Our opinion on the current state of GEMFIELDS(GML)The Gemfields Group (GML) (previously Palinghurst Group) is a mining group that has two major projects: (1) Kagem, the world's largest producer of emeralds (in Zambia) and rubies (at Montepuez in Mozambique); (2) Jupiter Mines, a South African producer of manganese. The group is led by Brian Gilbertson, previously the CEO of BHP Billiton. Gilbertson identified that the semi-precious stones market was under-developed and offered an opportunity for consolidation and professional management - hence the Gemfield's operation.
Jupiter was listed on the Australian Stock Exchange (ASX) in April of 2018, and in the process, Gemfields disposed of 60% of that company in line with its decision to cease being a diversified mining company and to focus purely on gemstones. The share is fairly well-traded with approximately R0.5m worth of shares changing hands on average every day. Like all commodity shares, it is risky and its fortunes depend on the prices of emeralds and rubies on the international market, as well as the risks associated with mining in third-world countries.
It appears to have found a niche for itself where there is very limited competition, and it should do well as the world economy recovers. On 24th October 2022, the company announced that operations had resumed at MRM and key personnel had returned following an insurgent attack on a mine about 12km away on 20th October 2022. On 7th August 2023, the company announced that it would construct a new processing plant that would triple its output from the Montepuez ruby mine.
In its results for the year to 31st December 2023, the company reported revenue down 23% and a headline loss of 0,9c (US) compared with a profit of 4,8c. The company said, "The Group’s financial performance was impacted in the year by the withdrawal of November 2023’s higher-quality emerald auction and an unrealised write-down of Gemfields’ non-core 6.54% equity holding in Sedibelo Resources, the platinum group metals mining company."
Technically, the share rose off an island formation and entered a strong new upward trend which lasted until July 2023 when the trendline was broken. We recommend waiting until the downward trendline is broken - which has not yet happened. On 11th June 2024, the company announced the appointment of Bruce Cleaver as Chairman. In a report on 19th June 2024, the company said that in June 2024 auctions, it had sold $68,7m worth of rubies at an average price of $316,95 per carat.
