【Mozambique; 】Gemfields Reports Interim Loss but Is Better Positioned for a Stronger Second Half

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Editor’s Note

This article highlights Gemfields Group’s challenging first half, marked by a sharp decline in revenue and a negative free cash flow position. The performance underscores the impact of lower auction revenues and ongoing capital expenditures in its key operations.

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Financial Performance Overview

Gemfields Group reported on Friday that its free cash flow before working capital movements fell to a negative $22.1 million for the six months ended June 30. This decline was attributed to lower auction revenue and capital expenditure at Montepuez Ruby Mining (MRM) in Mozambique.

The JSE-listed miner and marketer of colored gemstones stated in its interim financial results that total revenue reached $64.2 million, a significant decrease from $121.41 million a year earlier. The company reported an EBITDA loss of $4.9 million and a net loss of $24.58 million, compared to a net profit of $13.67 million for the same period last year.

“This has been a challenging first half marked by gemstone production difficulties at both mines. MRM experienced lower premium ruby output while Kagem Mining suspended mining altogether at the end of 2024, with limited operations resuming only in May 2025,” said CEO Sean Gilbertson.

Gemfields’ share price fell 6.2% to 136 cents in thin trade on the JSE on Friday, trading 40% below its price from 12 months prior.

Operational and Regulatory Challenges

Gilbertson noted that the beginning of the year was also impacted by civil unrest in Mozambique following a disputed general election and the surprise implementation of a 15% export duty on emeralds in Zambia, a matter that has since been resolved. At Kagem in Zambia, the 15% duty reinstatement in January 2025 was revoked within months, allowing Zambian emeralds to compete globally again.

“These factors contributed to short-term cash flow pressures and certainly tested the team and the business,” he said.

Net debt at the end of the period stood at $61.2 million, compared to $16.1 million in auction receivables, which have now been 100% collected.

Strategic Restructuring and Future Outlook

Gilbertson stated, however, that a series of difficult decisions had resulted in a more streamlined and focused organization. Thanks to shareholder support via a rights issue, the company now has a stronger balance sheet, positioning it better for the year ahead.

“Significantly, our new processing plant in Mozambique produced its first rubies earlier this month and is expected to be fully operational during October,” he said.

No dividend was declared, compared to $0.86 per share declared last year. In August 2025, Gemfields sold its 100% interest in the iconic brand Fabergé to SMG Capital for $50 million.

“With the sale of Fabergé and the discontinuance of other non-core projects, Gemfields is now a more streamlined business, focused on the mining of colored gemstones,” Gilbertson said.

Fabergé was classified as a disposal group held for sale as of June 30, 2025.

Leadership Commentary and Focus Areas

Chairman Bruce Cleaver said the group would work to stabilize operations in the coming months, driving greater profitability and improving financial flexibility.

“This will be achieved through disciplined cost controls, increased production and a conservative approach to capital allocation. I am eager to work more closely on developing the overriding strategy, and my fellow board members will pursue improvements in the areas of risk, audit, and ESG,” said Cleaver.

“Our approach to the second half is cautiously optimistic. While market conditions are still far from the highs experienced in recent years, the results from our 2025 auctions to date suggest an encouraging shift in demand sentiment. MRM’s second processing plant, together with the gradual restoration of mining at Kagem, will aid our supply capability,” said Gilbertson.

Speaking about operational priorities, Gilbertson emphasized that getting MRM’s new processing plant up and running to its design capacity was critical.

“This industry-leading plant is ambitious and is designed to transform production levels of rubies from the mine. The project has not been without its challenges and has experienced delays owing to logistical disturbances during the civil unrest and key parts being damaged in transit. With the plant now in the commissioning phase, we look forward to attaining design capacity,” he said.

He also noted that proposed changes to Mozambique’s mining law offered an opportunity to address issues negatively affecting MRM, such as tightening controls on illegal mining, trading and smuggling, minimizing corruption, and promoting greater transparency.

“Committing these aspirations to law could be game-changing for Mozambique’s receipts from its mineral resources,” he said.

Gemfields has developed a proprietary grading system and a pioneering auction platform to provide a consistent supply of colored gemstones to downstream markets, a key component of its business model that has played an important role in the growth of the global colored gemstone sector.

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⏰ Published on: September 29, 2025