Gemfields Group Ltd reported on Monday it had slashed its dividend after profit dived due to a write-down on its platinum group metals investment and the withdrawal of emerald auction.

The London-headquartered gemstones producer saw its pretax profit plunge 86% to $16.6 million in 2023 from $114.7 million in 2022.

Revenue fell 23% to $262.0 million from $341.1 million.

Production of gemstones in the premium quality category had been weaker at both its 75%-owned Kagem emerald mine in Zambia and at its 75%-held Montepuez Ruby Mining Ltda in Mozambique. The company withdrew one auction of higher quality emeralds in November.

Revenue at Kagem dwindled 40% to $89.9 million from $148.6 million, while Montepuez reported a 9.2% decline in top-line to $151.4 million from $166.7 million.

Also weighing on financial performance, Gemfields booked unrealised fair value losses on unlisted equity instruments amounting to $28.0 million, down sharply from $5.2 million loss a year earlier.

These losses are related to its stake of 6.5% in Sedibelo Resources Ltd, a producer of platinum group metals in the Bushveld Complex in South Africa.

Gemfields cut its final dividend to 0.857 US cents from 4.125 cents, drawing the payout from its income reserves.

For 2023, loss per share was 0.8 US cents, swung from earnings per share of 4.8 cents, while headline loss per share was 0.9 cents, flipped from headline EPS of 4.8 cents.

‘2023 also saw the start of a period of considerable investment across the group spurred by the position of financial strength prevailing at the end of 2022. We believe that the short-term impact of these investments on our financial performance and position will lead to a stronger and expanded business, particularly at MRM, where construction of a second processing plant - tripling our throughput capacity - is well underway,’ Gemfields Chief Executive Officer Sean Gilbertson said.

Gemfields recorded revenue of $17.1 million at a rough emerald auction held between from March 5 to March 22, 2024, down 19% from $21.2 million at the sale held between Match 6 and March 24, 2023. From August 29 to September 15, rough emerald revenue was $25.5 million.

Going forward, Gemfields said 2024 will continue to see considerable investment across its mining and development operations.

In London, Gemfields shares were down 1.1% at 12.61 pence on Monday morning. But they rose 2.6% in Johannesburg to R 3.13.

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