Gemfields looks to access increase market liquidity
Gemfields has announced its intention to seek admission of its Ordinary Shares to trading on the AIM market of the London Stock Exchange.
The Company is not intending to raise capital in conjunction with Admission. The Company expects that Admission will become effective on 14 February 2020.
The AIM listing will provide Gemfields with access to much greater market liquidity, as well as a widening of the current investor base. We are looking forward to this next phase in the Company’s development and to delivering value for all our shareholders.
Sean Gilbertson, CEO of Gemfields, comments:
“We are pleased to announce our decision to bring the Gemfields assets back to the London market, thereby providing UK, European and international investors with the opportunity of being part of the growing precious coloured gemstones market.
The past decade has seen a consistent rise in the demand and price for precious coloured gemstones, and Gemfields has been at the forefront of driving that increased awareness, confidence and transparency in the sector from both the market and the consumer.
“Our ownership of the iconic luxury brand, Fabergé, offers the Group direct insight into perception and pricing of precious coloured gemstones from a consumer perspective.
The Company’s auctions in both rubies and emeralds during 2019 have clearly demonstrated robust demand and pricing and we continue to see increasing numbers of participating customers, further validating our pioneering auction and grading platform.”
Key strengths of the Group
World-class and sector-leading assets
Kagem is estimated to provide more than one fifth of the world’s emeralds and unearthed the ‘Inkalamu’, or Lion Emerald, a 5,655-carat gem which was successfully sold in November 2018.
MRM is estimated to provide around half of the world’s ruby supply through shallow, open-pit mining. The Group has a controlling 75% interest in both Kagem and MRM and is the operator of both assets.
Consistent growth in consumer demand and price for coloured gemstones
The past decade has seen world record prices at auction houses for cut and polished emeralds and rubies, surpassing the price of colourless diamonds on a per carat basis.
Prices realised at Gemfields’ auctions of higher quality Zambian rough emeralds have increased over 1,500% over the same period.
Gemfields has boosted manufacturer and consumer confidence in its emeralds and rubies through reliable supply, consistent grading, greater transparency and by engaging with innovative traceability technology.
Strong and profitable business
Gemfields is a cash generative business. Based on unaudited numbers for the year to December 2019, the Company was free cash flow generative and holds a positive net cash position at the end of 2019.
Since 2009, Gemfields has held 47 auctions surpassing US$1.2 billion in combined auction revenue. In the 2018 annual results, the Group received revenues of $206 million and EBITDA of $58.9 million, a 29% EBITDA margin.
The recent suspension of the Zambian 15% export duty on precious gemstones is anticipated to further improve the profitability of the business, whilst revenues from MRM have reflected strong and consistent demand for Mozambican rubies.
Professional and pioneering commercial auction platform
Gemfields’ proprietary grading system and pioneering auction platform, together with initiatives such as the use of blockchain in improving supply chain traceability, have been instrumental in providing downstream markets with confidence in Gemfields’ gemstones.
These initiatives have given manufacturers and the wider market improved visibility of the availability, volume, quality and consistency of supply of rough coloured gemstones being supplied by Kagem and MRM.
This has been a key component of Gemfields’ business model and has played an important role in the growth of the global coloured gemstone sector.
Deep commitment to social licence and responsible mining
Gemfields takes a leading role in providing a positive impact for stakeholders through its commitment to the Group’s three core values of Transparency, Legitimacy and Integrity.
Gemfields carries a strong belief that coloured gemstones should benefit the host country and host communities from which they originate.
Responsible sourcing for Gemfields includes incorporating industry-leading policies and practices across its operations, transparency in the auction sales process, an active role in industry working groups to modernise the sector, projects to improve health, education and livelihoods for the communities around mine sites and conservation efforts to protect Africa’s wildlife and biodiversity.
Owner of Fabergé
Through its outright ownership of Fabergé, an iconic and prestigious brand of exceptional heritage, Gemfields can optimise the positioning, perception and consumer awareness of coloured gemstones, advancing the Group’s wider “mine and market” vision.
Exploration upside from its wider portfolio
The Group holds controlling interests in various other gemstones mining and prospecting licences in Zambia, Mozambique, Ethiopia and Madagascar that form part of the Company’s wider strategy of delivering long term value to its shareholders.
Experienced management team
The Gemfields senior management and Board is comprised of industry veterans in their respective technical, supply chain and financial fields.
The Directors are focused on consolidating Gemfields’ position as a leading global coloured gemstones supplier, with a clear African focus.
The Directors intend to continue to pursue an organic growth strategy
driven by a strong operational performance, healthy profitability and a commitment to further developing a transparent, professional and responsible coloured gemstones industry.
Any future M&A opportunities will be carefully considered by the Board against appropriate financial and operational criteria.