Gemfields Reports Challenging 2024 Results, Announces Proposed Rights Issue
Why we think this is bad
The RNS indicates that Gemfields faced significant challenges in 2024, with a 19% decline in revenue, a drop in EBITDA margin from 31.7% to 19.2%, and substantial impairment charges leading to a net loss of $100.8 million. The company is also seeking a $30 million rights issue to address a near-term working capital shortfall, further suggesting a difficult operating environment. While the company remains optimistic about its long-term prospects, the current financial performance and the need for additional financing point to a negative sentiment.
Key Points
- Total annual revenue declined 19% to $213 million
- EBITDA margin dropped from 31.7% to 19.2%
- Significant impairment charges led to a net loss of $100.8 million
- Company seeking shareholder approval for a $30 million rights issue
Summary
Gemfields Group Limited, a world-leading responsible miner and marketer of coloured gemstones, has released its audited 2024 Annual Report. The key highlights include:
- Total annual revenue of $213 million, down from $262 million in 2023, due to a "disturbed market for emeralds in H2 2024" and "lower production of premium rubies at MRM".
- EBITDA margin declined from 31.7% in 2023 to 19.2% in 2024.
- Significant impairment charges, primarily at the Kagem emerald mine and the MML and Nairoto projects, leading to a net loss of $100.8 million.
- The company is seeking shareholder approval for a $30 million rights issue, which will be fully underwritten by its two largest shareholders, to address a near-term working capital shortfall.
The company remains optimistic about its long-term prospects, with the construction of the second processing plant in Mozambique on track and the coloured gemstone market expected to recover. However, the current financial performance and the need for additional financing suggest a challenging operating environment.