Gemfields Sinks To Loss On Zambia Pain; Targets Payout, London List (ALLISS)

LONDON (Alliance News) - Precious gems miner Gemfields Group Ltd said Monday it sank to a 2018 ...

Alliance News 25 March, 2019 | 5:36AM
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LONDON (Alliance News) - Precious gems miner Gemfields Group Ltd said Monday it sank to a 2018 loss amid Zambian impairments and the after-effects of its shift to becoming an operating mining firm, as it continues to target a maiden dividend in 2019 and an additional list in London.

In 2018, Gemfields - previously known as Pallinghurst Resources Ltd - sank to a USD53.9 million pretax loss from a USD52.6 million profit the year prior. This was despite revenue more than doubling to USD206.1 million from USD81.7 million the year before.

Profit performance was hurt by a USD22.6 impairment on its Zambia business after tax changes. It was also held back by the non-recurrence of a USD96.4 million bargain purchase gain from its acquisition of Gemfields in 2017.

"The company has undergone significant transformation in reaching its new structure and strategic focus," Gemfields Chair Brian Gilbertson said. "We converted from a limited-life, closed-ended investment fund to an operating mining company, made high-level changes to our senior management, and opted to focus on being a 'pure-play', African precious coloured gemstone producer."

"The company is now in a stronger position to support the strategic positioning of our sector-leading mining operations in Zambia and Mozambique and the ongoing development of Faberge, and to take advantage of suitable new opportunities, should they arise," Gilbertson added.

"Our operations in Mozambique and Zambia generated revenues of USD127.1 million and USD60.3 million, respectively, in different market circumstances," Gilbertson continued. "The ruby auctions achieved record results, while the emerald market continued to suffer from a combination of deflating property prices in Jaipur, tight liquidity, and heightened regulatory scrutiny in India following the Nirav Modi scandal."

Gemfields explained its "biggest challenge" in the near future is a new 15% export tax introduced in Zambia for precious gemstones and metals. Alongside other changes, this has resulted in its tax bill in the country jumping 21% and saw it book a USD22.6 million impairment for its Kagem business in the country.

"While our business inherently involves fairly volatile geological and political risks, making a maiden distribution to our shareholders remains a key ambition for the year ahead," Gilbertson added.

Johannesburg-listed Gemfields is also exploring an additional listing on the London Stock Exchange in 2019 amid "lack of broker research and share trading liquidity, as well as feedback from shareholders", Gilbertson explained.

By Ahren Lester; ahrenlester@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Gemfields Group Ltd 151.00 ZAC -8.48 -
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