Gemfields decries cancelled auctions as a result of pandemic

On Monday, Gemstones miner, Gemfields, said it expected to swing to a temporary net loss for the six months ended on June 30 since the company had only held one sale due to the COVID-19 pandemic.

The company, which returned to the London Stock Exchange’s market for juniors in February, expects to report a net loss after tax of US $56.7m in the first half of 2020. The figure sharply contrasts with the US $12.4m profit reported during the same period last year.

Gemfields cancelled auctions originally scheduled for May, June and August

The company noted it remained unable to provide reliable guidance about when it might next be able to host auctions or generate meaningful revenue from gemstone sales. It attributed the uncertainty to travel, quarantine and congregating restrictions put in place to mitigate the spread of COVID-19.

Gemfields also said it will write its luxury Fabergé jewellery brand by $11.5 million, because of lower than expected sales and a general downturn in the market.

A review of the company’s shareholding in Sedibelo Platinum Mines also will cause a write-down of between US $12.5m and US$45m, Gemfields said.

The effect of the novel coronavirus pandemic on the company’s upcoming auctions is not the only challenge Gemfields has had to face this year. In early February, 11 illegal miners died at its Montepuez mine in Mozambique, following a series of tunnel collapses over three days.

Montepuez is the world’s richest known ruby mine, which generated revenue of almost $122 million in 2019. The mine has faced incursions in the past, and Gemfields last year paid US $7.6m to community members living near the Mozambican mine, in a “no admission of liability” move that settled a claim of human rights abuses brought against it by locals.

Gemfields also operates the Kagem emerald mine in Zambia. The company has recently increased efforts to market its emeralds and rubies in China after a report highlighted the “huge potential” for ethically sourced gems in that market.

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