11th Apr 2025 08:38
(Alliance News) - Gemfields Group Ltd on Friday announced that it intends to raise USD30 million through an equity rights issue, after swinging to annual loss as the company grappled with rising costs and political uncertainty.
The London-based miner and marketer of coloured gemstones suffered pretax loss of USD103.6 million in 2024, swung from a profit of USD16.6 million in 2023.
Revenue for the year was USD212.9 million in 2024, down 19% from USD262.0 million.
Gemfields booked impairment charges of USD91.3 million in 2024, compared to none a year before.
Selling, general and administrative expenses rose 13% to USD63.9 million from USD56.5 million. Finance costs more than doubled to USD6.6 million from USD3.0 million.
Gemfields skipped paying dividend for 2024, after paying out 0.857 US cents for 2023.
Loss per share widened to 7.0 US cents in 2024 from 0.8 cents in 2023, while headline loss per share was 2.1 cents, worse than 0.9 cents.
Gemfields Chair Bruce Cleaver said 2024 proved to be a challenging year for gemstones producer.
The company made "significant" capital expenditure in mid-2023 at both of its key mining assets, Cleaver said. It has subsequently faced higher costs and reduced revenues, necessitating extensive cost cutting measures at the year end in 2024.
Production fell below expectations, particularly for the highest grade and price-robust gemstones, while costs rose as mining inflation hit the price of its key input, fuel, the chair said.
Political uncertainty introduced volatility at an operational level and had carried into 2025, he said. The Zambia government reintroduced a 15% export duty on precious gemstones in January 2025, which was subsequently reversed a month later, and civil unrest in Mozambique went on until mid-January 2025 from October 2024.
On the proposed rights issue, Gemfields said it will seek shareholder approval to issue 556.2 million new shares at an extraordinary general meeting.
The company said the proposed rights issue will be fully underwritten by its two largest shareholders, Assore International Holdings Ltd and Rational Expectations (Pty) Ltd.
Should shareholders approve, the company will offer 10 new shares for every 21 existing shares held at 4.22 pence and ZAR1.06860 per new share.
In London early Friday, Gemfields shares were down 21% to 4.63p, while they were down 13% to ZAR1.30 in Johannesburg.
Assore and Rational Expectations also have entered into pre-funding agreements to make loans to Gemfields equivalent to their pro-rata entitlement in the proposed rights issue amounting to USD8.7 million and USD4.6 million.
The loans will provide the company with an immediate working capital injection, pending the completion of the proposed rights issue, it said.
Gemfields also said it will pause assessing strategic options for its luxury brand Faberge and will only recommence after completing the proposed rights issue.
It has said in December last year it was assessing strategic options in respect of Faberge and had received a number of non-binding offers.
But the group said it does not believes these offers are sufficiently sound alternatives.
By Artwell Dlamini, Alliance News reporter
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