Gemfields Group Ltd reported on Monday it is suspending mining its the emerald mine in Zambia, shelving planned capital expenditure at its ruby development assets in northern Mozambique, and deciding to sell its gold project.

The London-headquartered gemstones miner and marketer said the measures are part of its plan to cut costs and streamline business amid challenging trading conditions.

In London early Monday, Gemfields share fell 9.1% to 6.50 pence in response, while they were down 3.2% to R 1.53 in Johannesburg.

The gemstones group has recently reported poor auction results due to oversupply of Zambian emeralds at discounted prices, lower production of premium rubies at Montepuez Ruby Mining Ltda in Mozambique, and a weaker luxury and gemstone market generally, given economic difficulties in China and geopolitical turbulence.

Earlier this month, Gemfields said it generated revenue of $46.2 million at a mixed-quality rough ruby auction held between November 25 and December 11. This was down by about one third from revenue of $69.5 million reported around the same period in 2023. At a ruby auction in June 2024, $68.7 million was recorded.

Last month, Gemfields recorded emerald revenue of $16.1 million at the second auction in 2024 that took place between November 4 and 21. For May 13 to 30, it generated revenue of $35.0 million. In an auction in May and June 2023, revenue was $43.7 million.

The company indicated on Monday it continues to closely monitor its working capital as it ‘navigates the prevailing challenges’.

To reduce costs, Gemfields is suspending all mining at Kagem Mining Ltd, the emerald mine in Zambia in which it owns 75% interest, for a period expected to be up six months. Kagem will focus on processing ore from its significant ore stockpile utilising the recently upgraded processing plant, the group said.

Gemfields also said it is halting all non-essential spend and suspending planned capital expenditure at its ruby development assets in northern Mozambique, namely Megaruma Mining Ltda and Campos De Joia Ltda.

Eastern Ruby Mining will continue core developmental work, but will delay the capital expenditure associated with its originally planned processing plant, it said

In addition, Gemfields said it is halting operations at Nairoto Resources Ltda, the gold project situated north of Montepuez Ruby Mining and seeking potential buyers.

It is also assessing strategic options around Faberge, its luxury brand.

Gemfields said it faces a challenge in Mozambique due to ongoing civil unrest and associated supply chain and logistics interruptions.

While mining operations at Montepuez Ruby Mining have thus far remained unaffected, the overall operating risk has increased, it warned.

Gemfields said the construction of the second ruby processing plant at Montepuez Ruby Mining continued as it seeks to increase premium ruby production and deliver additional revenue for its by the end of 2025.

Construction remains materially on budget and on schedule for completion by the end of the second half of 2025.

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