Aim- and JSE-listed Gemfields says its full-year results reflect the magnitude of the impact that Covid-19 has had on the company, rendering it unable to hold auctions in its traditional format since February 2020.

The group had to implement a range of cash saving measures, including suspending operations at the emerald and ruby mines operated by Kagem Mining, in Zambia, and Montepuez Ruby Mining, in Mozambique, respectively.

“We believe the difficult decisions taken during 2020 best position Gemfields for an optimal recovery in 2021,” says CEO Sean Gilbertson.

Gemfields for the year ended December 31, 2020, posted an operating loss of $24-million, compared with an operating profit of $91-million reported in the year ended December 31, 2019.

The net loss for the year under review reached $93-million, against a net profit of $39-million in the prior comparable year. Its loss a share was $0.07 in 2020, compared with earnings a share of $0.02 in the prior year.

The company has not declared a dividend.

Gemfields had been on track to distribute its maiden dividend to shareholders during the second quarter of 2020. However, given the emergence of the pandemic, the planned distribution was postponed for an indefinite period to preserve cash resources.

Meanwhile, Gemfields’ multi-city mini auctions, combined with a new online bidding platform, provide important flexibility until travel and congregating restrictions begin to ease some time this year.  

“We are also very pleased with the restart of operations at both Kagem and Montepuez and we anticipate they will both be fully operational by the end of April,” confirms Gilbertson.

Gemfields was able to host only one regular-format auction in 2020, yielding $11.4-million from the sale of commercial-quality emeralds in February 2020 in Lusaka.

The group has therefore had to find alternative and innovative ways of holding auctions despite challenging market conditions, introducing its inaugural series of five small online emerald auctions that took place between November and mid-December of 2020.

Gemfields achieved revenues of $10.9-million from the mini auction series, resulting in Kagem generating total auction revenues for 2020 of $22.3-million. This while there was no ruby revenue in 2020.

During the same period in 2019, the Mozambican and Zambian operations generated revenues of $121.5-million and $79-million, respectively. Overall, revenues fell by almost 89% year-on-year, from 2019’s record high of $200-million, to just $22.3-million in 2020.

“With the disruptions caused by Covid-19 running well into 2021, the group is pleased that this new online auction platform provides an additional string to Gemfields’ bow in facing the inevitable challenges ahead,” states chairperson Martin Tolcher.

Gilbertson adds that the company looks forward to firing up all the mining engines during the course of March and April.

“We take some comfort from the fact that well-bought gemstones have for centuries been regarded as a store of value and a guard against turbulent times. This was also evidenced in the 2008 financial crisis where gemstone pricing indices proved remarkably resilient,” he says.