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Cancellation of Gemfields auction causes 86% drop in profit

Gemfields, a leading miner of colored gemstones, announced a significant decline in pre-tax profit for the fiscal year 2023, with an 86% drop attributed in part to the cancellation of a high-quality emerald auction in November. This announcement was made on Monday.

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The London-based company reported a 23% decrease in revenue, which amounted to $262 million compared to $341.1 million in the previous year. Moreover, Gemfields recorded a loss after tax of $2.8 million, marking a substantial shift from the $74.3 million profit reported in 2022.

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The estimated value of the company’s investments underwent a downward revision to $4 million, reflecting a decrease of $28 million from its 2022 valuation. Gemfields emphasized that inflationary pressures have been impacting its revenues as operating expenses remain high.

Despite a slight decline in global commodity prices towards the end of 2023, Gemfields expressed concerns regarding persisting high interest rates and geopolitical tensions worldwide, which have led to increased costs.

In response to these challenges, the company reduced its final dividend to 0.857 US cents from 4.125 US cents, financing the payment from its income reserves.

Gemfields’ Chief Executive Officer, Sean Gilbertson, commented on the company’s performance in 2023, stating, “Gemfields had a year of both achievements and challenges.” He noted that the company achieved its second-highest annual revenues, with healthy prices paid at auctions of rough emeralds and rubies.

Regarding the emerald auction, which was canceled in November but completed last week from March 5 to March 22, Gemfields explained that the overall lower quality and quantity of premium emerald production at Kagem led to the cancellation. Despite this setback, the sale generated $17.1 million, lower than the $25.5 million achieved at the previous auction held from August to September 2023.

During the March auction, Gemfields sold 93% of the emeralds offered, equivalent to 3.85 million rough stones at an average price of $4.45 per carat. Adrian Banks, the Managing Director of Product and Sales, noted that the March auction offering included large quantities of lower-quality emeralds, primarily destined for smaller manufacturers in India through the company’s direct sales channel. These parcels accounted for 55% of the auction by weight, resulting in the lower overall dollar-per-carat figure realized at the auction.

Since July 2009, Gemfields has held 47 emerald auctions, generating over $1 billion in revenues.

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