Profile image - Gemfields group, Kagem - 16072019 - JPG

Gemfields Group

JP: GML

ZAR1346.7m market cap

ZAR1.15 last close

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 an investment in Sedibelo Platinum.

Investment summary

For Gemfields, the key impact of COVID-19 is the inability to hold emerald and ruby auctions while customers are unable to travel internationally. The company intends to hold its next auction in Q4. Mining operations were suspended at Kagem and MRM in March and April respectively and we await news as to when production may resume. Gemfields ended 2019 with cash of US$78.2m and net cash of US$25.4m (up from net cash of US$9.8m at the end of 2018) providing a strong balance sheet backdrop to support the company through the current climate.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2018A 206.1 58.9 (22.5) (2.6) N/A N/A
2019A 216.2 80.9 55.9 1.3 5.2 N/A
2020E 62.1 (10.2) (38.0) (2.7) N/A N/A
2021E 212.4 54.8 27.4 0.0 N/A N/A
Industry outlook

We have considered three COVID-19 scenarios for Gemfields, looking particularly at the ability to hold auctions in 2020 (but also considering longer-term sales impacts and production and cost impacts including the benefit of weaker local currencies in Zambia and Mozambique). Gemfields remains EBITDA positive this year in our faster recovery and central cases, generating 2020 EBITDA of US$26m and US$11m, respectively (previous forecast US$75m). The slower recovery scenario sees a 2020 EBITDA loss of US$14m. We see Gemfields ending 2020 with net cash of US$15m in the faster recovery scenario, net cash of US$4m in our central case and net debt of US$21m in the slower recovery scenario.

Last updated on 11/08/2020
Share price graph
Balance sheet
Forecast net debt (US$m) 0
Forecast gearing ratio (%) 0
Price performance
%
1m
3m
12m
Actual (19.6) (17.9) (29.0)
Relative* (22.0) (27.9) (31.0)
52-week high/low ZAR2.1/ZAR1.1
*% relative to local index
Key management
Martin Tolcher Chairman
Sean Gilbertson CEO
David Lovett CFO