The newly formed Gemfields Group (GGL - formerly Pallinghurst Resources Limited), which had earlier acquired complete control of the erstwhile Gemfields Ltd, has said in its interim report for the six months ended June 30, 2018 that it is now in a “strong position” to support “planned growth” along a “clear strategic path”.

With the goal of evolving into “the De Beers of coloured gemstones”, the Company noted that it had curtailed “expensive international expansion ambitions” that were being pursued and has now decided to focus on its “principal mining operations, the emerald mine of Kagem Mining Limited and the ruby operations of Montepuez Ruby Mining Limitida (MRM)”, as well as on addressing the high corporate cost base.

Simultaneously, it had also divested some of the stakes held by Pallinghurst in the non-coloured gemstone mining activities, notably disposing of approximately 60% of GGL’s stake in Jupiter Mines Ltd at the time of that Company’s IPO.

During the six-month period, GGL reported significantly higher ‘premium emerald’ production at Kagem, the highest ever auction revenues achieved at MRM’s ruby auction in June 2018 and record revenues at Fabergé.

GGL said that the ruby and emerald markets showed contrasting performances. While the emerald market suffered from the tightening of liquidity and regulatory oversight in India following the reaction to the Nirav Modi scandal and a deflating property market in Jaipur, the ruby auction resulted in a second year of record results

Accordingly, GGL generated revenues of US$ 21.1 million and US$ 71.8 million respectively from Kagem and Montepuez (MRM) with an EBITDA of US$ 30.7 million. Revenues were used to fund expansionary capex at MRM, update an ageing fleet at Kagem and fund the development of the new projects in Ethiopia and Zambia.

Fabergé recorded revenues of US$ 7.0 million, an all-time high against historic, like-for-like periods. As a result of increasing emphasis on e-commerce, rigorous reduction in operating costs and Fabergé’s decision to withdraw from the BaselWorld fair, Fabergé’s operating loss also showed significant improvement.

At 30 June 2018, GGL was in a net cash position of US$31.6 million (31 December 2017: net debt of US$25.7 million) following the receipt of approximately US$64 million from the Jupiter IPO and the repayment of Fabergé’s Gordon Brothers loan facility during the period.

GGL is now in a strong position to support the planned growth of the underlying mining operations in Zambia and Mozambique, to further develop Fabergé and to progress bulk- sampling in Ethiopia should the situation there stabilise.