Gemfields Group Limited · JSE:GML
Gemfields — H1 2020 Earnings Presentation
54 slides from Gemfields's earnings presentation, September 2020
Slide 1: Interim Results Presentation – September 2020
Gemfields Group INTERIM RESULTS PRESENTATION – SEPTEMBER 2020 Responsibly sourced Zambian emeralds and Mozambican rubies. Championing transparency and trust in the coloured gemstone industry. A Story in Every Gemstone | Discover more about Gemfields and Fabergé at Gemfields.com
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer This document, which has been compiled by Gemfields Group Limited (the “Company”), comprises the written materials/slides for a presentation concerning the Company, including its business, results of operations and prospects. This document does not constitute or form
Slide 3: Our Principal Focus
Gemfields Group Limited OUR PRINCIPAL FOCUS EMERALDS RUBIES FABERGÉ (ZAMBIA) (MOZAMBIQUE) 2 3 SAPPHIRES (?) 18/09/2020 www.gemfields.com 3
Slide 4: Company Highlights
Gemfields Group Limited COMPANY HIGHLIGHTS 1. Gemfields is a world-leading miner and supplier of responsibly sourced precious coloured gemstones 2. Key assets are: a. Montepuez Ruby Mine in Mozambique (75%) b. Kagem Emerald Mine in Zambia (75%) and c. Fabergé (100%) 3. Gemfields is the market leader
Slide 5: Group Structure Diagram (Simplified)
Gemfields Group Limited GROUP STRUCTURE DIAGRAM (SIMPLIFIED) 18/09/2020 www.gemfields.com 5
Slide 6: Financial Headline Figures for Six Months Ending 30 June 2020
Gemfields Group Limited FINANCIAL HEADLINE FIGURES FOR THE SIX MONTHS ENDING 30 JUNE 2020 1. Earnings before interest, taxation, depreciation and amortisation. 2. Free Cash Flow is calculated as cashflow from operating activities less capital expenditure and tax paid. Free Cash Flow is calculated pr
Slide 7: Segmental Statement of Cash Flows
Gemfields Group Limited SEGMENTAL STATEMENT OF CASH FLOWS – (EBITDA / FREE CASH FLOW) FOR THE SIX MONTHS ENDING 30 JUNE 2020 1 Excluding share-based payments and inventory impairments. 2 Includes movements relating to inventory purchases and excludes VAT refunds. 18/09/2020 www.gemfields.com 7
Slide 8: Segmental Income Statement
Gemfields Group Limited SEGMENTAL INCOME STATEMENT FOR THE SIX MONTHS ENDING 30 JUNE 2020 1 Kagem held one commercial quality auction during 2020. MRM did not hold an auction during the period. 2 Revenues have been recognised at one point in time, as control passes to the customer on the date at whi
Slide 9: Segmental Balance Sheet at June 2020
Gemfields Group Limited SEGMENTAL BALANCE SHEET AT 30 JUNE 2020 18/09/2020 www.gemfields.com 9
Slide 10: Net Cash/(Debt) Profile
Gemfields Group Limited NET CASH/(DEBT) PROFILE, USD’000 At 28 August 2020 Cash – USD 46.4 million USD'000 Debt – USD 49.1 million _ 80,000 Net cash/(debt) – USD (2.7) million (plus Auction Receivables – USD 8.3 million) 60,000 40,000 20,000 (20,000) (40,000) 30-Jun-10 30-Jun-11 30-Jun-12 30-Jun-13
Slide 11: Gross Debt Profile
Gemfields Group Limited GROSS DEBT PROFILE, USD’000 May 2018 90,000 PEAK: USD 85.6 million • USD 35 million Kagem Mining Limited 80,000 • USD 32.8 million Montepuez Ruby Mining 70,000 • USD 17.8 million Faberge (UK) Ltd 60,000 50,000 USD '000 40,000 30,000 20,000 10,000 0 Jun-18 Oct-18 Dec-18 Feb-19
Slide 12: Operations – Kagem, MRM & Fabergé
Operations – Kagem, MRM & Fabergé Responsibly sourced Zambian emeralds and Mozambican rubies. Working with conservation partners to protect Africa’s wildlife and biodiversity. A Story in Every Gemstone | Discover more about Gemfields and Fabergé at Gemfields.com
Slide 13: CY2020 Production and Mining KPIs
Gemfields Group Limited CY2020 PRODUCTION AND MINING KEY PERFORMANCE INDICATORS (KPIs) MONTEPUEZ RUBY MINING YTD2020 PRODUCTION AND MINING KPIs UNITS KAGEM MINING LTD LDA Premium Emerald/ Premium Ruby Production carats’000 134 29 Total Gemstone Production carats’000 9,383 1,254 Ore Processed tonnes’
Slide 14: Competent Persons Reports
Gemfields Group Limited COMPETENT PERSONS REPORTS KAGEM MRM Effective Date 1 July 2019 1 July 2019 Competent Person SRK Consulting SRK Consulting Reporting code - mineral resources and mineral reserves JORC Code (2012 edition) JORC Code (2012 edition) Net Present Value (post-tax) USD 600 million USD
Slide 15: Key Revenue Drivers
0 50 100 150 200 Jun-10 Sep-10 18/09/2020 Dec-10 Mar-11 Jun-11 Sep-11 KEY REVENUE DRIVERS Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Gemfields Group Limited Jun-13 Sep-13 Dec-13 Mar-14 Kagem Auction Revenues Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 www.gemfields.com Dec-15 MRM Auction Revenues Mar-1
Slide 16: Introduction to Coloured Gemstones Market
Gemfields Group Limited INTRODUCTION TO COLOURED GEMSTONES MARKET • Since 2009, Gemfields has held 48 auctions (35 of Zambian emeralds & 13 of Mozambican rubies), surpassing USD 1.2 billion in combined auction revenue. • Sales of coloured gemstones continue to outperform the wider jewellery market.
Slide 17: World Record Auction Prices
World Record Auction Prices INTRODUCTION TO COLOURED GEMSTONES Auction World Records (USD per carat) 1. The prices of rubies and emeralds are 1,400,000 determined by many factors, including seven Cs: a. Colour (most important) 1,200,000 b. Clarity c. Cut d. Carat 1,000,000 e. Certification f. Confid
Slide 18: Kagem Mining Limited, Zambia
Kagem Mining Limited, Zambia EMERALDS Responsibly sourced Zambian emeralds and Mozambican rubies. Empowering local communities by establishing schools, education initiatives and scholarships. A Story in Every Gemstone | Discover more about Gemfields and Fabergé at Gemfields.com
Slide 19: Kagem Emerald Mine, Zambia Overview
Kagem Emerald Mine, Zambia OVERVIEW • Kagem is an emerald mine in the “Copperbelt” region of northern Zambia, estimated to produce around a quarter of the world’s emeralds. It has been operating for over 20 years. • It is the world’s single-largest producing emerald mine • Gemfields controls and own
Slide 20: Kagem Emerald Auctions Revenue
Kagem Emerald Auctions Revenue ZAMBIA KAGEM EMERALD TOTAL AUCTION SALES (USD MILLION) CUMULATIVE REVENUE IS USD 647 MILLION FROM 35 AUCTIONS 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 - Feb-20 Feb-19 Jul-09 Jul-10 Jul-13 Feb-18 Aug-19 Jul-11 Feb-14 Feb-15 Sep-15 Apr-16 Sep-16 Feb-17 Aug-18 Apr-13 May-19
Slide 21: Kagem Emerald Mine Performance
Kagem Emerald Mine Performance ZAMBIA KAGEM (LAST 12 MONTHS) GEMSTONE PRODUCTION – EMERALD + BERYL (CARATS) 50,000,000 Covid-19 – suspension of mining operations 45,000,000 40,000,000 35,000,000 Gemfields agreed to acquire 75% 30,000,000 of Kagem in December 2007. 25,000,000 20,000,000 15,000,000 10
Slide 22: Kagem Emerald Mine Performance
Kagem Emerald Mine Performance ZAMBIA KAGEM MONTHLY GEMSTONE PRODUCTION - EMERALD+BERYL (CARATS) 6,000,000 Covid-19 – suspension of mining operations 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Beryl Emerald Premium Emerald 18/09/2020 www.gemfields.com 22
Slide 23: Kagem Emerald Mine Performance
Kagem Emerald Mine Performance ZAMBIA KAGEM (LAST 12 MONTHS) PREMIUM EMERALD PRODUCTION (CARATS) 1,400,000 • The key value driver for Kagem is the 1,200,000 production and sale of Conclusion of a series of material premium emeralds. changes to the grading system. 1,000,000 • Increased emphasis has b
Slide 24: Kagem Emerald Mine Performance
Kagem Emerald Mine Performance ZAMBIA KAGEM CUMULATIVE PREMIUM EMERALD (PE) PRODUCTION (CARATS) BY CALENDAR YEAR 240,000 220,000 200,000 180,000 160,000 Covid-19 – suspension of mining operations (30 March 2020) 133,862 carats 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Actual PE for 2020
Slide 25: Kagem Emerald Mine Performance
Kagem Emerald Mine Performance ZAMBIA KAGEM CUMULATIVE EMERALD (E) PRODUCTION (CARATS) BY CALENDAR YEAR 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 Covid-19 – suspension of mining operations (30 March 2020) 4,000,000 2,996,237 carats 2,000,000 0 Actual E for 2020 Budget E for 2020 Actual E
Slide 26: Kagem Emerald Mine Performance
Kagem Emerald Mine Performance ZAMBIA (‘REACTION ZONE’ = ORE) KAGEM TOTAL OPERATING COSTS, LAST 12 MONTHS (ACTUAL CASH COST BASIS) USD’000 (UNAUDITED) 50,000 40,000 30,000 20,000 10,000 0 KAGEM LAST 12 MONTHS ROCK HANDLING (TONNES) 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,0
Slide 27: Kagem Emerald Mine Performance
Kagem Emerald Mine Performance ZAMBIA KAGEM LAST 12 MONTH UNIT ROCK HANDLING COSTS (USD / TONNE OF ROCK MINED) 6.0 5.0 4.0 3.0 2.0 1.0 0.0 18/09/2020 www.gemfields.com 27
Slide 28: Kagem Emerald Mine Performance
Kagem Emerald Mine Performance ZAMBIA KAGEM UNIT COST PER PREMIUM CARAT (LAST 12 MONTHS in USD / carat, CASH COST BASIS) 1,000 900 800 700 600 500 400 300 200 100 0 KAGEM UNIT COST PER OVERALL CARAT (LAST 12 MONTHS in USD / carat, CASH COST BASIS) 2.5 2.0 1.5 1.0 0.5 0.0 18/09/2020 www.gemfields.com
Slide 29: Kagem Emerald Mine Performance
Kagem Emerald Mine Performance ZAMBIA KAGEM CAPITAL EXPENDITURE (LAST 12 MONTHS, ACTUAL CASH COST BASIS in USD’000, UNAUDITED) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 18/09/2020 www.gemfields.com 29
Slide 30: Kagem Emerald Mine Performance
Kagem Emerald Mine Performance ZAMBIA KAGEM TOTAL MONTHLY OPERATING COSTS (ACTUAL CASH COST BASIS) USD '000 (UNAUDITED) 4,700 4,200 3,700 3,200 2,700 2,200 1,700 1,200 700 18/09/2020 www.gemfields.com 30
Slide 31: Montepuez Ruby Mining Limitada, Mozambique
Montepuez Ruby Mining Limitada, Mozambique RUBIES Responsibly sourced Zambian emeralds and Mozambican rubies. Creating sustainable livelihoods through local development programs. A Story in Every Gemstone | Discover more about Gemfields and Fabergé at Gemfields.com
Slide 32: Montepuez Ruby Mining, Mozambique Overview
Montepuez Ruby Mining, Mozambique OVERVIEW • The Montepuez ruby deposit is located in the northeast of Mozambique within the Cabo Delgado Province, believed to be the most significant recently discovered ruby deposit in the world, covering an area of 34,966 hectares. • Montepuez Ruby Mining Limitada
Slide 33: Montepuez Ruby Mining Performance
Montepuez Ruby Mining Performance MOZAMBIQUE MONTEPUEZ ROUGH RUBY TOTAL AUCTION SALES (USD MILLION) CUMULATIVE REVENUE IS USD 584 MILLION 80.0 71.8 71.5 70.0 60.0 54.8 55.0 55.3 50.0 50.0 43.3 44.3 40.0 33.5 30.5 29.3 28.8 30.0 20.0 15.9 10.0 0.0 Jun-14 Dec-14 Apr-15 Jun-15 Dec-15 Jun-16 Dec-16 Jun-
Slide 34: Montepuez Ruby Mining Performance
Montepuez Ruby Mining Performance MOZAMBIQUE MONTEPUEZ GEMSTONE PRODUCTION (LAST 12 MONTHS, in CARATS) (PRODUCTION EXCLUDES SAPPHIRE AND LOW SAPPHIRE PRODUCTION) 12,000,000 10,000,000 8,000,000 6,000,000 Covid-19 – suspension of mining operations 4,000,000 2,000,000 0 Low Sapphire Sapphire Corundum
Slide 35: Montepuez Ruby Mining Performance
Montepuez Ruby Mining Performance MOZAMBIQUE MONTEPUEZ PREMIUM RUBY PRODUCTION (LAST 12 MONTHS, in CARATS) 140,000 Covid-19 – suspension of • The key value driver mining operations for MRM is the 120,000 production and sale of premium rubies. 100,000 • Increased emphasis has been placed on 80,000 di
Slide 36: Montepuez Ruby Mining Performance
Montepuez Ruby Mining Performance MOZAMBIQUE MRM CUMULATIVE PREMIUM RUBY (PR) PRODUCTION (CARATS) BY CALENDAR YEAR 140,000 120,000 100,000 80,000 60,000 40,000 28,653 carats 20,000 Covid-19 – suspension of mining operations (April 2020) 0 Actual PR for 2020 Budget PR for 2020 Actual PR for 2019 Actu
Slide 37: Montepuez Ruby Mining Performance
Montepuez Ruby Mining Performance MOZAMBIQUE MRM CUMULATIVE RUBY (R) AND TUMBLE RUBY PRODUCTION (CARATS) BY CALENDAR YEAR 700,000 600,000 500,000 400,000 300,000 200,000 146,369 carats 100,000 Covid-19 – suspension of mining operations (April 2020) 0 Actual TR and R for 2020 Budget TR and R for 2020
Slide 38: Montepuez Ruby Mining Performance
Montepuez Ruby Mining Performance MOZAMBIQUE MONTEPUEZ LAST 12 MONTH OPERATING COSTS (ACTUAL CASH COST BASIS) USD’000 (UNAUDITED) 45,000 40,000 Includes settlement costs relating to claim brought by law firm Leigh Day 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 MONTEPUEZ LAST 12 MONTH ROCK HAN
Slide 39: Montepuez Ruby Mining Performance
Montepuez Ruby Mining Performance MOZAMBIQUE MONTEPUEZ LAST 12 MONTH UNIT ROCK HANDLING COSTS (USD / TONNE OF ROCK MINED) 16 14 12 10 Includes settlement costs relating to claim brought by law firm Leigh Day 8 6 4 2 0 18/09/2020 www.gemfields.com 39
Slide 40: Montepuez Ruby Mining Performance
Montepuez Ruby Mining Performance MOZAMBIQUE MONTEPUEZ MONTHLY TOTAL ROCK HANDLING (TONNES) 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Ore mined Waste mined 18/09/2020 www.gemfields.com 40
Slide 41: Montepuez Ruby Mining Performance
Montepuez Ruby Mining Performance MOZAMBIQUE MONTEPUEZ UNIT COST PER PREMIUM CARAT (LAST 12 MONTHS, in USD/carat, CASH COST BASIS) 600 500 400 300 200 100 0 MONTEPUEZ UNIT COST PER OVERALL CARAT (LAST 12 MONTHS, in USD/carat, CASH COST BASIS) 30.0 25.0 20.0 15.0 10.0 5.0 0.0 18/09/2020 www.gemfields
Slide 42: Montepuez Capex
Montepuez Ruby Mining Performance CAPEX MONTEPUEZ CAPITAL EXPENDITURE (LAST 12 MONTHS, ACTUAL CASH COST BASIS in USD’000, UNAUDITED) 25,000 20,000 15,000 10,000 5,000 0 Major capex projects include the MRM sort house (completed Feb 2019), and initial construction of the resettlement village for 105
Slide 43: Montepuez Operating & Capex Costs
Montepuez Ruby Mining Performance OPERATING & CAPEX COSTS MONTEPUEZ MONTHLY TOTAL CASH OPERATING AND CAPEX COSTS USD '000 (UNAUDITED) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Total (cash) operating cost Capex - Property, Plant and Equipment 18/09/2020 www.gemfields.com 43
Slide 44: Fabergé
Fabergé Responsibly sourced Zambian emeralds and Mozambican rubies. Providing dependable healthcare to remote communities. A Story in Every Gemstone | Discover more about Gemfields and Fabergé at Gemfields.com
Slide 45: Fabergé Overview
OVERVIEW Fabergé is one of the world’s most recognisable luxury brands owned outside of the major luxury conglomerates. It has a well documented and globally respected heritage. The Fabergé brand provides Gemfields with direct access to the coloured gemstone end consumer through directly operated bo
Slide 46: Fabergé Performance
Gemfields Group Limited FABERGÉ PERFORMANCE SALES ORDERS AGREED (LAST 12 MONTHS) OPERATING COSTS (LAST 12 MONTHS) (USD, POST ANY DISCOUNTS, ALL CHANNELS) (USD) 20,000,000 20,000,000 18,000,000 18,000,000 16,000,000 16,000,000 14,000,000 14,000,000 12,000,000 12,000,000 10,000,000 10,000,000 8,000,00
Slide 47: Fabergé Performance
Gemfields Group Limited FABERGÉ PERFORMANCE NO. OF PIECES SOLD, LAST 12 MONTHS NO. OF SALES TRANSACTIONS, LAST 12 MONTHS (NO. OF PIECES, ALL CHANNELS) (NO. OF SALES TRANSACTIONS, ALL CHANNELS) 2,750 1,200 2,500 2,250 1,000 2,000 800 1,750 1,500 600 1,250 1,000 400 750 500 200 250 0 0 Feb-11 Feb-12 F
Slide 48: Fabergé Performance
0 120 150 180 210 30 60 90 Oct-09 Jan-10 18/09/2020 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 FABERGÉ PERFORMANCE Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Gemfields Group Limited Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Total Sales Transactions Agreed with Retail Customers Jul-14 Oct-14 Jan-15 (# of Sale
Slide 49: Fabergé Funding Requirement
Gemfields Group Limited FABERGÉ FUNDING REQUIREMENT FUNDING REQUIRED BY FABERGÉ (LAST 12 MONTHS, in USD) $25,000,000 2015 The focus at Fabergé remains $23,650,000 the reduction of its $22,500,000 dependency on funding from Gemfields via careful cost $20,000,000 control and revenue growth. 2014 $14,1
Slide 50: COVID-19 and Revenue Opportunities
COVID-19 and Revenue Opportunities Responsibly sourced Zambian emeralds and Mozambican rubies. Enhancing environmental sustainability by regenerating land and replanting native flora. A Story in Every Gemstone | Discover more about Gemfields and Fabergé at Gemfields.com
Slide 51: COVID-19 - Alternative Revenue Streams
Gemfields Group Limited COVID-19 - ALTERNATIVE REVENUE STREAMS • Principal operations at Kagem were suspended from 30 March 2020 and are expected to remain suspended until such time that a successful auction is held. • All but critical operations at MRM were suspended from 22 April 2020 and are expe
Slide 52: Group Cash Forecast – No Auction Revenue Scenario
Gemfields Group Limited GROUP CASH FORECAST – NO AUCTION REVENUE SCENARIO 70.00 60.00 56.3 52.7 53.3 48.7 52.3 50.00 46.6 45.8 42.9 40.00 40.0 USD million 34.3 30.00 28.8 22.8 20.00 17.1 13.3 10.00 8.4 3.2 - (1.0) (10.00) May-21 Sep-20 Jul-21 Sep-21 Jul-20 Mar-21 Jun-21 Jun-20 Dec-20 Aug-20 Oct-20 N
Slide 53: Marketing, Selling and Advertising Costs
Gemfields Group Limited MARKETING, SELLING AND ADVERTISING COSTS (ANNUAL, EXCLUDING FABERGÉ) IN USD’000 12,000 10,000 8,000 USD'000 6,000 4,000 1 Jan - 30 Jun 2020 2,000 - 2012 2013 2014 2015 2016 2017 2018 2019 2020 18/09/2020 www.gemfields.com 53
Slide 54: C A T H E D R A L P I A Z Z
1 C A T H E D R A L P I A Z Z A L O N D O N S W 1 E 5 B P U N I T E D K I N G D O M T : + 4 4 2 0 7 5 1 8 3 4 1 9