Gemfields is a world-leading supplier of responsibly sourced coloured gemstones. It owns 75% of Montepuez Ruby Mining in Mozambique, 75% of the Kagem emerald mine in Zambia, the Fabergé jewellery business and investments in Jupiter Mines and Sedibelo Platinum.
Gemfields Group (Gemfields) provides investors with exposure to major producing coloured gemstone mines at Montepuez or MRM (rubies) and Kagem (emeralds) with additional value upside from the potential turnaround of Fabergé and its investment in Sedibelo Platinum Mines. Gemfields has agreed to sell its minority stake in Jupiter Mines and plans to return US$24.68m to shareholders through a share buyback and special dividend. Our sum-of-the-parts valuation of Gemfields totals ZAR4.91/share (before taking into account any impact of the planned share buyback).
The coloured gemstone market is significantly smaller than the world diamond market at US$2–3bn in rough gemstone production per annum, putting Gemfields current market share at just under 10% of world supply. Per carat prices for emeralds and rubies can exceed white diamond prices and while firm data on the fragmented coloured gemstone market are limited, all available evidence including the trend in coloured gemstone prices at auctions points to increased demand and a strongly growing market (with some commentators seeing total market sales growth of >20% pa). We note that FY17 numbers below are based on five months post the Pallinghurst/Gemfields transaction.