Gemfields Group Limited · JSE:GML
Gemfields — H1 FY2016 Earnings Presentation
35 slides from Gemfields's earnings presentation, Feb 22, 2016
Slide 1: A leading supplier of responsibly sourced coloured gemstones
A leading supplier of responsibly sourced coloured gemstones Interim results for the six months ended 31 December 2015 22 February 2016 Gemfields Plc
Slide 2: Legal disclaimer
Legal disclaimer This document, which has been issued by Gemfields Plc (the “Company”), comprises the This document does not and is not intended to constitute an offer of securities for written materials/slides for a presentation concerning the Company, including its business, distribution or sale i
Slide 3: Business Model
Business Model Mine and Market Develop, mine, deliver • A leading supplier of responsibly sourced coloured gemstones, and one of the world’s largest emerald, ruby and amethyst producers • Experienced and well-regarded management team with a proven track record of delivery • Unrivalled expertise in c
Slide 4: Financial highlights
Interim results for the six months ended 31 December 2015 Financial highlights Gemfields Plc
Slide 5: Financial highlights
Financial highlights Interim results for the six months ended 31 December 2015 Revenues US$ EBITDA US$ Gross profit margin 94.0m 35.6m 49% EBITDA margin 2014: 103.4 million (‘m’) 2014: 61.7m 38% Net profit after tax US$ Est. cost of inventory US$ Cash on hand US$ 8.2m 107.0m 1 24.9m 2014: 23.2m 30 J
Slide 6: Financial highlights - Consolidated income statement
Financial highlights - Consolidated income statement Six months Six months ended 31 ended 31 % change In thousands of US$ December 2015 December 2014 for the period Revenue 94,025 103,388 (9.1) Cost of sales (47,649) (35,628) 33.7 Gross profit 46,376 67,760 (31.6) Other income 164 566 (71.0) Selling
Slide 7: Revenue analysis – three auctions held during the Period
Revenue analysis – three auctions held during the Period Emeralds Higher quality rough emerald and beryl Rubies – Singapore Higher and medium quality rough ruby • September 2015 aggregate revenues of – Singapore US$34.7m • December 2015 aggregate revenues of • Average price of US$58.42 per carat (‘/
Slide 8: Financial highlights – Cost of sales and inventory breakdown
Financial highlights – Cost of sales and inventory breakdown 26,804 US$47.6m US$107.0m1 Total cost of sales H1 FY 2016 Total inventory as at December 2015 US$5,774 5,774 Total mining and production cost Rough, cut and US$26,804 23,089 Depreciation and US$40,598 US$66,379 polished gemstones 15,071 26
Slide 9: Mine cost analysis for Kagem, Zambia (75% interest)
Mine cost analysis for Kagem, Zambia (75% interest) Six months production Average emerald and beryl of emerald and beryl grade for the period • Fourth high wall pushback 15.7 mct 2014: 12.1mct 254ct/t 2014: 202 carats per tonne (‘ct/t’) was completed in September 2015, exposed ore available to mine
Slide 10: Mine cost analysis for Montepuez, Mozambique (75% interest)
Mine cost analysis for Montepuez, Mozambique (75% interest) Six months production Average ruby and • Medium term focus on of ruby and corundum corundum grade for the lower grade but 2.1mct period significantly higher value 2014: 6.3mct 15 ct/t 2014: 37ct/t alluvial ore resources, delivering a 341% i
Slide 11: Operational highlights
Interim Results Operational highlights Gemfields Plc
Slide 12: Kagem mine
Kagem mine Believed to be the world’s single largest producing emerald mine (75% ownership) H1 2016 highlights FY 2016 Outlook • Guidance of 25-30mct of emerald and beryl production for FY • 15.7mct of emerald and beryl produced for the period (2014: 2016 12.1mct) with an average grade of 254ct/t (2
Slide 13: Montepuez mine
Montepuez mine Considered to be the world’s single largest producing ruby and corundum deposit (75% ownership) H1 2016 highlights FY 2016 outlook • 2.1mct of ruby and corundum produced (2014: 6.3mct), with an • Maintaining guidance of approximately 8mct of ruby and corundum for FY 2016 average grade
Slide 14: Investment in new projects and trading operations
Investment in new projects and trading operations • Continue strategy of targeted low-cost/high-value acquisitions and low capital intensity development • Geographic and product diversification through investment in exploration and development of existing assets in: • Colombia – Executed binding but
Slide 15: Fabergé influencing the position of coloured gemstones
Fabergé influencing the position of coloured gemstones (100% ownership) • Value of realised sales during the period increased by 70% when compared with the same period in 2014 • Losses before interest, tax, depreciation and amortisation reduced by 21% • Fabergé will be exhibiting at the Doha Jewelle
Slide 16: Outlook
Outlook Gemfields Plc
Slide 17: Significant growth opportunities
Significant growth opportunities Mining Kagem New Projects • Maintain target of 25-30mct of emerald and beryl per annum for • Geographical diversification through investment in exploration FY2016 with potential of rising to 40-45mct following new LoM and development assets in other jurisdictions suc
Slide 18: Rough sales and marketing
Rough sales and marketing Gemfields Plc
Slide 19: Market overview
Market overview Gemval Relative Index: Gemstone Historical Values 2005-2015 Coloured gemstone market increased 26% in 2014 and continued to 260 Emeralds Rubies expand in H2 2015: 240 Sapphires Diamonds Relative index 220 • Gemfields rough emerald and ruby auction results indicate a considerable 200
Slide 20: Gemstone production
Gemstone production Emeralds, rubies and sapphire production • Zambia believed to have become the world’s leading producer of rough emeralds and beryl in 2014 by export value Value of emerald exports per producing region – 2014 • Kagem’s contribution c. 70% of Zambia’s known production • Gemfields’
Slide 21: Providing a consistent supply
Providing a consistent supply A key component within Gemfields’ success and significant future • Proprietary rough grading platform and auction process for rough emeralds, rubies and amethysts. Prior to Gemfields’ strategy there was no formal process in place with mined production largely being sold
Slide 22: Targeted marketing, incl. Fabergé
Targeted marketing, incl. Fabergé Rejuvenating demand • The global emerald, ruby and sapphire market has grown 213% since 2009 (US$1.6bn) and reached US$5bn in 2014 • Gemfields spend on marketing (including total Faberge spend), exploration and new projects stands at around 12% of revenues • Fabergé
Slide 23: Committed to sustainability
Committed to sustainability Gemfields’ approach: Cause-related initiatives: Addressing sustainability at our operations; societal, Gemfields is committed to managing corporate environmental, health & safety, human rights aspects but responsibility and sustainable development across the also, crucial
Slide 24: Appendix
Appendix Gemfields Plc
Slide 25: Rough emerald and beryl sales / Rough ruby and corundum sales
Rough emerald and beryl sales Rough ruby and corundum sales Higher Quality Emerald Lower Quality Emerald Rubies Total sales realised at auction (US$m) Total sales realised at auction (US$m) Total sales realised at auction (US$m) 19.2 16.4 36.5 34.9 15.2 15.5 34.7 14.5 31.6 31.5 43.3 26.2 26.8 11 10
Slide 26: Locations
Locations Global gemstone deposits and Gemfields’ locations 26 Gemfields Plc Interim results for the six months ended 31 December 2015 Fabergé retail outlets and wholesale partners not shown
Slide 27: Kagem JORC Resource and Reserves update
Kagem JORC Resource and Reserves update • Measured, Indicated and Inferred Mineral Resource of 1.8bct of emerald and beryl at an in-situ grade of Total sales Beryl-II Beryl-I Opex 000 cts US$/ct 281ct/t 50,000 Emerald Premium Emerald 1.4 Opex (RHS) • Open pit mine plan until 2040 45,000 1.2 • Chama
Slide 28: Montepuez JORC Maiden Resource and Reserves
Montepuez JORC Maiden Resource and Reserves • Indicated and Inferred Mineral Resource of 467mct at in-situ ore grade of 62.3ct/t • Projected 21 year LoM producing a total of 432mct over LoM • Projected real cash flow (no discount rate applied) over the LoM of approximately US$2.76 billion Tonnage Gr
Slide 29: Company overview
Company overview Directors and Management Analyst Forecasts Target Price BMO Capital Markets – 4 Jan 2016 90.0p FinnCap – 4 Feb 2016 80.0p Investec Securities – 20 Jan 2016 71.0p JP Morgan Cazenove – 18 Jan 2016 65.0p Macquarie – 23 Sept 2015 120.0p Numis – 17 Oct 2015 85.0p Graham Mascall Ian Hareb
Slide 30: Rough emerald and beryl sales (lower quality)
Rough emerald and beryl sales (lower quality) AUCTION RESULTS MAR ’10 MAR ’11 NOV ’11 JUN ’12 APR ’13 NOV ‘13 AUG’14 FEB ’15 NOV ’15 (LOWER QUALITY) AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION Dates 11-15 Mar ‘10 10-14 Mar ‘11 21-25 Nov ‘11 9-13 Jun ‘12 15-19 Apr ‘13 11-1
Slide 31: Rough emerald and beryl sales (higher quality)
Rough emerald and beryl sales (higher quality) JUL ‘09 NOV ‘09 JUL ‘10 DEC ‘10 JUL ‘11 MAR ‘12 NOV ‘12 JUL ‘13 FEB ‘14 NOV ‘14 SEPT ‘15 AUCTION RESULTS AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION 29 Oct- 31Aug- Dates 20-24 Jul ‘09 23-27 Nov ‘09 19-23 Jul ‘
Slide 32: Rough ruby and corundum auctions
Rough ruby and corundum auctions AUCTION RESULTS JUNE ’14 AUCTION DEC ‘14 AUCTION APRIL ’15 AUCTION JUNE ‘15 AUCTION DEC ‘15 AUCTION (RUBY & CORUNDUM) Dates 12-17 June ‘14 3-8 Dec ‘14 17-22 April ‘15 16-21 June ‘15 14-18 December ‘15 Location Singapore Singapore Jaipur, India Singapore Singapore Qua
Slide 33: Gemfields: Stakeholders
Gemfields: Stakeholders Investors Debt providers Governments Consumer Local communities Retail NGOs Fabergé’s JV Partners stakeholders Governing Employees bodies Buyers Traders 33 Gemfields Plc Interim results for the six months ended 31 December 2015
Slide 34: Investment highlights
Investment highlights IDENTIFYING QUALITY Proven track record of identifying high quality gemstone deposits, with large scale potential DRIVING SUPPLY & IMPORTANTLY DEMAND Promoting and repositioning the industry, alongside other luxury goods. Gemfields is a price-maker, not a price-taker INVESTMENT
Slide 35: Contact us
Contact us 2nd Floor 23 King Street London, SW1Y 6QY United Kingdom Tel: +44 (0)20 7518 3400 Fax: +44 (0) 20 7197 8193 Gemfields Plc