Our opinion on the current state of GML

The Gemfields Group (GML) (previously Palinghurst Group) is a mining group that has two major projects: (1) Kagem, the world's largest producer of emeralds (in Zambia) and rubies (at Montepuez in Mozambique); (2) Jupiter Mines, a South African producer of manganese. The group is led by Brian Gilbertson, previously the CEO of BHP Billiton. Gilbertson identified that the semi-precious stones market was under-developed and offered an opportunity for consolidation and professional management - hence the Gemfield's operation. Jupiter was listed on the Australian Stock Exchange (ASX) in April of 2018 and in the process Gemfields disposed of 60% of that company in line with its decision to cease being a diversified mining company and to focus purely on gemstones. The share is fairly well-traded with approximately R,5m worth of shares changing hands on average every day. Like all commodity shares it is risky and its fortunes depend on the prices of emeralds and rubies on the international market - as well as the risks associated with mining in third-world countries. It appears to have found a niche for itself where there is very limited competition, and it should do well as the world economy recovers. On 24th October 2022 the company announced that operations have resumed at MRM and key personnel had returned following an insurgent attack on a mine about 12km away on 20th October 2022. On 7th August 2023 the company announced that it would construct a new processing plant that would triple its output from the Montepuez ruby mine. In its results for the six months to 30th June 2023 the company reported revenue of $153,6m compared with $193,2m in the previous period. Headline earnings per share (HEPS) were 0,8c (US) compared with 3,7c in the previous period. The company reported, "Free cash flow before working capital movements for the six months ended 30 June 2023 of USD 25.2 million. Strong balance sheet with net cash balance at 30 June 2023 of USD 62 million, and USD 63.8 million of auction receivables now 97% collected". Technically, the share rose off an island formation and entered a strong new upward trend which lasted until July 2023 when the trendline was broken. We recommend waiting until a new upward trend is established.