Coloured gemstones miner Gemfields (LON: GEM) posted on Monday a 86% drop in pre-tax profit for 2023 due partly to the cancellation of a high-quality emerald auction in November, a lower number of carats sold and a write-down in its platinum group metals investments.

The London-based company experienced a 23% drop in revenue, amounting to $262 million from $341.1 million, and recorded a loss after tax of $2.8 million, a significant shift from the $74.3 million profit reported in 2022. 

The decline was attributed partially to unrealized fair value losses of $28 million from the company’s 6.54% equity stake in South African platinum group miner Sedibelo Resources. 

The estimated value of this investment was revised down to $4 million, a decrease of $28 million from its worth in 2022.

Gemfields highlighted that inflationary pressures have been impacting its revenues as operating expenses remain high.

Despite a slight decrease in global commodity prices towards the end of 2023, concerns regarding high interest rates and geopolitical tensions persist worldwide, leading to increased costs, the company said. 

The miner reduced its final dividend to 0.857 US cents from 4.125 US cents, funding the payment from its income reserves.

“Gemfields had a year of both achievements and challenges in 2023, “ chief executive Sean Gilbertson said in a statement. “The group recorded its second highest annual revenues [the highest was in 2022] and saw healthy prices paid at our auctions of rough emeralds and rubies.”

Emerald auction completed

The overall lower quality and quantity of premium emerald production at Kagem led to the cancellation of the November auction, which was completed last week.

The sale brought in $17.1 million, lower than the $25.5 million achieved at the previous auction held from August to September 2023.

It sold 93% of the emeralds offered, equivalent to 3.85 million rough stones at an average price of $4.45 per carat. 

Managing director of product and sales, Adrian Banks, said the March auction offering included large quantities of lower-quality emeralds, which are typically destined for smaller manufacturers in India, through the company’s direct sales channel.

He said those parcels accounted for 55% of the auction by weight, resulting in the lower overall dollar-per-carat figure realized at the auction.

Since July 2009, Gemfields has held 47 emerald auctions that have generated over $1 billion in revenues.

Source: MINING.COM – Read More