Gemfields Group (GML) H2 2024 earnings summary

Executive summary

• 2024 was marked by revenue dropping to $213 million, cash constraints, and impairments due to multiple challenges, prompting a proposed $30 million rights issue to address near-term working capital and ensure completion of the second processing plant at Montepuez Ruby Mine (PP2).

• Major issues included oversupply of Zambian emeralds, undersupply of premium rubies, luxury market softness, civil unrest in Mozambique, new tariffs, and a now-reversed Zambian export duty.

• Completion of MRM's PP2 in June 2025 is expected to triple ruby processing capacity and deliver new revenue streams in late H2 2025.

Financial highlights

• Revenue fell to $213 million, with Kagem contributing $78.7 million, MRM $117.2 million, and Fabergé $13.4 million.

• EBITDA dropped to $41 million, significantly lower than 2023 and four times less than 2022.

• Free cash flow was negative $58 million, reflecting heavy investment.

• Net debt at year-end was $80.5 million, with $101.3 million drawn debt and expectations to reach $100 million net debt in 2025.

• Adjusted EPS was negative at (1.8) cents, compared to 1.5 cents in 2023.

Outlook and guidance

• Cost-cutting and business simplification are expected to reduce costs by around 20% in 2025.

• CapEx and development spend will be significantly lower in 2025, with $21 million due to Consulmet for PP2 and total CapEx projected at $50 million.

• Revenue assumptions for 2025 are conservative for Kagem and based on a three-year average for MRM.

• The rights issue is critical for working capital and PP2 completion, with benefits expected in the second half of 2025.

• First revenues from PP2 anticipated in late H2 2025.