London: Gemfields Group Ltd announced on Friday plans to raise USD30 million through an equity rights issue, following a swing to a significant annual loss driven by rising costs and ongoing political instability.
The London-listed miner and marketer of coloured gemstones reported a pretax loss of USD103.6 million for 2024, reversing from a USD16.6 million profit in 2023. Annual revenue dropped 19% to USD212.9 million, down from USD262.0 million the previous year.
The company’s results were heavily impacted by impairment charges totaling USD91.3 million, compared to none in 2023. Operating costs also rose sharply, with selling, general and administrative expenses increasing 13% to USD63.9 million, while finance costs more than doubled to USD6.6 million from USD3.0 million.
As a result, Gemfields opted not to declare a dividend for 2024, after distributing 0.857 US cents per share in 2023. Loss per share widened to 7.0 US cents, compared to 0.8 cents the prior year. Headline loss per share increased to 2.1 cents from 0.9 cents.
Chair Bruce Cleaver described 2024 as a “challenging year” for the company. He noted that Gemfields undertook substantial capital expenditure at its two core mining operations in mid-2023, which led to heightened costs amid falling revenues. This prompted aggressive cost-cutting measures by year-end.
Production fell short of expectations, particularly for high-grade, high-value gemstones. Meanwhile, mining inflation—especially fuel price increases—further pressured margins.
Cleaver also pointed to political instability as a major operational challenge, with disruptions continuing into 2025. The Zambian government temporarily reinstated a 15% export duty on gemstones in January 2025, which was reversed a month later. Civil unrest in Mozambique persisted from October 2024 through mid-January 2025.
To bolster its financial position, Gemfields will seek shareholder approval to issue 556.2 million new shares via a rights issue at an extraordinary general meeting. The issue will be fully underwritten by its two largest shareholders, Assore International Holdings Ltd and Rational Expectations (Pty) Ltd.
If approved, shareholders will be offered 10 new shares for every 21 held, priced at 4.22 pence in London and ZAR1.06860 in Johannesburg.
Following the announcement, Gemfields’ shares dropped 21% to 4.63p in London and fell 13% to ZAR1.30 in Johannesburg.
Assore and Rational Expectations have also agreed to provide loans totaling USD13.3 million (USD8.7 million and USD4.6 million respectively) equivalent to their pro-rata rights issue entitlement, giving the company immediate working capital while the fundraising proceeds.
Separately, Gemfields said it will pause ongoing strategic evaluations of its luxury brand, Fabergé, until the rights issue is completed. The company had disclosed in December that it was reviewing options for Fabergé and had received several non-binding offers, but now states that none are sufficiently compelling to pursue at this stage.
