Dual-listed Gemfields expects to report earnings a share of R11.80 for the six months ended June 30 – a 21% decrease from the earnings a share of R14.90 reported for the first half of 2023.

Gemfields’ 6.54% shareholding in platinum group metals (PGM) company Sedibelo Resources has now been written down to nil from $4-million at the end of 2023.

The write-down reflects the fact that there has been no further positive news from Sedibelo, that its operations remain suspended and Gemfields management’s view that the prospects in the medium term remain dim.

The Sedibelo stake is noncore to the Gemfields business.

Gemfields says it is reasonably certain that, after taking the Sedibelo write-down into account, its net profit after tax will be $13.7-million, or R255.6-million, compared with $18.1-million, or R333.7-million, reported for the first half of 2023.

The lower profit is driven by the lower revenues and higher costs at both Kagem Mining and Montepuez Ruby Mining (MRM), the Sedibelo write-down and an increase in net financing costs as the group’s debt increases to help fund the construction of MRM’s second processing plant.

The company expects to release its results for the period on September 27.

Gemfields’ two key operating assets, Kagem Mining and MRM generated revenues of $51.9-million and $68.7-million respectively in the period.

The demand for rough emeralds and rubies remained healthy, while production of the highest-quality gemstones at both mines over this period was below the group’s expectations.

Kagem’s production in August saw a considerable uptick alongside the completion of its upgraded processing plant, while MRM continues to be challenged by weaker gemstone production.

Fabergé recorded revenues of $6.6-million, down from $8.4-million in the first half of 2023, in a softer luxury goods market and against a comparative period that included a one-off sale of legacy jewellery.

“As previously disclosed, the group generated auction revenues during the period of $120.6-million, as well $6.6-million from Fabergé, contributing to another profitable period albeit at a reduced level when compared to the same period last year.

“This month we experienced a weaker-than-expected commercial-quality emerald auction. While this increases the uncertainty we face, management considers it unlikely that the November higher-quality emerald auction or the December mixed-quality ruby auction will see below-par results of a similar scope,” CEO Sean Gilbertson says.

“While higher-quality gemstones typically remain more robust than lower-quality gemstones in challenging times, we remain vigilant given that the luxury and gemstone sectors are facing greater uncertainty than we have seen in the last three years,” he adds.

“While we continue to invest in our future, having completed the Kagem processing plant upgrade, and with the construction of MRM’s second processing plant materially on time and within budget, for completion by the end of the first half of 2025, we will maintain a keen focus on working capital and capital allocation,” Gilbertson informs.