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. In its results for the year to 31st December 2022 the company reported revenue up 32% and headline earnings per share (HEPS) of 4,8c (US) compared with 4,7c in the previous period. The company said, "In 2022, we generated record revenues at both of our world-class mines, the Kagem emerald mine and Montepuez Ruby Mining (“MRM”), as well as at Fabergé, the prestigious luxury brand. The payment during 2022 of our first and second ever dividends to shareholders marked a major milestone for Gemfields". In a report on the six months to 30th June 2023 the company said, "Strong auction revenues and pricing continue, including the highest ever revenue earned from a Kagem emerald auction in June 2023 - Total auction revenues of USD 145 million, the third highest half-year in Gemfields’ history". 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 a trading statement for the six months to 30th June 2023 the company estimated that HEPS would be 14,9c compared with 57,1c in the previous period. The company said, "Gemfields’ two key operating assets, Kagem and MRM, generated revenues of USD 64.6 million and USD 80.4 million respectively during the six-month period to 30 June 2023 (comparative period: Kagem – USD 85.2 million; MRM – USD 95.6 million)". Technically, the share rose off an island formation and, although volatile, looks to be in a strong new upward trend. The volume traded has improved to the point where it is a viable investment for private investors.