez followed an internal review. In 2015, Esmeracol S.A transferred the Coscuez emerald mine licence into a newly incorporated company, Coscuez New Co, in which Gemfields bought a 70% indirect stake.

“Gemfields and its prospective project partner, New-Esmeracol S.A. made the joint decision to withdraw from the Coscuez transaction on the grounds that not all of the conditions precedent to the existing share purchase agreement were able to be satisfied within the stipulated timeframe,” the company explained.

In Sri Lanka, the company has decided not to progress operations after a review found more potential for expansion opportunities in other jurisdictions.

The announcement on its exit from Sri Lanka and Cosuez came as the company said demand for coloured gems continues to rise despite a setback to production of emeralds and rubies in the first quarter.

Production of carats of emerald and beryl from its Kagem operations in Zambia fell to 4.5mln in the first quarter from 7.1mln carats the same period a year earlier. The average grade was 193 carats per tonne, down from 297 carats per tonnes.

The decline was due to high rainfall and a renewed focus on opening new areas for future production.

Ruby and corundum production at Montepuez mine in Mozambique fell to 1.2mln carats from 2.0mln carats while the average grade dropped to 7.0 carats per tonne from 30 carats per tonne.

The full year targeted total production is now estimated to be between 8 to 10 million carats of rough rubies and corundum as company processes “predominantly lower grade but considerably higher value ore” for the remainder of the year.

The Faberge business, famed for its intricate, jewelled Russian Imperial eggs, saw the number of piece sold jump 63% in the first quarter compared to year ago, boosted by a 18% rise in the number of sales transactions. Total operating costs fell 13%.

Fabergé has launched the third men's timepiece in the Fabergé Visionnaire collection.

Gemfields said the Visionnaire Chronograph was showcased alongside new jewellery pieces at Baselworld 2017, the World Watch and Jewellery Show, and has already received considerable acclaim.

Chief executive Ian Harebottle said: "From an operational perspective the quarter under review delivered mixed results but we remain delighted that demand for coloured gemstones continues to increase as the sector strengthens.”

Harebottle said Montepuez saw a significant increase in the quantity of ore and the quality of the gemstones produced while an upgrade to the existing wash plant has delivered a 170% increase in ore processed.

On the lower production at Kagem, he said the company was working to counteract this with further improvements to operational efficiencies, a reduction in total operating costs, and continuing exploration and bulk sampling activities.

Harebottle added: “Importantly, the lower production experienced during the quarter at both Kagem and Monetpuez, and the changes to the targeted total production figures for financial year 2017, will not impact on the company's upcoming auction schedule.”

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Fri, 12 May 2017 08:30:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/177705/gemfields-turns-focus-to-high-quality-assets-as-it-withdraws-from-coscuez-and-sri-lanka-177705.html
<![CDATA[Media files - Panmure Gordon's Kieron Hodgson discusses monster diamond finds in Lesotho ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/7256/panmure-gordon-s-kieron-hodgson-discusses-monster-diamond-finds-in-lesotho-7256.html Fri, 07 Apr 2017 07:50:00 +0100 https://www.proactiveinvestors.co.uk/companies/stocktube/7256/panmure-gordon-s-kieron-hodgson-discusses-monster-diamond-finds-in-lesotho-7256.html <![CDATA[News - Gemfields a sparkling success despite recent blip ]]> https://www.proactiveinvestors.co.uk/companies/news/173394/gemfields-a-sparkling-success-despite-recent-blip-173394.html Gemfields PLC (LON:GEM) has had a tough half year, but taking a longer term view the coloured gems miner has performed exceptionally.

Shares in Gemfields tumbled after it chose to cancel the next auction of higher quality rough emeralds in the wake of the Indian government’s decision to do something drastic about fake bank notes in its country.

India withdrew 500 and 1,000 rupee notes from circulation overnight in November, which caused liquidity problems for a number of Gemfields’ emeralds customers.

That might explain why the result of the February emeralds auction in Lusaka – which was delayed for two months to allow for Indian customers to get to grips with new financial constraints – was a tad on the disappointing side.

Short-term disruption

House broker finnCap notes that the US$22.3mln of revenue at the emerald sale was the lowest since 2010 for a high quality emerald auction, which seems to have had a bearing on the decision to yank the next planned higher quality emerald auction.

“This has meant that we have had to reduce our revenue and profit expectations significantly for the current year. In terms of underlying valuation, the impact is limited; we have slightly reduced our target to 95p,” finnCap said.

Chief executive Ian Harebottle is confident this just a short-term disruption.

“We are confident that we will see a correction in the market in the short term as the actions required by our customers to improve liquidity and adjust to the demonetisation programme begin to bear fruit,” he added.

Meanwhile, SP Angel acknowledged that the downgrade to current year revenue and earnings guidance might disappoint some observers, but it said it sees “the move as prudent management as the company adjusts to the impact of Indian demonetisation and waits for the stabilisation of the market while the company has substantial inventory stock."

Aussie finance Macquarie also said it had been a tough first half to the year but the future remains solid, and it retains its ‘outperform’ rating, though it cut its target price from 110p to 80p.

“Beyond 2017 we remain confident that Indian midstream demand will recover. In fact, we continue to see encouraging signs in the global jewellery retail market including: a) continued very strong growth in the key US market; b) a return to growth in China following a 2-year downturn, which is crucial to long-term jewellery demand; and c) a stable and improving European market,” Macquarie said.

Still a ten-bagger

The shares slipped 6.4% on the recalibration of full-year expectations, but it is worth noting that the shares are still double the level they were five years ago; if you wanted to cherry pick a flatter starting point for share price performance, how about September 10 when the shares were quoted at 3.625p? They are now 47.25p.

Investors in Aim shares talk about this mythical beast called the ‘ten bagger’, a company that provides a ten-fold return on the initial investment.

In that respect, Harebottle and the team have more than delivered, but it hasn’t been an easy route to success.

The company’s structure and operational glitches needed to be sorted out along the way. This has required no small amount of patience.

What marks out Gemfields, which also owns the Faberge brand, is its strategy.

For it isn’t simply a miner. It has taken a leaf out of the playbook of the legendary diamond firm De Beers.

So, it holds its own auctions for stones in specifically targeted hotspots for its precious output, and it is meticulous in the planning, right down to who is invited and just which batches go on sale.

Taking a leaf out of the De Beers play-book

Indeed, the company is creating a marketing aura around its products reminiscent of De Beers in its pomp.

Output from the company’s flagship Kagem emerald mine, in Zambia, declined to 10.7mln carats in the second half of 2016 from 15.7mln carats in the second half of the previous year.

Low first half production at Kagem is expected to reduce targeted total production of rough emerald and beryl to 25 to 30 million carats for the current financial year, the company. Thus represents 5mln carat reduction to previous guidance 30 - 35 million carats.

The company remains confident that it will be able to achieve its planned ramp-up in emerald and beryl production over the coming years.

At the 75%-owned Montepuez ruby deposit in Mozambique, rough ruby and corundum production more than doubled year-on-year to 5.6mln carats from 2.1mln. Unit operating costs tumbled to US$2.21 per carat from US$6.19 per carat the year before.

The outlook for Montepuez remains encouraging both in terms of operational and financial performance.

The company is keen to apply its model in other locations.

“The company continues to progress its acquisition of the Coscuez emerald mine in Colombia, although does not guide on expected closure of the deal. Exploration for emeralds in Ethiopia continues with encouraging results,” house broker and nominated adviser finnCap noted.

“Additional licences adjacent to the Montepuez ruby mine are being explored. The initiative to set up a sapphire business in Sri Lanka is under review because of various operating difficulties and the need to preserve cash,” it added.

The aim of the company, in a nutshell, is to see coloured gems accorded the same cachet as diamonds. Ownership of the Fabergé brand can’t do any harm in this respect, though the division remains loss-making at present.

“Fabergé continues to lose money, though sales orders have continued to improve. The business continues to grow at a steady pace with positive momentum in a number of areas despite general sector challenges. In addition, it continues to win prizes for its high end products,” finnCap said.

For shareholders, the advice from management is to ride out the current short term turbulence; only diamonds are supposed to be forever (though Gemfields is changing that view). 

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Mon, 20 Feb 2017 11:36:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/173394/gemfields-a-sparkling-success-despite-recent-blip-173394.html
<![CDATA[Media files - 'Our shareholders understand the incredible upside to the company' says Gemfield's Ian Harebottle ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/6951/-our-shareholders-understand-the-incredible-upside-to-the-company-says-gemfield-s-ian-harebottle-6951.html Mon, 20 Feb 2017 11:25:00 +0000 https://www.proactiveinvestors.co.uk/companies/stocktube/6951/-our-shareholders-understand-the-incredible-upside-to-the-company-says-gemfield-s-ian-harebottle-6951.html <![CDATA[News - Gemfields' adjustment of guidance "prudent management", SP Angel says ]]> https://www.proactiveinvestors.co.uk/companies/news/173377/gemfields-adjustment-of-guidance-prudent-management-sp-angel-says-173377.html The delayed auction of emeralds from Gemfields PLC’s (LON:GEM) Kagem mine in Zambia produced the third highest average per carat sales value to date.

The auction of predominantly higher quality rough diamonds was held in Lusaka, Zambia, from 13 – 17 February, having originally been scheduled to take place in December of last year.

Read Gemfields puts back emerald auction

The decision to defer the auction was taken after the Indian government's abrupt action in November to withdraw 500 and 1,000 rupee notes from circulation overnight, which caused liquidity problems for a number of Gemfields’ emeralds customers.

In all, 33 companies placed bids at the auction, generating revenue of US$22.3mln. Of the 417,060 carats offered, 349,935 carats were sold at an overall average value of US$63.61 per carat.

Gemfields' next emerald auction is expected to take place before the end of June 2017, comprising predominantly commercial quality emeralds from the Kagem emerald mine.

"With 95% of the value of the emeralds offered being sold, and with positive responses received from all of the customers who managed to win some of the schedules placed on offer, we've achieve yet another excellent result in Lusaka,” said Ian Harebottle, chief executive officer of Gemfields.

“We were pleased with the average price obtained, which is the third highest average price achieved at an auction to date and a clear sign that the demand for coloured gemstone remains healthy. Notwithstanding the short term impact of the demonetisation policy in India, the long term outlook for the sector continues to be very encouraging,” he added.

Though the results of the February auction were heartening, the fact the auction was delayed from December had an impact on Gemfields’ half-year results, while the fall-out from India is set to hit full-year results.

Revenue in the six months to the end of December 2016 fell to US$51.0mln from US$94.0mln the year before. Gemfields noted that as well as the deferral of the Lusaka emeralds auction, there was a moderated product mix on offer at the most recent ruby auction.

Underlying earnings (EBITDA) turned negative at US$4.3mln versus a profit of US$35.6mln in the same period of 2015.

The company ended the year with US$12.3mln cash in the bank, down from US$41.5mln at the end of June. The cost of the gemstone and Fabergé inventory remained steady at US$106.7mln, compared to US$107.2mln at the end of June.

Production at the Kagem mine, which is 25% owned by the government of Zambia, declined to 10.7mln carats from 15.7mln carats in the second half of the previous year.

As a result of the lower number of carats produced, the unit operating cost at Kagem rose to US$1.91 per carat from US$1.50 the year before.

Low first half production at Kagem is expected to reduce targeted total production of rough emerald and beryl to 25 to 30 million carats for the current financial year, the company. Thus represents 5mln carat reduction to previous guidance 30 - 35 million carats.

The company remains confident that it will be able to achieve its planned ramp-up in emerald and beryl production over the coming years.

At the 75%-owned Montepuez ruby deposit in Mozambique, rough ruby and corundum production more than doubled year-on-year to 5.6mln carats from 2.1mln. Unit operating costs tumbled to US$2.21 per carat from US$6.19 per carat the year before.

The outlook for Montepuez remains encouraging both in terms of operational and financial performance.

At Fabergé, sales orders agreed 41% year-on-year, while revenue eased to US$6.8mln from US$7.2mln in the same period of the previous year, though Gemfields noted that the 2016 figure excludes some US$1.9mln of orders that will be delivered and realised this year.

The impact of India’s currency actions is still being felt, with Gemfields deciding to remove one of the scheduled higher quality emerald auction from the current financial year. The removal of this auction will result in a material reduction in revenue and EBITDA in the year to the end of June 2017.

"Gemfields' financial results for the six months have been impacted by the one-off Indian demonetisation programme, which has affected the company's auction schedule,” company boss Harebottle noted.

“Today's auction results for our higher quality emerald auction continue to demonstrate strong pricing levels and firm demand in spite of the Indian demonetisation and resulting financial constraints it has placed on one of our core customer bases. We are confident that we will see a correction in the market in the short term as the actions required by our customers to improve liquidity and adjust to the demonetisation programme begin to bear fruit,” he added.

“The clear shift in both consumer trends and the increased urgency with which so many of the world's leading luxury brands are beginning to embrace coloured gemstones remain extremely encouraging and provides for a continued long term positive outlook for the sector. This is clearly evidenced by the increased number of retail brands that are now looking to collaborate with Gemfields," Harebottle concluded.

Mining specialist SP Angel said: "Gemfields has had a tough half year and is pulling back on its forecast emerald production for the full year. Although this may disappoint some observers, we see the move as prudent management as the company adjusts to the impact of Indian demonetisation and waits for the stabilisation of the market while the company has substantial inventory stock."

House broker finnCap notes that the US$22.3mln of revenue at the emerald sale was the lowest since 2010 for a high quality emerald auction, which seems to have had a bearing on the decision to yank the next planned higher quality emerald auction.

“This has meant that we have had to reduce our revenue and profit expectations significantly for the current year. In terms of underlying valuation, the impact is limited; we have slightly reduced our target to 95p,” finnCap said.

“The company continues to progress its acquisition of the Coscuez emerald mine in Colombia, although does not guide on expected closure of the deal. Exploration for emeralds in Ethiopia continues with encouraging results,” the broker noted.

“Additional licences adjacent to the Montepuez ruby mine are being explored. The initiative to set up a sapphire business in Sri Lanka is under review because of various operating difficulties and the need to preserve cash,” it added.

Shares in Gemfields were down 3.5p at 47p in mid-morning trading.

--- adds broker comment and share price ---

 

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Mon, 20 Feb 2017 07:58:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/173377/gemfields-adjustment-of-guidance-prudent-management-sp-angel-says-173377.html
<![CDATA[News - Gemfields production dips on lower grades at Kagem ]]> https://www.proactiveinvestors.co.uk/companies/news/172688/gemfields-production-dips-on-lower-grades-at-kagem-172688.html Gemfields PLC (LON:GEM) produced 4.7 mln carats of emerald and beryl at an average grade of 156 carats per tonne during the quarter to December 2016.

That was down on the corresponding quarter in 2015, as the company mined through a lower grade zone at its Kagem emerald mine in Zambia.

A reduction in operating costs partially off-set the production drop though, down by nearly US$2 mln at US$10.2 mln.

Meanwhile, over at the company’s ruby mine in Mozambique, production rang in at 1.1 mln carats of ruby and corundum.

The company said that a mixed ruby and corundum auction held in Singapore in mid-December generated revenues of US$30.5 mln at an average of US$27.88 per carat.

The next emerald auction will be held in February in Lusaka.

 

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Mon, 06 Feb 2017 08:11:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/172688/gemfields-production-dips-on-lower-grades-at-kagem-172688.html
<![CDATA[News - Gemfields analyst kicks off new year with bullish price target ]]> https://www.proactiveinvestors.co.uk/companies/news/171472/gemfields-analyst-kicks-off-new-year-with-bullish-price-target-171472.html Is now the time to buy into Gemfields PLC (LON:GEM)?

Well, if you accept the analysis of the broker Peel Hunt, the answer to that question is a resounding yes.

Reiterating his ‘buy’ recommendation on the stock in the emerald and ruby miner and marketer, Peel’s analyst Michael Stoner raised his valuation to 93p from 78p.

That new target, based on the long-term outlook for the luxury goods sector, suggests the stock has headroom to advance a further 88% from the current price of 49.5p.

“The company and the wider luxury goods markets should benefit from a strong US economy and the current risk-on trade,” said Peel Hunt’s Stoner.

“These tailwinds outweigh the short term negative impact of the issues in India.”

Gemfields’ flagship asset is the Kagem emerald mine in Zambia, while its other mine, Montepuez, took the firm into ruby production.

Last summer it started drilling on the Dogogo South Block in Ethiopia, while it also expanded the size of its team in Colombia. Both are earlier stage emerald projects.

According to Peel Hunt, Gemfields will generate sales of US$187mln this year, giving underlying earnings (EBITDA) of just under US$62mln.

Turnover will rise to US$227.7mln and the then US$270.8mln, giving, respectively, operating profits of US$86.4mln and US$104mln.

“Our forecasts suggest that shares are now reaching a level which implies a 37% decline in rough emerald pricing versus an already conservative Peel Hunt price deck,” analyst Stoner told clients.

“This appears an aggressively negative assumption given Gemfields’ dominant position in the gemstone market. As we have said previously, it benefits from being a price-maker rather than price-taker.

“By that we mean its large market share, and ability to adjust the stone mix at auctions, allows it to tailor its offerings to meet demand, thus smoothing or influencing prices through the cycle and allowing it to deliver consistent price performance.”

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Wed, 11 Jan 2017 12:24:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/171472/gemfields-analyst-kicks-off-new-year-with-bullish-price-target-171472.html
<![CDATA[News - Ruby demand remains strong as Gemfields pulls in US$30mln ]]> https://www.proactiveinvestors.co.uk/companies/news/170655/ruby-demand-remains-strong-as-gemfields-pulls-in-us30mln-170655.html Global demand for rough rubies remains robust said Gemfields PLC (LON:GEM), after the coloured gemstones supplier sold US$30.4mln worth of rubies at a Singapore auction last week.

The gems were all mined from the Montepuez deposit in Mozambique – in which Gemfields has a 75% stake – with 58 of the 76 lots selling.

Almost 1.1mln carats – around 80% of the total offered – were sold at an average price of US$27.79.

“The prices achieved at this auction, combined with the high percentage of the value sold, fully support our view of ongoing solid demand for responsibly sourced Mozambican rubies across key markets and categories,” said chief executive Ian Harebottle.

“The recent prices obtained for fine cut-and-polished Mozambican rubies by international auction houses further underscore the exciting trajectory for rubies from Mozambique.”

Thirty nine companies placed bids at the sale, which offered both high and commercial grade rubies in treated and untreated form.

The blend of sizes and quality makes a direct comparison between previous auctions difficult said Gemfields.

Broker FinnCap noted: " This was the seventh auction of rubies from Montepuez and was the fourth highest in terms of revenue raised.

"The result was negatively impacted by the recent demonetisation policy in India, which has resulted in some buyers having to reorganise their financial backing. This is a temporary phenomenon and is expected to be resolved early in the New Year.

"The next auction will be of emeralds and is scheduled to happen in India in February 2017," said Martin Potts.

Shares sparkled a bit higher - up 2.05% to 56p.

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Mon, 19 Dec 2016 07:32:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/170655/ruby-demand-remains-strong-as-gemfields-pulls-in-us30mln-170655.html
<![CDATA[News - Gemfields offers investors exciting opportunity, says Numis ]]> https://www.proactiveinvestors.co.uk/companies/news/169889/gemfields-offers-investors-exciting-opportunity-says-numis-169889.html Broker Numis says precious gems miner Gemfields PLC's (LON:GEM) should 'excite' investors looking for exposure to a growing segment of the luxury goods sector.

It notes that with US$60mln of investments planned over the next three years, production should grow at the firm's Kagem mine in Zambia and double at its ruby mine Montepuez. It also has greenfield potential in Colombia and Sri Lanka.

But the broker noted that the recent Indian demonetisation policy is a temporary disruption to the emerald market and has tempered its full year 2017 Kagem projections as a result.

The country is tightening up the economy and trying to stamp out corruption by discontinuing  500 and 1,000 rupee notes.

As reported previously, plans remain on schedule for the group to meet its annual target production of 40mln carats of rough emeralds from Kagem and 20 million carats of rough rubies from Montepuez within the next three years.

That means US$30mln of capital expenditure is planned at Kagem over the next three years (US$10mln per year).  The wash plant capacity has already been doubled from 33tph (tonnes per hour) to 66tph.

Meanwhile, US$60mln of capex  is planned over the same time frame at Montepuez, where planned works include the doubling of the wash plant capacity to 150tph from the current 70tph, adding a DMS and scrubber and construction of a new sorthouse.

The broker repeated a 'buy' rating and 85p target price, which is a long chalk from the current  share price of around 49p.

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Fri, 02 Dec 2016 10:04:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/169889/gemfields-offers-investors-exciting-opportunity-says-numis-169889.html
<![CDATA[News - Gemfields puts back emerald auction ]]> https://www.proactiveinvestors.co.uk/companies/news/169813/gemfields-puts-back-emerald-auction-169813.html Gemfields PLC (LON:GEM) has said an auction of higher quality emeralds from its Kagem mine in Zambia, due to take place this month, has been pushed back to February.

The delay is to allow and adjustment period for the predominantly Indian customer base following Prime Minister Narendra Modi's snap demonetisation programme.

The withdrawal of 500 and 1,000 rupee notes was designed to clamp down on the flourishing black market economy, but has plunged the India into chaos.

The decision to put back the sale has been “well received, and appreciated” by the participants, said Gemfields chief executive Ian Harebottle.

An auction of mixed quality rubies, from the Montepuez deposit in Mozambique, will proceed as planned later this month.

There is no change to revenue forecasts for the year, the company said.

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Thu, 01 Dec 2016 07:23:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/169813/gemfields-puts-back-emerald-auction-169813.html
<![CDATA[Media files - Gemfields PLC set for a boost as 'demand for rubies has been underplayed' says analyst ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/6428/gemfields-plc-set-for-a-boost-as-demand-for-rubies-has-been-underplayed-says-analyst-6428.html Mon, 21 Nov 2016 13:59:00 +0000 https://www.proactiveinvestors.co.uk/companies/stocktube/6428/gemfields-plc-set-for-a-boost-as-demand-for-rubies-has-been-underplayed-says-analyst-6428.html <![CDATA[News - Costs declining at Gemfields ]]> https://www.proactiveinvestors.co.uk/companies/news/168309/costs-declining-at-gemfields-168309.html Increased processing capacity and efficiency at Gemfields PLC's (LON:GEM) Montepuez asset saw the ruby mine achieve “exceptional production results” in the third quarter.

Plans remain on schedule for the group to meet its annual target production of 40 million carats of rough emeralds from Kagem and 20 million carats of rough rubies from Montepuez within the next three years.

The 75%-owned mine produced 4.5mln carats of ruby and corundrum in the third quarter of 2016, with an average grade of 44 carats per tonne; that's a massive improvement on the 0.5mln tonnes produced in the same quarter of 2015, when the average grade was seven carats per tonne.

Total operating costs eased to US$5.8mln from US$6.1mln the year before.

At the 75%-owned Kagem emerald mine in Zambia, production clocked in at 6mln carats of emerald and beryl with an average grade of 174 carats per tonne, versus production of 7.5mln carats at an average grade of 237 carats per tonne a year earlier.

Gemfields said the difference between this year's third quarter performance and last year's was down to the varied nature of the mineralisation; last year the company was mining a higher-grade zone than it was this year.

Total operating costs at Kagem came down to US$10.2mln from US$11.4mln the previous year.

The group's Fabergé unit saw the value of sales orders agreed fall by 23% from a year earlier, when two new significant wholesale agreements were signed.

The number of sales transactions rose 67% year-on-year, and the average selling price per piece rose by 2%.

Gemfields ended the quarter with cash and cash equivalents of US$24.1mln and Total debt outstanding of US$49.4mln.

"This has been a positive quarter with Montepuez continuing to generate strong results. The increased processing capacity and efficiency has seen us achieve exceptional production results,” said Ian Harebottle, chief executive officer of Gemfields.

“At Kagem production remains consistent and operating costs saw a reduction on the corresponding period last year. In addition, I am pleased to report the quarter saw the completion of two new exciting community projects in the form of new Chapula high school and Nkana Health Clinic.

"These new facilities have been incredibly well received and the local communities are already reaping the rewards. This achievement is as a strong endorsement of the company's CSR [corporate social responsibility] strategy that seeks to engage local stakeholders to conceive and co-develop projects that will have a long-lasting and positive impact in our local neighbourhoods,” Harebottle said.

“Thanks to the full global launch of our new integrated marketing campaign, demand for our coloured gemstones continues to rise, ensuring that achievable prices generate robust auction results," the Gemfields boss said.

Gemfields' next auction of predominantly higher quality rough emerald extracted from Kagem is scheduled to take place in December 2016 in Singapore.

The coloured gems miner's next auction of mixed quality rough rubies and corundrum extracted from Montepuez is also expected to take place next month in Singapore.

The company continues to work towards closing the acquisition of the Coscuez emerald mine in Colombia, noted finnCap, the company’s house broker.

“No deadline has been given for the completion of the deal, but the company has already started work on detailed geological modelling and underground mine planning,” observed finnCap’s Martin Potts.

At Shore Capital, Yuen Low noted the production numbers and the reduced costs, but said “it is auction results that matter most for this company”.

Referring to Kagem, “we noted that ore tonnes were down (i.e. not just grade), but importantly, unit costs were also down on per-ounce and per-tonne bases,” the broker said.

“At Montepuez, Q1 FY2017 [first quarter of fiscal 2017] also saw lower production (vs Q4 FY2016), but this was due to markedly lower grades – tonnages were all up. This resulted in a slight uptick in per-carat costs, but per-tonne costs were pleasingly down,” Low opined.

In a separate announcement, Gemfields announced that chief financial officer Janet Boyce would be joining the board with immediate effect.

“She has built a strong track record ever since she joined the Gemfields group and has a robust insight into the manifold aspects of our business. Her positive, dynamic and thorough approach will further enhance the well-established proficiencies of our experienced and long-standing board," Harebottle said.

Towards the end of the day Gemfields shares were trading at 48.25p, down 0.25p.

---adds broker comments and share price---

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Tue, 01 Nov 2016 14:32:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/168309/costs-declining-at-gemfields-168309.html
<![CDATA[News - Gemfields hails another sparkling Jaipur auction ]]> https://www.proactiveinvestors.co.uk/companies/news/166739/gemfields-hails-another-sparkling-jaipur-auction-166739.html Gemfields PLC’s (LON:GEM) auction of emeralds and amethysts held in Jaipur this week raked in just over US$11mln.

It brings the running total from 23 sales in Indian city to US$437mln since 2009.

In all just over 4mln carats of commercial quality rough emeralds from Zambia’s Kagem mine went under the hammer.

Gemfields received US$10.7mln, or a ‘robust’ US$3.28 per carat.

It made an additional US$400,000 from higher quality amethysts from the Kariba mine, also in Zambia.

In all 81% of the stones offered were sold.

"Jaipur has yet again delivered a positive result in support of Gemfields' vision and reflecting the fact that the platform upon which the growth of the coloured gemstone sector is being built remains encouraging,” said Gemfields chief executive Ian Harebottle.

“While there is evidence of a softening in demand for some of the lower qualities in some markets, the overall average price per carat achieved was impacted on by this auction not having the benefit of some of the larger-size, higher quality gems that were placed on offer in our May auction.”

The next major sale will be held in Singapore in December.

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Fri, 30 Sep 2016 07:45:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/166739/gemfields-hails-another-sparkling-jaipur-auction-166739.html
<![CDATA[Media files - Gemfields PLC boss hopes to lift Kagem ouput to 40mln carats ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/6044/gemfields-plc-boss-hopes-to-lift-kagem-ouput-to-40mln-carats-6044.html Mon, 26 Sep 2016 15:30:00 +0100 https://www.proactiveinvestors.co.uk/companies/stocktube/6044/gemfields-plc-boss-hopes-to-lift-kagem-ouput-to-40mln-carats-6044.html <![CDATA[News - How this miner outperformed Anglo American in its bid to become the next De Beers ]]> https://www.proactiveinvestors.co.uk/companies/news/166460/how-this-miner-outperformed-anglo-american-in-its-bid-to-become-the-next-de-beers-166460.html We are always keen to point out where, with the right management and financial backing, a small-cap makes it to that crucial point of being a proper, grown up, profitable and cash generative business.

Under the guidance of chief executive Ian Harebottle, Gemfields PLC (LON:GEM, OTCMKTS:GFLDF), which mines and sells emeralds, beryl and rubies, crossed that particular threshold several years ago.

But such is the fickle nature of the mainstream business press Harebottle and his team have received only cursory recognition for the amazing job in taking the firm to this point and the share price to 45p today from 3.6p in Septmber 2010. In fact last year the stock got above 60p.

Investors in AIM talk about this mythical beast called the ‘ten bagger’, a company that provides a ten-fold return on the initial investment.

In that respect, Harebottle and the team have more than delivered.

It hasn’t been an easy route to success.

The company’s structure and operational glitches needed to be sorted out along the way. This has required no small amount of patience.

What marks out Gemfields, which also owns the Faberge brand, is its strategy.

For it isn’t simply a miner. It has taken a leaf out of the playbook of the legendary diamond firm De Beers.

So it holds its own auctions for stones in specifically targeted hotspots for its precious output, and it is meticulous in their planning; down to who is invited and just which batches go on sale.

Indeed, the company is creating a marketing aura around its products reminiscent of De Beers in its pomp.

Anyway, Monday saw the culmination of all that hard work.

Gemfields said it had achieved a “record operational year” with hard work at its two mines translating to financial success.

Revenues for the 12 months ended June rose 13% to US$193.1mln, generating underlying earnings of US$69.4mln (up US$5mln). Net profit almost doubled to US$23.5mln, while cash in the bank was up US$13.5mln at US$41.5mln.

Output from the company’s flagship Kagem emerald mine, in Zambia, was steady at 30mln carats, while the ruby operation at Montepuez, in Mozambique, unearthed 10.3mln carats.

A recent resource update estimated the former to be host to 1.8bn carats of emerald and beryl worth US$520mln, while latter has 467mln carats valued at just under US$1bn.

Gemfields current market capitalisation is around a fifth of that combined price tag of the two deposits.

Looking at new projects, Gemfields over the summer set a drill team to work on the Dogogo South Block in Ethiopia, while it also expanded the size of its team in Colombia. Both are earlier stage emerald projects.

In Sri Lanka, Gemfields has established trading centres in the capital Colombo as well as Ratnapura, one of the country’s other major cities.

Looking ahead, chief executive Ian Harebottle said there was scope for further “price escalation” – price rises to you and I.

In the coming 12 months Gemfields is targeting four emerald and beryl auctions and two mixed quality ruby and corundum sales.

“This financial year has seen Gemfields consolidate its position as an industry leader,” Harebottle added.

The shares resisted the broader market trend to register a 1.4% gain to 45.65p and have advanced over a quarter in the past three months.

Martin Potts, the veteran mining analyst at finnCap, reckons the stock has a lot further to go, valuing Gemfields at 85p. City broker Peel Hunt thinks it is worth 78p share.

Peel’s analyst Michael Stoner said: “If the company can continue to deliver growth and rising rough stone pricing without materially increasing marketing spend we will have to review our numbers as the potential to generate cash in the long term could stand to be stronger than we expected.”

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Mon, 26 Sep 2016 13:52:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/166460/how-this-miner-outperformed-anglo-american-in-its-bid-to-become-the-next-de-beers-166460.html
<![CDATA[News - Gemfields hails a "record operational year" ]]> https://www.proactiveinvestors.co.uk/companies/news/166427/gemfields-hails-a-record-operational-year--166427.html The coloured stones specialist Gemfields PLC (LON:GEM) said it achieved a “record operational year” with hard work at its two mines translating to financial success.

Revenues for the 12 months ended June rose 13% to US$193.1mln, generating underlying earnings of US$69.4mln (up US$5mln). Net profit almost doubled to US$23.5mln, while cash in the bank was up US$13.5mln at US$41.5mln.

Output from the company’s flagship Kagem emerald mine, in Zambia, was steady at 30mln carats, which were mined at rock handling cost of US$2.48 per tonne, down from US$2.90.

A recent resource update estimated Kagem to be host to a ‘measured, indicated and inferred’ 1.8bn carats of emerald and beryl worth a ‘net present’ US$520mln.

Gemfields’ ruby operation at Montepuez, in Mozambique, unearthed 10.3mln carats, up 1.9mln carats from a year earlier.

The grade increased to 35 carats per tonne (from 26), unit costs were marginally lower, while a maiden JORC resource statement put the indicated and inferred resource at 467mln carats.

That gives a mine life of 21 years and tells us Montepuez is worth a ‘net present’ US$996mln.

The company also owns the world-famous Fabergé jewellery brand. Its revenues increased by a third as it expanded its global footprint.

Looking at new projects, Gemfields set a drill team to work on the Dogogo South Block in Ethiopia, while it also expanded the size of its team in Colombia. Both are earlier stage emerald projects.

In Sri Lanka, Gemfields has established trading centres in the capital Colombo as well as Ratnapura, one of the country’s other major cities.

Looking ahead, chief executive Ian Harebottle said there was scope for further “price escalation”.

In the coming year Gemfields is targeting four emerald and beryl auctions and two mixed quality ruby and corundum sales.

“This financial year has seen Gemfields consolidate its position as an industry leader,” Harebottle added.

 

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Mon, 26 Sep 2016 07:43:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/166427/gemfields-hails-a-record-operational-year--166427.html
<![CDATA[News - Gemfields target nudged higher by keen Panmure ]]> https://www.proactiveinvestors.co.uk/companies/news/129157/gemfields-target-nudged-higher-by-keen-panmure-129157.html Gemfields’ (LON:GEM) recent trading update has prompted Panmure Gordon to nudge its price target up to 61p.

The coloured stones specialist beat the broker’s estimates on costs at emerald mine Kagem in Zambia. Production at ruby mine Montepuez in Mozambique also exceeded Panmure’s forecasts.

“Annual production reached 10.3Mcts, significantly higher than our 7.75Mcts target, albeit driven by a greater proportion of higher grade but lower value amphibolite ore being processed during the final quarter.”

Kagem’s next auctions are in September and November, while the next ruby auction is in December.

Panmure is a buyer and said the exposure to precious stone consumption growth through two world class mining operations, as well as the luxury goods segment via its Fabergé brand, makes it  'an unrivaled proposition investment'.

There are also other opportunities for growth through additional production sources in Zambia, Colombia and Ethiopia.

Shares have underperformed recently. but should rally in the coming months said Panmure, with its new target 61p from 57p.

“Our group NAV of 108p/share reflects our longer term emerald and ruby price assumptions and FX forecasts,” it added.

Shares today were 38.6p.

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Tue, 09 Aug 2016 12:42:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/129157/gemfields-target-nudged-higher-by-keen-panmure-129157.html
<![CDATA[News - Gemfields ruby operation enjoys sparkling end to year ]]> https://www.proactiveinvestors.co.uk/companies/news/128828/gemfields-ruby-operation-enjoys-sparkling-end-to-year-128828.html The coloured stones specialist Gemfields PLC (LON:GEM) said it enjoyed a “pleasing” final quarter of the year as it said output from its ruby operation would exceed guidance.

Annual production from Montepuez in Mozambique is slated to be 10.3mln carats of ruby and corundum, some 2.3mln carats ahead of forecast. Output hit 6.2mln carats in the three months to June 30 (the final quarter of the financial year).

The biggest contributor to revenues and earnings is the Kagem Emerald Mine in Zambia, where production is dictated by the variability of the grade of the ore mined.

So in the final quarter Gemfields unearthed 7.2mln carats of emerald and beryl, which was around 900,000 carats lower than the same point last year.

However for the year production was steady at 30mln carats, as was the grade, while cash operating costs for the 12 months rose marginally to US$47.3mln from US$44.5mln. The company raked in a record US$101.3mln from auctions.

VIDEO: Boss talks growth plans  IN DEPTH: Building a loyal customer base 

At Montepuez the grade increased (35 carats per tonne versus 26 carats a year ago). And while Total costs edged up, unit costs and rock handling costs fell.

Chief executive Ian Harebottle said the US$65mln financing facility agreed last month would “sustain” Gemfields’ growth and expansion plans.

Specifically, it will be used to increase annual production to approximately 20mln carats of rubies at Montepuez and more than 40mln carats of emeralds in Kagem within the next the years.

“Demand for our products and the way in which they are presented continue to rise, achievable prices are on the increase and costs are well contained while the level of work and output has increased significantly,” Harebottle said.

“This is an exceptional achievement in itself, but is even more impressive when considered against a backdrop of market uncertainty in a number of jurisdictions and Gemfields' ever expanding operating footprint.”

Finally, the company’s luxury brand Fabergé enjoyed a strong end to the financial year with the value of sales orders up 14% in the final quarter and number of transactions more than doubled. Total operating costs fell 28%.

Boss upbeat on prospects

Speaking to Proactive’s Juliet Mann, chief executive Ian Harebottle talked about growth plans, funded by the new financing package, as well as some of the potential challenges.

Kagem: “We expect in the next three-to-four years to ramp production up to 40-45mln carats.”

Expansion plans: “We’ve also got a lot of other potential expansion plans we’re looking at: Ethiopia for emeralds, Columbia for emeralds, Sri Lanka for sapphires; so some of it [new funds] will go into those newer projects as well.”

Market challenges: “Some are in our consumer base (Russia, China and some of the Arab states). But fortunately our product is consumed on a global basis, when one market goes up another comes down. I think compared to the sector we have done very well.”

Faberge: “It has done very well. Unit sales have gone up, margins are well-maintained, revenues have gone up and costs have come down; all in a period when most of the luxury houses have gone backwards.”

Brokers remain bullish on the stock 

The shares rose 5% to 38.77p in morning trade, valuing the business a £208mln. The specialist  commodities broker SP Angel values the stock at 82p, while finnCap reckons it is worth 85p.

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Mon, 01 Aug 2016 07:37:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/128828/gemfields-ruby-operation-enjoys-sparkling-end-to-year-128828.html
<![CDATA[Media files - Faberge bucks market trend says Gemfields PLC chief ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/5343/faberge-bucks-market-trend-says-gemfields-plc-chief-5343.html Mon, 01 Aug 2016 06:44:00 +0100 https://www.proactiveinvestors.co.uk/companies/stocktube/5343/faberge-bucks-market-trend-says-gemfields-plc-chief-5343.html <![CDATA[News - Gemfields secures US$65mln of growth funding ]]> https://www.proactiveinvestors.co.uk/companies/news/127781/gemfields-secures-us65mln-of-growth-funding-127781.html Gemfields PLC (LON:GEM) has agreed US$65mln of new debt facilities, US$45mln of which will be used to fund the advancement of its Montepuez Ruby Mining (MRM) in Mozambique.

The new lines are in addition to the US$30mln revolving facility for the company’s Kagem emerald mine in Zambia.

Chief financial officer Janet Boyce said the company now has the “necessary funding” to grow output at MRM to 20mln carats of rough rubies in the next three years as well as pushing Kagem’s production to 40mln carats.

"We are pleased to have agreed these financing facilities after having considered a number of alternatives as well as other offers from various banks,” she added.

The MRM borrowings have been split into three equal tranches with different lenders.

Gemfields has an unsecured overdraft with Barclays Mozambique charged at the US dollar London inter-bank rate (LIBOR) plus 4%, an overdraft with Banco Comercial E De Investimentos (BCI) at LIBOR plus 3.75% and a finance leasing facility with BCI also at LIBOR plus 3.75%.

Additionally, it has agreed a US$20mln facility with Macquarie Bank at LIBOR plus 4.5%, which replaces a US$25mln loan it negotiated with Australian group last year.

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Mon, 04 Jul 2016 07:31:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/127781/gemfields-secures-us65mln-of-growth-funding-127781.html
<![CDATA[News - Gemfields launches new ruby ad campaign ]]> https://www.proactiveinvestors.co.uk/companies/news/127595/gemfields-launches-new-ruby-ad-campaign-127595.html Coloured gemstone supplier Gemfields PLC (LON:GEM) is using three high profile actresses and models to boost sales of rubies from its Montepuez mine in Mozambique.

A series of three films will form the backbone of a global marketing campaign that aims to resonate with women said Ian Harebottle, Gemfields’ chief executive.

Three short films called ‘Ruby Inspired Stories’ explore the hidden meaning behind the “captivating” gemstones.

“Rubies have been renowned for their magical properties since the beginning of civilisation,” said Harebottle.

Directed by award-winning filmmaker Leonora Lonsdale, the films premiered in London last week and feature up-and-coming actresses Sophie Cookson and Adito Rao Hydair, as well as model Grace Guozhi.

Over US$195mln worth of gems from the Montepuez mine have been auctioned off over the past two years.

Shares were down 0.26p, or 0.7%, to 35.74p.

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Tue, 28 Jun 2016 12:26:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/127595/gemfields-launches-new-ruby-ad-campaign-127595.html
<![CDATA[News - Gemfields building a loyal customer base ]]> https://www.proactiveinvestors.co.uk/companies/news/127275/gemfields-building-a-loyal-customer-base-127275.html Coloured gems specialist Gemfields PLC (LON:GEM) notched up record revenues in its recent auction of rough rubies held in Singapore.

The auction generated record total revenues of US$44.3 million at an average realised price of US$29.21 per carat.

Given the quality mix offered at this auction comprised a blend of varying qualities and sizes of material, a direct comparison with previous auction results is not possible, Gemfields said.

On a quality-for-quality basis, however, the per carat prices achieved were indicative of improved overall global demand when compared to previous auctions, it added.

In all, 71 of the 75 lots up for auction were sold, with 44 companies placing bids.

In depth: Gemfields flourishes as coloured gems market revives Watch: Gemfields' pride in mine & emeralds on Cannes festival red carpet

The proceeds of this auction will be repatriated to Montepuez Ruby Mining Limitada, which is 75%-owned by Gemfields, in Mozambique, with the royalties due to the Government of Mozambique being paid on the full sales price achieved at the auction.

In total, the six auctions of gems from Montepuez held since June 2014 have generated US$195.1mln in aggregate revenues.

"We are pleased with the results of Gemfields' sixth Montepuez ruby auction. The prices achieved and the high percentage of goods sold fully support our analysis of the market conditions, the quality of Mozambique's rubies and the increasing levels of demand across various markets and categories,” said Ian Harebottle, chief executive officer (CEO) of Gemfields.

Speaking to Proactive Investors, the chief executive said the outcome of the auction was above expectations, especially as the "global economy is not the best" at the moment.

"It's not just about the numbers, though; we're pleased that a lot of the stock went to very good companies, many of which had bought at previous auctions," Harebottle said.

The CEO revealed that the company is to launch a new global marketing campaign in London on 22 June focusing on Mozambican rubies.

Attendees of the Singapore auction were given a sneak preview of the campaign.

“The overwhelmingly positive response underpinned the clients' confidence in Gemfields marketing efforts and is further supported in the company's ongoing success in growing demand for Zambian emeralds,” Harebottle said.

“The five ruby and emerald auctions Gemfields has hosted so far this financial year have yielded aggregate revenues of US$174.4 million,” Harebottle noted, adding this represented a superb performance by the company.

The rest of us will have to wait until Thursday afternoon to find out the full details of the marketing launch, but Harebottle did reveal that the company had spent a lot of time and effort on it, and that it would address multiple media formats, including those used by the all-important millennials, who have a substantial amount of purchasing power.

The shares were up 2.3% at 39p in lunchtime trading.

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Mon, 20 Jun 2016 13:35:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/127275/gemfields-building-a-loyal-customer-base-127275.html
<![CDATA[Media files - Gemfields pride in mine & emeralds on Cannes festival red carpet ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/5065/gemfields-pride-in-mine-emeralds-on-cannes-festival-red-carpet-5065.html Mon, 23 May 2016 10:19:00 +0100 https://www.proactiveinvestors.co.uk/companies/stocktube/5065/gemfields-pride-in-mine-emeralds-on-cannes-festival-red-carpet-5065.html <![CDATA[News - Gemfields: Another sparkling auction result ]]> https://www.proactiveinvestors.co.uk/companies/news/126230/gemfields-another-sparkling-auction-result-126230.html Gemfields PLC (LON:GEM) achieved a new record at its auction of rough emeralds in Jaipur, India last week.

It netted US$5.15 per carat, a new high for lower quality stones, as it raked in a total of US$14.3mln from the sale.

Of the 3.67mln carats offered, 2.78mln, or 76%, were sold, Gemfields told investors.

Jaipur was the fourth auction this year of output from the company’s flagship Kagem mine in Zambia. Since 2009 there have been 22, raising US$426mln in revenue.

The next big sale – this time of mixed quality rough rubies from the Montepuez operation in Mozambique - takes place in Singapore next month.

Chief executive Ian Harebottle told investors: "Jaipur has delivered another solid auction result, including a new record price per carat for our lower quality emerald auctions.

“The results from this auction mean that the Kagem mine has exceeded US$100mln of declared revenues for the current financial year.

“And, while we are confident that these numbers will be well surpassed in the years to come, we remain grateful for the part that each of our loyal staff members have played in ensuring that Kagem is the first mine to reach anywhere near this milestone in the history of the Zambian gemstone sector.”

House broker FinnCap repeated a target price for the shares of 85p (current price: 43p).

"The auction resulted in a new record high of US$5.15 per carat, although volume sold at 2.78 million carats was lower than expected," it said.

"This was in part because the lowest quality beryl is no longer sold by auction, but also because of some uncertainty about final recovery meant that some lots did not reach their reserve prices."

Panmure Gordon repeated a 'buy' stance and a target of 57p.

"We continue to believe Gemfields offers an unrivalled proposition for investors, providing exposure to precious stone consumption growth through two world class mining operations, Kagem and Montepuez, as well as exposure to the luxury goods segment via the Company’s Fabergé brand.

"The company also offers additional opportunities for growth through additional production sources in Zambia, Colombia and Ethiopia. Following the general underperformance vs. the sector we believe a re-rating is highly likely given the numerous catalysts in the coming months," said analyst Kieron Hodgson.

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Mon, 23 May 2016 07:21:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/126230/gemfields-another-sparkling-auction-result-126230.html
<![CDATA[News - Gemfields on course to meet full-year production guidance ]]> https://www.proactiveinvestors.co.uk/companies/news/125522/gemfields-on-course-to-meet-full-year-production-guidance-125522.html Coloured gems specialist Gemfields PLC (LON:GEM) said its Kagem emerald and Montepuez mines are both on track to meet annual production targets.

First quarter production data demonstrated the inherent variability in the mining process, with production and grades at Kagem this year lower than last year, owing to the fluid nature of the mineralisation and a higher-grade zone having been encountered during the first quarter of last year, while at Montepuez production and grades were up year-on-year.

At Kagem, production in the first quarter Totalled 7.1mln carats of emerald and beryl, versus 9.9mln carats in the corresponding quarter of 2015.

The average grade was 297 carats per tonne (cpt), versus 355 cpt a year earlier.

Total operating costs rose to US$10.3mln from US$9.8mln, while unit operating costs per carat rose to US$1.45 (2015: 99 cents), or 99 cents on a cash basis versus US$1.15 the year before.

Cash rock handling units costs fell to US$2.69 per tonne from US$2.85 per tonne the previous year.

At Montepuez (MRM), production in the first quarter of 2016 rose to 2mln carats of ruby and corundum from 1.4mln carats a year earlier, partially supported by processing of the higher grade, but lower value, amphibolite resources, but offset by prolonged and heavy rainfall during the period.

The average grade rose to 30 cpt from 18 cpt in the first quarter of 2015, which was due to a greater proportion of higher grade amphibolite ore being processed this year.

Total operating costs rose to US$5.8mln from US$4.6mln the year before as operations at Montepuez scale up.

Unit operating costs ebbed to US$2.90 per carat from US$3.29 as a direct result of the increase in carats produced. On a cash basis(c), unit operating costs were US$2.40 per carat versus US$2.64 per carat in the quarter ending 31 March 2015).

Cash rock handling unit costs rose to US$10.18 per tonne from US$7.10 per tonne in the first quarter of 2015, due to higher cash costs in preparation for an increase in the scale of mining operations and a reduction in overall volumes due to the prolonged and heavy rains.

At Fabergé, sales orders agreed fell by 26% from a year earlier, when the Total was inflated by the sale of the high value Pearl Egg in February 2015, while timing differences on orders agreed at BaselWorld also had an impact.

The number of sales transactions during the latest quarter increased by 17% year-on-year while the average selling price per piece increased by 32%.

Total operating costs for the quarter increased by 10% from a year earlier, largely on account of an increase in advertising spend.

"Gemfields has had another pleasing quarter of solid production across its emerald and ruby operations with both Kagem and MRM having maintained the momentum seen over the previous calendar year and well on track to meet their annual guidance. At Kagem this has been aided by an increase in both its processing efficiency and capacity following upgrades to the wash plant, while a shift in mining focus has supported MRM's results as it begins to implement some of its longer term capacity building initiatives,” said Ian Harebottle, chief executive officer of Gemfields.

"The coloured gemstone market remains robust, as is evident from Gemfields auction results, and is further supported by improving consumer demand within the US. To date the company has generated over US$116 million in revenue from auctions held in the 2016 financial year and we look forward to two additional auctions, firstly a lower quality emerald auction in May and another ruby auction in June, prior to the year end," he added.

“The final quarter for the financial year will see a sale of lower quality emeralds in Jaipur, India in the current month and a sale of mixed quality ruby in Singapore in June,” noted broker finnCap, as it retained its price target of 85p.

Shore Capital, meanwhile, noted: “Gemfields is continuing to generate increasing customer support and robust margins from its coloured gemstone operations.”

Shares in Gemfields were up 1.2% at 43p in lunchtime trading.

---ADDS BROKER COMMENT AND SHARE PRICE---

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Wed, 04 May 2016 07:31:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/125522/gemfields-on-course-to-meet-full-year-production-guidance-125522.html
<![CDATA[News - Gemfields PLC salutes record-breaking emeralds auction ]]> https://www.proactiveinvestors.co.uk/companies/news/124357/gemfields-plc-salutes-record-breaking-emeralds-auction-124357.html Coloured gems specialist Gemfields PLC (LON:GEM) achieved a new “per carat” record price for higher quality auctions at its recent auction in Lusaka, Zambia.

The auction of predominantly higher quality rough emeralds took place from 30 March until 3 April, and raked in $33.1mln, at an average of $70.68 per carat.

Of the 558k carats offered for sale, 469k carats were sold, 84% of the total up for sale.

Gemfields said the 21 auctions of the output from its 75%-owned Kagem emerald mines have raised an aggregate of $412mln in revenues.

The auction also included higher quality amethysts from Kariba Minerals Ltd in which Gemfields has a 50% interest, with the balance also belonging to the Government of the Republic of Zambia.

The amethysts auction brought in $0.22mln at an average price of $3.26 per carat. Of the 9.4mln carats on sale, 6.6mln (70%) were sold.

Gemfields' next auction is expected to take place in May 2016 in Jaipur, India and is anticipated to be predominantly comprised of lower quality emerald and beryl from the Kagem emerald mine in Zambia.

"Our return to Lusaka has delivered another strong - and indeed record - result at a time when global commodity and diamond prices remain volatile and uncertain,” said Ian Harebottle, chief executive officer of Gemfields.

“Demand for - and prices of - emeralds clearly remain as robust as ever and gemstone mining represents one of the healthier segments of the sector. We're delighted that, in collaboration with our partners, the Government of the Republic of Zambia, the Kagem and Kariba operations continue to perform strongly," he added.

House broker finnCap described it as a “good result” that showed the market is holding up in terms of both price and demand.

Shore Capital was a touch more effusive, having done some number crunching in the belief that parameters other than just price and volume should be considered, as the mix of stones at each auction is different.

“The number of bidders was the lowest of the last six auctions at 33 (last auction: 37 companies), and unsurprisingly, the average number of bids per lot was second-lowest at nine,” Shore's Yuen Low observed.

“The percentage by weight of lots sold fell to 84% (469kct sold, 558kct offered), the second-lowest of the last six auctions,” Low continued, before adding: “However, most importantly in our view, the percentage by value was 94%, the second-best result of the last six.”

Overall, Shore Capital was encouraged by the apparent strength of the emerald market.

Gemfields’ next emerald auction, which is to comprise mainly lower-quality emeralds, is to be held in Jaipur, India in May 2016.

SP Angel speculated that the Jaipur auction may contain stones that failed to sell in the Lusaka auction, so no one should be expecting the next auction to match the record prices seen in Lusaka, but nonetheless “Gemfields has established a solid market presence”.

Shares in Gemfields rose 3.4% to 46.125p in the morning trading session. 

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Mon, 04 Apr 2016 08:10:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/124357/gemfields-plc-salutes-record-breaking-emeralds-auction-124357.html
<![CDATA[Media files - Gemfields boss says second half will balance out first half slowdown ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/4684/gemfields-boss-says-second-half-will-balance-out-first-half-slowdown-4684.html Tue, 23 Feb 2016 08:29:00 +0000 https://www.proactiveinvestors.co.uk/companies/stocktube/4684/gemfields-boss-says-second-half-will-balance-out-first-half-slowdown-4684.html <![CDATA[News - Gemfields still in growth phase, Investec says ]]> https://www.proactiveinvestors.co.uk/companies/news/122773/gemfields-still-in-growth-phase-investec-says-122773.html ---ADDS BROKER COMMENT AND SHARE PRICE---

Gemfields (LON:GEM) reiterated its full-year production guidance as it looked forward to at least three more auctions in the second half of the financial year.

The coloured gems specialist said there would be more of an equal weighting between the two halves of the financial year than last year, when performance was weighted to the first half.

Revenues in the six months to the end of 2015 totalled $94.0mln, down from $103.4mln the year before, reflecting the fact that, while both reporting periods had seen three auctions, the ruby auction in 2014 was for higher quality (and therefore more expensive) stones than the counterpart rough ruby and corundum auction in 2015.

Reflecting the dip in revenues, underlying earnings (EBITDA) fell to $35.6mln from $61.7mln the year before, while profit before tax halved to $21.8mln from $34.5mln in the second half of 2014.

The company ended 2015 with $24.9mln of cash in the bank, down from $28.0mln a year earlier, while the cost of the inventory, excluding fuel and other consumables, rose to $107.0mln from $101.1mln.

Gemfields plans to hold two further auctions of rough emerald and beryl during the second half of the financial year 2016 with the next auction of predominantly higher quality rough emeralds expected to take place in March 2016.

The company's rough ruby and corundum auction schedule is still being finalised. At least one larger size auction of mixed qualities of ruby and corundum is expected to take place before the end of June 2016, Gemfields revealed.

At the company's 75%-owned Kagem mine in Zambia, production of emerald and beryl rose to 15.7mln carats from 12.1mln carats the year before, with the average grade rising to 254 carats per tonne from 202.

Unit operating costs came to to $1.43 per carat from the previous year's $1.81, largely as a result of increased volumes.

The Montepuez mine in Mozambique, which is also 75%-owned, saw production decline to 2.1mln carats of ruby and corundum from 6.3mln carats in the same period of 2014. Production during the period focused on lower grade but significantly higher value alluvial ore resources delivering a 341% increase in overall volume of higher quality rubies recovered.

Reduced production volumes resulted in the unit operating costs at Montepuez rising to $6.19 per carat from $1.59 per carat the year before.

The company retains its production forecast of 25 to 30 million carats for rough emerald and beryl, and 8 million carats of ruby and corundum for the 2016 financial year.

The wholly-owned Fabergé unit saw the value of realised sales during the period increase by 70% when compared with the same period in 2014. Losses before interest, tax, depreciation and amortisation reduced by 21%.

“The first six months of the financial year has seen steady demand for our emeralds and rubies being well supported by Fabergé's role as a change agent within the luxury sector, the very positive production results delivered at our mining operations in Zambia and Mozambique, and the ongoing progress of our numerous expansion initiatives,” said Ian Harebottle, chief executive officer of Gemfields.

Harebottle said the company's current focus on mining the lower grade alluvial resources is soon to be supplemented by a planned shift in mining operations to areas of the already exposed higher grade, lower value, ore over the coming months.

He added that the company remains confident in the integrity of the coloured gemstone sector.

Mining specialist SP Angel said the results were in line with its expectations, as did Panmure Gordon.

“The recent quarterly update saw good performance from the Kagem mine with mining efficiency ahead of our forecasts. At Montepuez grade recovery is in line. The company is seeing good demand from mid-tier market in jewellery, which will be helpful in moving volume as the company builds up production,” SP Angel said.

Panmure Gordon noted the decline in production at Montepuez and said that as mining moves back into higher grade primary sources, a significant uplift in recoveries should result, albeit with a commensurate decline in grades.

“We continue to believe Gemfields offers an unrivalled proposition for investors, providing exposure to a robust precious stone industry through a world class emerald mining operation, an emerging ruby operation and exposure to the luxury goods segment via the company’s Fabergé brand. We believe Gemfields continues to offer investors considerable long term value with potential growth in production sources from operations in Zambia, Colombia and Ethiopia. We maintain our long held Buy recommendation and 64p price target,” Panmure Gordon said.

Investec, meanwhile, said the company is still very much in the growth phase, despite what a cursory glance at the figures might suggest; the nature of the auctions processes leads to considerable volatility in revenues and earnings, it observed.

“We note that key in the months ahead [Gemfields] will be renewing and possibly extending debt facilities coming due, with the needs in part driven by the success of the emerald and ruby auctions planned. The company has US$111mln inventories at cost (US$66.4mln in gemstones, US$40.6mln Faberge and US$3.5m fuel and consumables) that can be used in as security for debt,” Investec said.

VSA Capital weighed in, saying it expects a recovery in precious stone prices to support Gemfields' performance in the latter part of fiscal 2016.

Shares in Gemfields were off a halfpenny at 45p late in the day, having initially risen to 47.34p on the back of the results.

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Mon, 22 Feb 2016 07:38:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/122773/gemfields-still-in-growth-phase-investec-says-122773.html
<![CDATA[News - Gemfields sparkles as coloured stone firm has bumper quarter ]]> https://www.proactiveinvestors.co.uk/companies/news/122552/ Coloured stones specialist Gemfields (LON:GEM) appears to have avoided the “challenges” seen in the diamond sector with all parts of the business recording a strong performance.

For the three months to December 31, which counts as Gemfields’ second quarter, output from the flagship Kagem mine was up strongly, while costs on a per carat basis fell significantly.

Production rose to 8.2mln carats of emerald and beryl, up from 5.8mln a year earlier, with the average grade rising to 272 carats from 190.

Total costs were U$11.3mln (a fall of US$300,000 compared with the same period last year), or US$1.38 per carat, down from US$2.

The November auction of stones in India generated revenues of US$19.2mln, or US$4.32 per carat. The next Kagem sale is in March.

Turning to rubies, which are mined from the Montepuez operation in Mozambique, the focus was on the higher quality alluvial resource during the period. While output was down recoveries of top notch stones shot up 1,825%.

An auction of medium-quality rough rubies brought in US$28.8mln at an average US$317.92 per carat.

Pleasing to Gemfields, led by Ian Harebottle and promoted by Mila Kunis, will have been the performance of the Fabergé business.

Sales orders rose 13%, while the gross profit margin grew to 49% from 31% in the comparable period 12 months ago.

“Fabergé has continued to reap the benefits of its successful watch campaign, launched in early 2015, and has delivered an increase in both unit sales and Total sales revenue during the quarter,” said chief executive Harebottle.

“The coloured gemstone sector also appears to have avoided many of the challenges being faced within the diamond and wider resource sector as we look forward to our upcoming higher quality emerald auction in March 2016."

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Tue, 16 Feb 2016 07:30:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/122552/
<![CDATA[Media files - Debt and dividend cuts will be mining themes of 2016, says Kieron Hodgson ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/4519/debt-and-dividend-cuts-will-be-mining-themes-of-2016-says-kieron-hodgson-4519.html Mon, 04 Jan 2016 07:29:00 +0000 https://www.proactiveinvestors.co.uk/companies/stocktube/4519/debt-and-dividend-cuts-will-be-mining-themes-of-2016-says-kieron-hodgson-4519.html <![CDATA[News - Gemfields hails US$29mln ruby sale ]]> https://www.proactiveinvestors.co.uk/companies/news/120674/gemfields-hails-us29mln-ruby-sale-120674.html Gemfields (LON:GEM) said the results of its latest auction of rubies held in Singapore were pleasing as it brought in US$28.8mln of revenues.

The sale was of higher and medium quality stones from its Montepuez deposit in Mozambique and generated a great deal of interest.

A total of 90,642 carats were sold, which was 98% of the lots by weight or 95% by market value, fetching US$317.92 per carat. Thirty six companies placed bids.

Gemfields said given the quality mix offered, the results could not be directly compared with prior auctions.

However, on what it calls a “quality-for-quality basis”, per carat prices achieved remained on a par with previous sales.

Since June last year the firm has held five events for rubies that have netted US$150.8mln, with Montepuez bringing in significant additional income to that generated by the Gemfields’ main Kagem emerald operation in Zambia.

Chief executive Ian Harebottle told investors: "Demand for fine gems remains healthy and has recently been supported by a commensurate increase in demand for mid-priced and high-production-run gems.

“The prices Gemfields has achieved in this auction are in line with the company's expectations.

“Only a small selection of goods remained unsold. I have no doubt that the joint efforts to continue to build and expand the reach of the coloured gemstone sector means that all Gemfields' auction clients will be able to achieve healthy margins on their purchases.

“Although some degree of softening in the demand for certain darker tone and lower quality grades remains, largely as a direct result of a short term shift in global buying patterns, this should be overcome as Gemfields' consumer education initiatives continue to reach a broader cross-section of markets and as key economies continue to strengthen.”

The next auction will be of predominantly higher quality emeralds from Kagem is expected to take place next March.

City firm Investec said: " A reasonable result in US$ terms in line with the previous auction of high quality rubies. Pricing from auction to auction is variable as the company works through a price discovery process."

SP Angel repeated a 'buy' and 82p price target.

Shares were unchanged today at 39.5p.

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Mon, 21 Dec 2015 07:27:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/120674/gemfields-hails-us29mln-ruby-sale-120674.html
<![CDATA[News - More record prices for gems following Gemfields' recent auction success ]]> https://www.proactiveinvestors.co.uk/companies/news/119972/more-record-prices-for-gems-following-gemfields-recent-auction-success-119972.html The price of coloured gems hit new highs today at a Christie’s auction in Hong Kong.

A 15 carat Burmese ‘pigeon’s blood red’ ruby was sold for a glittering US$18.3mln at the auction, smashing the US$15.6mln expected.

It also shattered the world record auction price per carat for a ruby set earlier this year at around US$1.1mln, as it reached a price of US$1.2mln per carat.

Also at the sale, another Burmese ruby sold for US$7.2mln, while an Afghan emerald of around 10.1 carats was sold for US$2.2mln.

It is a world record price for Afghan emeralds which are usually smaller than others found around the world.

The news is a continuation of the trend seen by coloured gem specialist Gemfields (LON:GEM), which recorded record revenues for lower quality stones at its recent emeralds auction in Jaipur, India.

Gemfields' next auction is expected to take place in December 2015 in Singapore and, based on current market demand, is anticipated to be predominantly comprised of mixed lots of ruby and corundum from the Montepuez ruby deposit in Mozambique.

Shares in the company climbed 5.4%, or 2p, to 40.3p on Wednesday.

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Wed, 02 Dec 2015 14:22:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/119972/more-record-prices-for-gems-following-gemfields-recent-auction-success-119972.html
<![CDATA[News - Gemfields flourishes as coloured gems market revives ]]> https://www.proactiveinvestors.co.uk/companies/news/119567/gemfields-flourishes-as-coloured-gems-market-revives-119567.html No question that Gemfields (LON:GEM) is a company with ambition.

You only have to look at where it’s come from to discover that.

From a near standing start six years ago the 75%-owner of the Kagem emerald mine in Zambia has grown to be one of the largest coloured gemstone producers in the world.

Over that time its market capitalisation has increased to close on £250mln and its share price has increased more than tenfold .

But how has that been possible when everyone knows that over the same period of time mining markets have been shot to hell, that the global economy has been in intensive care, and consumer appetite for discretionary spending anaemic at best?

The answer, as Gemfields chief executive Ian Harebottle explains, is an interesting combination of the right people, the right assets, and a clever and sometimes counter-intuitive approach to the market.

“When I joined in 2009 our revenue was close to zero, ” he says. “We turned it completely around.”

Who exactly the “we” are in this statement perhaps requires a bit of explanation. 

First off, there’s the Pallinghurst Group, a private equity vehicle controlled by one-time BHP Billiton (LON:BLT) chief Brian Gilbertson and which took a major stake in the company at the beginning of 2008. 

In turn, Gilbertson and his team brought in Harebottle, described on the Gemfields web site as a coloured gemstone “veteran.”

But the key thing about that appointment was not just that Harebottle brought with him a wealth of African coloured gemstone experience garnered at the helm of Tanzanite One, but that he brought a lot of the Tanzanite One team with him.

At one time early on, he recalls, when the Gilbertsons (father and son) were sizing up a potential acquisition of Tanzanite One while Harebottle was between jobs, he delivered the intuitive advice that the company would be worth the acquisition price based on the value he believed that its people could add to Gemfields alone.

Once he was appointed to Gemfields many of those people, all of whom had developed unique sector specific skills over the years, came across with him and the nucleus of future success was put in place.

Still, anyone who recalls what the mining markets were like in 2009 will know that nothing then was a given.

Indeed, Harebottle himself regards the way the mining industry kept attempting to prop itself up in the face of relentless pressure on prices and demand as worse than futile.

In fact it was actually counterproductive, he says, as the mining industry went through a series of stops and starts instead of crashing to find its base level and beginning the job of rebuilding on firm foundations.

Still, as far as Gemfields is concerned it wasn’t all for the bad.

Global discretionary spend did indeed drop after the financial crisis in 2008, but that had the paradoxical effect of boosting demand for Gemfields’s emeralds.

Why? 

Simple, says Harebottle. Faced with a choice in tougher times, the potential purchaser of a precious stone could either buy a tiny diamond or a bigger emerald.

That fundamental price-to-size advantage enjoyed by emeralds played well when purse strings were tightened, and especially when backed up by a clear-focused marketing strategy, and not just from Gemfields.

“In 2009 if you took a walk down Bond Street,” says Harebottle, “all you would have seen in the jewellery store windows would have been white diamonds. Now more than half the window space is colour, and you put in your window what’s going to draw your customers in.”

Colour is good; coloured gemstones are marketed heavily by De Beers, by Graf, by all the major players.

And where with tanzanite Harebottle often struggled to gain product recognition from consumers, with emeralds, and with Gemfields’ new products rubies and amethysts, there is no such need for education.

“There’s this inherent knowledge,” says Harebottle, and it runs deep.

“Man has a hierarchy of needs,” he says, eliciting the obvious ones of food, water and shelter first. “Going back into the past, right at the top of the pinnacle was coloured gems.”

That pinnacle has been subverted over the past 100 years, partly by De Beers’ unparalleled success in pushing diamonds, and partly by the more recent growth of consumer branding as a luxury item in itself.

But coloured stones are making a comeback. 

Gemfields uses the US actress Mila Kunis in its marketing campaigns, and other major celebrities like Angelina Jolie and Penelope Cruz have also been seen wearing coloured stones with much more frequency lately.

Then there’s Kate Middleton, who famously wore Princess Diana’s sapphire engagement ring.

“We’re certainly seeing a significant demand for colour,” says Harebottle.

That’s all to the good, as far as Gemfields is concerned. It already accounts for around 30% of the world’s emeralds by value, and is making serious inroads into the ruby markets with its new Mozambican mines.

Will there be more to come?

You bet there will. The company has just sold US$19.2mln worth of stones in Jaipur, with the next auction due in December in Singapore.

“We’re in a solid place now,” says Harebottle. “We have a roughly 40 % EBITDA margin after spending 20% of our revenues on growth – 11% on marketing and 9% on greenfields exploration.”

In the long-term, there’ll probably be a move to the main board of the London Stock Exchange too. But one thing at a time.

After all, it’s only a few years since the company had no revenues at all - and look at it now.

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Mon, 23 Nov 2015 11:21:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/119567/gemfields-flourishes-as-coloured-gems-market-revives-119567.html
<![CDATA[News - Gemfields rises after sparkling auction results ]]> https://www.proactiveinvestors.co.uk/companies/news/119549/gemfields-rises-after-sparkling-auction-results-119549.html Coloured gems specialist Gemfields (LON:GEM) achieved record revenues for lower quality stones at its recent emeralds auction in Jaipur, India.

Auction revenues clocked in at US$19.2mln, with a new record level for a designated lower quality auction of US$4.32 per carat.

Of the 5.07mln carats on offer, 4.45mln – 88% of the total – were sold.

A total of 29 companies placed bids in Gemfields' second auction of Kagem production in the current financial year. The auction marked the first auction of predominantly lower quality rough emerald outside of Zambia since June 2012.

The proceeds will be fully repatriated to the company's Kagem Mining subsidiary in Zambia, in which the Zambian government has a 25% stake.

In addition to the auction of gemstones mined by Gemfields at Kagem, the Jaipur event was also used to host a traded emerald auction of predominantly higher quality emeralds originating from Zambia and Brazil and obtained by Gemfields in the open market from various sources. The traded auction yielded additional gross revenue of US$1.1mln with 20,400 carats sold.

Gemfields' next auction is expected to take place in December 2015 in Singapore and, based on current market demand, is anticipated to be predominantly comprised of mixed lots of ruby and corundum from the Montepuez ruby deposit in Mozambique.

Shares in Gemfields rose 5.6% to 44.35p in early deals on Monday.

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Mon, 23 Nov 2015 08:07:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/119549/gemfields-rises-after-sparkling-auction-results-119549.html
<![CDATA[News - Gemfields reveals “very positive start” to financial year ]]> https://www.proactiveinvestors.co.uk/companies/news/117049/gemfields-reveals-very-positive-start-to-financial-year-117049.html Gemfields (LON:GEM) first quarter trading update has revealed an improved performance at the Kagem emerald mine and rising sales at the Fabergé jewellery business.

Chief executive Ian Harebottle described it as a “very positive start” to the new financial year.

Orders at Fabergé rose by 61% year-on-year for the September quarter, Gemfields said, while gross profit margins also improved significantly to 51% from 30%.

The Total number of items sold was up 241% versus the 2014 comparative, albeit the Total revenue figure from last year was skewed by the sale of a single high price exceptional item and as a result Total revenues from sales were actually 4% lower.

Increased advertising spend meant the operating costs at Fabergé increased by 6%.

At Kagem, in Zambia, production rose to 7.5mln carats of emerald and beryl in the three months to September 30, up from 6.3mln in the corresponding period of 2014.  At the same time grades improved to 237 carats per tonne, versus 214 carats in the same quarter of last year.

Top line operating costs rose to US$11.1mln, compared with US$10.3mln, reflecting heightened mining activities but costs per tonne improved. Unit operating costs equated to US$1.48 per tonne, versus US$1.63 in 2014, while cash rock handling costs amounted to US$2.12 per tonne, from US$2.91.

September’s auction saw higher quality rough stones generate US$34.7mln, and the next auction (of predominantly lower quality rough stones) is scheduled to take place this month.

Harebottle highlighted that Gemfields is maintaining its 2016 production target of 25 to 30 million carats for rough emeralds and 8mln carats for rubies.

Ruby mining operations at the Montepuez site, Mozambique, meanwhile, was focused on delineating areas of higher quality alluvial resource and it saw the production of 0.5mln carats.

These operations saw a 96% increase in the recovery of higher quality rubies. It saw high quality, lower grade material processed; as such the company reports seven carats per tonne, compared to 41 carats in the same period of last year.

It was a larger operation than before and costs reflect that. Total operating costs amounted to US$6.1mln, versus US$4.3mln, while unit costs were US$12.2 per carat from US$1.48 reflecting the lower grade.

An auction of the higher quality rubies from Montepuez is anticipated in December.

The company also highlighted that in September it held an auction of rough amethyst that generated US$0.44mln and saw an average price of US$4.32 per carat, which is the best price seen to date at a Gemfields auction.

Harebottle added: “Demand for coloured gemstones continues to be firm as we look forward to our next lower quality rough emerald and beryl auction later this month and our next auction of predominantly higher quality rubies from Montepuez in December 2015."

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Wed, 04 Nov 2015 07:52:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/117049/gemfields-reveals-very-positive-start-to-financial-year-117049.html
<![CDATA[Media files - Fabergé watch award to boost value and demand, says Gemfields chief ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/4325/faberg-watch-award-to-boost-value-and-demand-says-gemfields-chief-4325.html Mon, 02 Nov 2015 12:20:00 +0000 https://www.proactiveinvestors.co.uk/companies/stocktube/4325/faberg-watch-award-to-boost-value-and-demand-says-gemfields-chief-4325.html <![CDATA[News - Fabergé takes prize at the 'Oscars' of global watch industry, says Gemfields ]]> https://www.proactiveinvestors.co.uk/companies/news/116926/faberg-takes-prize-at-the-oscars-of-global-watch-industry-says-gemfields-116926.html A ladies' Fabergé watch has walked away with a prestigious Swiss watchmakers industry prize, revealed Gemfields (LON:GEM), which owns the luxury jewellery business.

The Grand Prix d'Horlogerie de Genève (GPHG) is widely regarded as the 'Oscars' of the watch industry, and presents accolades in 12 categories to the finest creations and the watch-making houses behind them.

Faberge's winner in the 'Ladies Hi-Mechanical' category was the 'Lady Compliquée Peacock'  watch.

Gemfields chief executive Ian Harebottle said today: "We are honoured to win this prestigious award, in particular because this is the launch year of our new watch collections.

"The achievement provides a glimpse into the incredible effort delivered by the Faberge' team over the past few years and clearly cements Fabergé's reputation as a leader in the watch world, all in less than two years since our in-house watch team was established.

"In addition to a number of other core brand elements that have recently been developed, the team has managed to deliver four original watch ranges, including the Visionnaire gentlemen's flying tourbillon, two ladies watches short-listed for the GPHG and one GPHG winner."

He added: "Winning this award will transform Fabergé's recognition and following in the luxury world and I thank and congratulate the team."

Broker Investec noted: "A positive development for Gemfields demonstrating progress as management has worked to turn Faberge around and re-establish its credibility as a premium jewellery brand."

Shares in Gemfields dipped 2.6% to 46.75p each.

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Mon, 02 Nov 2015 07:59:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/116926/faberg-takes-prize-at-the-oscars-of-global-watch-industry-says-gemfields-116926.html
<![CDATA[News - Plenty of upside still at Gemfields, says broker ]]> https://www.proactiveinvestors.co.uk/companies/news/116225/plenty-of-upside-still-at-gemfields-says-broker-116225.html Wed, 14 Oct 2015 13:06:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/116225/plenty-of-upside-still-at-gemfields-says-broker-116225.html