Gemfields Resources reported Monday that it earned no revenue in fiscal 2008, ended in June, compared to earnings of $1.8 million in 2007. The mining and exploration company also reported a loss of $30.2 million for the year, compared to a loss of $7.2 million in fiscal 2007.
In addition, the London-based company said in its regulatory statement that it will suspend or end much of its mining and exploration operations to focus on the Kagem Emerald Mine in Zambia and to continue its plan to consolidate the emerald industry with a mine-to-market emerald initiative that originates in Kagem.
Gemfields acquired a 75 percent controlling interest of the emerald mine in early June. Since that time it said in its statement that it has taken a number of steps to improve the mine’s efficiency, which includes equipment upgrades and management changes. What the company hasn’t done yet is sold emeralds yet, choosing to build up its stock of the gemstone.
In August, Gemfields opened a cutting and polishing facility in Jaipur, India, which is cutting and processing higher quality emeralds from Kagem.
In September, Fabergé Ltd., granted Gemfields aworldwide and exclusive 15 year license to use the Fabergé brand name in respect of colored gemstones (excluding diamonds). Sean Gilbertson, Gemfields chief executive officer (pictured), previously told JCK that it plans to supply Fabergé with emeralds from the Kagem mine.
Gemfields said in its regulatory statement that its strategy of “integrating the supply chain and improving the marketing of colored gemstones during the coming year … will increase the selling prices achieved for colored gemstones significantly therefore enhancing Gemfields’ margins.”
Gemfields other mines where it has suspended or ceased operations, include:
* Jagoda Pink Tourmaline Mine
Gemfields said its option to acquire the Jagoda mine in Zambia expired on March 31 after exploration “proved inconclusive as to whether it would be possible to establish a commercially viable operation at the mine.” The company therefore decided not to exercise the option and the $100,000 paid for it has been written off in the financial statements.
* The Mbuva-Chibolele Emerald Mine
The company, which owns 100 percent of the Zambian mine, suspended operations there but it intends to return to the site “at some stage in the future” when its overall marketing strategy for emeralds may make the mine profitable.
* Kamakanga Emerald Mine and Ndola Rural Emerald Restricted Area prospecting licenses
With the focus on Kagem for both operations and exploration, Gemfields decided to fully write off the Kamakanga Mine in Zambia and the NRERA prospecting licenses.
* Kariba Amethyst Mine
Gemfields owns a 50 percent stake in Kariba. Production at Zambian mine has continued in fiscal 2008 although at a lower rate than previous years. A privatization agreement to purchase an additional 26 percent remains unsigned by the Government of Zambia. Gemfields said it “has requested an explanation regarding the delay and will make a decision on Kariba’s future once this has been received.”
Gemfields also made a hostile takeover bid for Tanzanite One Ltd., which is the world’s major supplier of Tanzanite. The bid was removed when the Tanzanite One board issued 83.74 million “B” stock shares in a limited offering. This was to ensure that if any offer were made for TanzaniteOne, it had to be extended to all the issued shares. Gemfields said in its statement that it will has no intention to revise its offer.
However, the bidding war may not be over as an entity holding the shares of Mike Nunn, Tanzanite One’s founder and its largest shareholder, has propose dismissing most of the company’s board because of the way it handled Gemfields hostile bid, charging that the B share scheme violated South African exchange control laws.
Gemfields, which remains one of Tanzanite One’s largest shareholders, reportedly said it would support the proposed board changes.
Tanzanite One reportedly dismissed the allegations that it broke South African law.