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Gemfields pulls a ‘well- groomed bunny out of the hat’ as it declares a $15m dividend – a milestone

Gemfields pulls a ‘well- groomed bunny out of the hat’ as it declares a $15m dividend - a milestone

Gemfields, the supplier of coloured gemstones, yesterday declared a dividend of $15 million (R260m) as its CEO Sean Gilbertson said its hard-working teams, aided by buoyant market conditions, had pulled a“very well-groomed bunny out of the hat”.

Gilbertson said: “Gemfields’ shareholders waited some 17 years for their first dividend, and with that milestone having been announced but six months ago, we are delighted today to be able to declare a non-routine interim dividend of $15 million in recognition of the sparkling results delivered for the first six months of 2022.”

The Gemfields group, based in London and listed on the Johannesburg and London stock exchanges, is focused on mining emeralds at the Kagem mine in Zambia and the Montepuez Ruby Mine (MRM)in Mozambique.

For its six months ending June 30, 2022, the group reported total revenue of $193.2m, with all three auctions held in the period breaking previous records.

Earnings before interest, taxes, depreciation, and amortization (Ebitda) for the reported period were $104.8m, with a 54% Ebitda margin.

"Free cash flow before working capital movements amounted to $86.5m. A strong balance sheet with a gross cash balance of $111.5m excludes auction receivables of a further $81.1m and a gross debt balance of $29.7m," the group said.

Gilbertson said Gemfields’ unique model saw its auction revenues repatriated in full to Mozambique and Zambia, and the company is pleased to see record-breaking sums of $96m and $86m, respectively, flowing back to the countries of origin.

According to Gemfields, Kagem’s remarkable production run of premium emeralds has continued.

"Production in this category for the period amounted to 109,600 carats. Overall production for the period amounted to 19.2 million carats. With revenues of $85.2m, Kagem generated Ebitda of $47.8m." the group said.

MRM's production during the period in the premium ruby category was 38,900 carats. Total gem production was 1.6 million carats. The ruby mine generated an Ebitda of $45.4m from auction revenues of $95.6m.

The group said its subsidiary Fabergé’s recovery from the pandemic continued into 2022, which resulted in record sales that included the sale of the Game of Thrones Egg.

"Fabergé’s wholesale business, in particular, delivered strong year-on-year growth, driven by increased global demand for Fabergé products and much-improved trading conditions versus the same period in 2021. Despite this, overall luxury goods have seen a decline in valuations since December 2021, mainly as a result of current uncertainties in the global market largely due to the crisis in Ukraine," it said.

Looking forward, the group said the current buoyant coloured gemstone market, alongside the encouraging production at both Kagem and MRM, means that the board remains optimistic for the second half of 2022.

"One must remain cautious that, even with a robust financial position, the current global economic climate is one of rising prices and supply chain constraints, amongst other things.

“Consequently, the impact of these matters on the group’s cost base cannot be underestimated, with fuel costs, in particular, seeing steep increases all over the world. The current challenges being faced at an operational level mean that Gemfields must remain attentive as it navigates the remainder of the year to maintain our financial resilience and prepare for the future," it said.

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