Slide 1: Site visit 6th - 11th December 2016
A leading supplier of responsibly sourced coloured gemstones Site visit 6th - 11th December 2016 Gemfields Plc
Slide 2: Legal disclaimer
Legal disclaimer This document, which has been issued by Gemfields Plc (the “Company”), This document does not and is not intended to constitute an offer of securities for comprises the written materials/slides for a presentation concerning the distribution or sale in the United States or any other
Slide 3: Kagem Emerald Mine
Kagem Emerald Mine Dibya Baral Gemfields Plc 2
Slide 4: Gemfields & The Government of Zambia
Gemfields & The Government of Zambia A Model Collaboration GEMFIELDS Plc GOVERNMENT OF ZAMBIA 75% 25% THE KAGEM EMERALD MINE World’s largest Employees: 891 Location: ZAMBIA emerald mine 50% 50% THE KARIBA AMETHYST MINE World’s largest Location: ZAMBIA Employees: 251 amethyst mine Kagem license over
Slide 5: Kagem Emerald Mine: Location Map
Kagem Emerald Mine: Location Map Kitwe Kagem Emerald Mine Lusaka Kariba Gemfields Plc 4
Slide 6: Kagem Location in Ndola Rural Restricted Area
Kagem Location in Ndola Rural Restricted Area 606 000mE 616 000mE 626 000mE 636 000mE NDOLA RURAL EMERALD RESTRICTED AREA 406 407 410 408 414 403 409 402 405 435 404 229 223 444 412 401 411 443 449 447 450 322 400 324 323 8 560 000mN 8 560 000mN 443A 413 432 436 433 440 295 260 416 355 314 296 317 2
Slide 7: Kagem Location In Emerald Area
Kagem Location In Emerald Area Location Gemfields Plc 6
Slide 8: Geology and Prospectivity
Geology and Prospectivity Geology Gemfields Plc 7
Slide 9: Kagem Licence Overview Map
Kagem Licence Overview Map Geology Gemfields Plc 8
Slide 10: Kagem Turnaround
Kagem Turnaround Pre 2008 - 2016 • Loss making • Environmentally Degrading • Short-term plan and deferred mine development • Widespread Pilferage • Unsafe operations • Little or no geological knowledge • Demotivated Workforce • No Community engagement Today • Profit making, Tax and Dividend Paying •
Slide 11: Exploration Work Flow
Exploration Work Flow Exploration 625200 E 625300 E 625400 E 625500 E 625600 E 625700 E 625800 E 625900 E 626000 E 626100 E 626200 E 626300 E 626400 E 626500 E 626600 E 626700 E 626800 E 626900 E 627000 E 627100 E 627200 E 627300 E KLB 85 8554800 N RL 1190.607 TD 152.50 KLB 101 RL 1194.242 KLB 95 85
Slide 12: Prospects
Total Blocks No. of DHs Total meters 835 85,988 Prospects 6 SEMPALA VILLAGE DUMP SANDAWANA POLICE CAMP DUMP BULK SAMPLING PIT BULK SAMPLING PIT PIT RADIO TOWER PIT SANDAWANA PIT PIT PIT FIBOLELE DAM FIBOLELE FIBOLELE PIT PIT FIBOLELE POLICE CAMP POLICE CAMP PIT PIT LE E HU ULLE NC HU KA NCCH AN KKA
Slide 13: Kagem JORC Resource and Reserves update
Kagem JORC Resource and Reserves update Resource Summary Proved/Probable Measured, Indicated and Post-tax NPV Average annual Open pit mine Ore Reserves Inferred Mineral Resource production plan until 1.1bct at diluted ore grade (E+B) 1.8bct at diluted ore grade (E+B) US$520m 44.7mct 10% discount rat
Slide 14: Mine Geology
Mine Geology LAT/SOIL MS Pegmatite Discordant QT QT shear QT shear TMS AMPH FMS FW shear Pegmatite concordant Gemfields Plc 13
Slide 15: Geology: Emerald Mineralisation
Geology Emerald Mineralisation EMERALD MINERALISATION 1. Occurrence of Host rock (TMS) and presence of Chromoferic elements (Cr, V) in its composition 2. Intrusion of Pegmatite containing Beryllium elements 3. Alteration / Reaction / Ionic exchange between the pegmatitic fluids and the host rocks 4.
Slide 16: Mine Development
Mine Development PB-5, looking to high wall Gemfields Plc 15
Slide 17: Chama Progress in Mine Footprint
Chama Progress in Mine Footprint Sep-2014 Jun-2013 Aug-2016 Mine Development 16
Slide 18: Mine Geology: Chama Geology
Mine Geology Chama Geology 17 Block Model looking to high wall
Slide 19: Mine Planning and Scheduling
Mine Planning and Scheduling Gemfields Plc 18
Slide 20: Fibolele Sector Bulk Sampling
4 Ha Proposed Fibolele Sector Bulk Sampling 8556900N 8556900N Successful Bulk Sampling Operation 8556800N 8556800N 8556700N 8556700N X` W` V` 8556600N 8556600N U` T` R` S` Exposed TMS Q` 8556500N 8556500N P` O` Gemfields Plc 8556400N 19 8556400N N` M`
Slide 21: Libwente Sector Bulk Sampling
Libwente Sector Bulk Sampling Accelerating the Search Libwente South pit Gemfields Plc 20 Ishuko South pit
Slide 22: Washing Plant: Last Year
Washing Plant Last Year Gemfields Plc 21
Slide 23: Washing Plant: Today
Washing Plant Today Gemfields Plc 22
Slide 24: Value Addition – Sort House
Value Addition – Sort House (i) Grading and Sorting (ii) Reliability (iii) Marketing (iv) Service Sorting and grading • Pioneered the world’s most comprehensive grading and sorting system for rough emeralds and rubies • Supported by the commensurate stock levels needed to ensure consistency of suppl
Slide 25: Highlights and Mine cost analysis for Kagem, Zambia
Highlights and Mine cost analysis for Kagem, Zambia A total of US$6.1m capex invested in Kagem in FY2016 Annual production Emerald and beryl of emerald and beryl grade for the year 30.0mct 241 ct/t 2015: 30.1 million carats (‘mct’) 2015: 242 carats per tonne (‘ct/t’) Total operating costs Unit opera
Slide 26: Kagem Monthly Excavation / Gemstone Production
Kagem Monthly Excavation / Gemstone Production TRH (t) $/ t Production Emerald+Beryl (carats) Gemfields Plc 25
Slide 27: Value Addition — Local Employment
Value Addition — Local Employment Increased mining activity created Employment Opportunities at Kagem 882 891 695 624 548 479 445 451 392 30 Jun 08 30 Jun 09 30 Jun 10 30 Jun 11 30 Jun 12 30 Jun 13 30 Jun 14 30 Jun 15 30 Jun 16 Gemfields Plc 26
Slide 28: Mining Outlook
Mining Outlook Production ramp up • Established the continuity of the host lithology all over the license and specifically over 300m along the dip and to a vertical depth of 150m by mining at Chama. • Further systematic exploration besides establishing the continuity over 500m down dip along the riv
Slide 29: Sustainability
Sustainability Gemfields Plc 28 Gemfields Plc
Slide 30: Corporate social responsibility
Corporate social responsibility Sustainability in Education, Health and Agriculture Gemfields Plc 29
Slide 31: Corporate social responsibility
Corporate social responsibility Sustainability in Education, Health and Agriculture Gemfields Plc 30
Slide 32: Corporate social responsibility
Corporate social responsibility Sustainability in Education, Health and Agriculture Gemfields Plc 31
Slide 33: Montepuez Ruby Mining
Montepuez Ruby Mining Ashim Roy Gemfields Plc 32
Slide 34: Montepuez Ruby Mining Lda
Montepuez Ruby Mining Lda Mwiriti Lda 75% 25% Potentially the world’s single largest ruby deposit Gemfields Plc 33
Slide 35: Timeline
Timeline 2009 2009 Rubies first discovered in Montepuez 3rd 3rdJun Jun2011 2011 JV agreement signed between Gemfields plc and Mwiriti Lda th th 3030 Aug Aug2011 2011 Montepuez Ruby Mining Lda (MRM) comes into existence 2424 th th Feb 2012 Feb 2012 The mining licenses 4702 and 4703 issued in the name
Slide 36: Location of Montepuez Ruby Mining
Location of Montepuez Ruby Mining MRM 4703 C MRM obtsained a 25-years of Mining and Exploration Licence (4702 & 4703c) in February 2012 for an area of 336 sqkm. Subsequently, the Process of Amalgamation of concessions was accomplished in 2015 & a new concession bearing no. 4703C for an Gemfields
Slide 37: Ruby Formation
Ruby Formation Geological history The African setting The Asian setting The Pan-African orogeny (Figure 1) occurred 750–450 million years ago, and gave rise to deposits in Kenya, Tanzania, Mozambique, Madagascar, Sri Lanka and southern India. Many of these corundum are genetically related. In contra
Slide 38: Ruby Formation
Ruby Formation How? Gemfields Plc 37
Slide 39: Ruby Formation: Primary Ruby Mineralisation
Ruby Formation Primary Ruby Mineralisation Unlike many other rocks, rubies and sapphires can only form under a limited Range of high pressure and temperature. These rare conditions occurred during Continental plates crashed in Archean times. Veins The rock type found associated with this P & T are A
Slide 40: Ruby Formation: Primary Ruby Mineralisation
Ruby Formation Primary Ruby Mineralisation Corundum (Al2O3) can only form in a limited range of high pressures and high temperature condition in a Silica (SiO2) deficient condition. When solutions rich in Alumina (Al2O3) intrudes a host rock rich in Cr, Fe and V. The corundum gains a red/pink color.
Slide 41: Ruby Formation: Secondary Ruby Mineralisation
Ruby Formation Secondary Ruby Mineralisation Ruby is liberated by physical and chemical weathering process from rocks, concentrated by water/gravity and deposited as alluvial/colluvial material over weathered bedrock. The size, intensity variation and total area of this deposition is unknown and in
Slide 42: Geology: Multidisciplinary Approach
Geology Multidisciplinary Approach: Geological • Typical association with certain rocks or minerals Geophysical Method • Magnetic susceptibility, specific gravity conductivity, radioactivity Geochemical Method • Chemical signatures of hidden mineral deposits often dispersed over wide areas by chemic
Slide 43: Geology: Geological Mapping
Geology Geological Mapping: Shuttle Radar Topography Mission (SRTM) data. Digital Elevation Models Gemfields Plc 42
Slide 44: Geology
43 Geology Gemfields Plc 43
Slide 45: Exploration: Core and Auger Drilling
Exploration Core and Auger Drilling The exploration programme incorporates: (i) Core drilling (ii) Auger drilling Till Oct’16, total core drilling of 22,500m Till date, auger drilling 21,217m Gemfields Plc 44
Slide 46: Maninge Nice Area
Maninge Nice Area Amphibolite Gravel Bed Figure 1 Bore holes Figure 2 Figure 1 showing the 3D model of paleo channel with gravel bed ( > 10 cm) with ruby mineralisation in the two exploration blocks. Figure 2 showing 3D model of primary mineralised Amphibolite body (Green) at Maninge nice area with
Slide 47: Reserve Estimation
Reserve Estimation SRK’s JORC complied report • Ore Reserves of Montepuez Ruby Mining in accordance with the JORC Code (2012) released on 22nd July 2015 • 467 million carats of indicated & 432 million carats of probable mineral reserve. (covering 36 sq. km based on exploration drilling till December
Slide 48: Mining
Mining Performance • Average stripping ratio of 1:5 (Ore:Waste) • Total ore mined until september 2016: 1.6 millions tonnes • Total waste mined until september 2016: 8 millions tonnes • 8 pits actively mined Gemfields Plc 47
Slide 49: MRM Progression
MRM Progression 2012 - 2016 • Year 1: 90, 000 tons total rock handling and 1.9 million carats • Year 2: 1.6 million tons total rock handling and 6.5 million carats • Year 3: 3 million tons total rock handling and 8.4 million carats • Year 4: 3.5 million tons total rock handling and 10.3 million cara
Slide 50: Processing
Processing Wash Plant Upgradation A wash plant has been in operation and its operating parameters continue to be improved simultaneously with the general understanding of the ore characteristics. Initial 50 tph pilot wash plant has been augmented to a 70 tph realistic and more efficient capacity sin
Slide 51: Expertise in Sorting & Grading
Expertise in Sorting & Grading Sort House Presently, hand sorting is conducted in a highly secure environment by a team of highly skilled sorters. Gemfields has developed the worlds’ first grading system for rough rubies. This system has been widely accepted by customers as it helps them assurance o
Slide 52: Sort house upgradation
Sort house upgradation • A State-of-the-Art ruby recovery plant to be added to the circuit by Q1 2018 • To produce 20million carats by FY 2018-19 • Installation of four optical sorting units for the first time in the world • Hands off sorting and classifying • Total cost of the new recovery plant es
Slide 53: Sustainability
Sustainability • The MRM Community Development Strategy (MRM-CDS) has been prepared with an objective to ensure that the local community benefits from the presence of MRM, in a way that is both sustainable and meaningful. • MRM-CDS seeks to enhance the socio-economic standards of the surrounding com
Slide 54: Community Development
Community Development Community and Social Investment • Further to the country’s economy benefitting from rubies as a natural Mozambican resource, we also strongly feel that the local communities should directly benefit from our presence. Our CSR programme is built around: Community development • He
Slide 55: Community Development
Community Development Community and Social Investment • Development of local farming associations and empowering women by forming Women’s chicken farming cooperative • Development of secondary schools and skills schools • Development of Medical centres Gemfields Plc 54
Slide 56: Environmental Conservation
Environmental Conservation Conservation funding We are committed to mining in a way that not only has the least impact on the environment but to leave it in a better state than what we found Old pits to be re-filled, re-planted or filled with water and seeded with fish No harmful chemicals used
Slide 57: Thinking Ahead
Thinking Ahead • We have improved the living conditions of our employees by investing huge amount in camp infrastructure of about US$ 5 million • We have a robust training program to develop the skills of our employees and we certificate them for every course that they complete • The security person
Slide 58: Economic Impact
Economic Impact • Building Mozambican rubies as a valuable natural resource • Paying Taxes - MRM pays approximately 20% of the corporate tax generated in Cabo Delgado • Generating foreign exchange for the country • Creating Employment - Most of our workforce is sourced from local villages and for th
Slide 59: Transparency
Transparency AUCTION RESULTS JUNE’14 DECEMBER’14 APRIL’15 JUNE’15 DECEMBER’15 JUNE’16 (RUBY & CORUNDUM) AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION Dates 12-17 June’14 3-8 Dec’14 17-22 April’15 16-21 June’15 14-18 Dec’15 13-19 June’16 Location Singapore Singapore Jaipur Singapore Singapore Singa
Slide 60: End of year results Financial Highlights
End of year results Financial Highlights Gemfields Plc 59
Slide 61: Financial highlights
Financial highlights Full year to 30 June 2016 Revenues US$ EBITDA US$ Gross profit margin 193.1m (+12.7%) 69.4m (+7.8%) 49% 2015: 50% 2015: 171.4 million (‘m’) 2015: 64.4m EBITDA margin 36% 2015: 38% Net Profit After Tax US$ Cost of gemstone and Fabergé Cash in hand US$ 23.5m 41.5m inventory US$ 20
Slide 62: Revenue analysis – six auctions held during the year
Revenue analysis – six auctions held during the year 2016 saw the highest ever auction revenue achieved at any Gemfields’ auction Higher, medium and Higher quality (‘HQ’) $200m Fabergé, UK Sales & Other commercial quality rough rough emeralds rubies Singapore, September 2015 $180m 18.9 Singapore, De
Slide 63: Mine cost analysis for Kagem, Zambia (75% owned)
Mine cost analysis for Kagem, Zambia (75% owned) A total of US$6.1m capex invested in Kagem in FY2016 Annual production Emerald and beryl • Kagem achieved similar of emerald and beryl grade for the year production levels to 2015 at 30.0mct 241 ct/t 30.0mct 2015: 30.1 million carats (‘mct’) 2015: 242
Slide 64: Mine cost analysis for Montepuez, Mozambique (75% owned)
Mine cost analysis for Montepuez, Mozambique (75% owned) A total of US$7.5m capex invested in Montepuez in FY2016 Annual production Average ruby and of rubies and corundum corundum grade • Step-up in production, exploration and bulk 10.3mct (+22.6%) for the year sampling activities delivered 2015: 8
Slide 65: Consolidated income statement
Consolidated income statement For the year ended 30 June 2016 % change In thousands of US$ 2016 2015 for the year Revenue 193,140 171,448 13 Cost of sales (98,827) (86,483) 14 Gross profit 94,313 84,965 11 Other income 427 747 (43) Selling, general and administrative expenses (54,848) (55,309) (1) P
Slide 66: End of year results operational highlights
End of year results operational highlights Gemfields Plc 65
Slide 67: Kagem mine
Kagem mine Believed to be the world’s single largest producing emerald mine (75% ownership) FY2016 highlights Outlook • Increase in the consistency of production, supported by overall • Target of 30-35mct of emerald and beryl production for FY2017. increase in scale of operations Goal to increase pr
Slide 68: Montepuez mine
Montepuez mine Considered to be the world’s single largest producing ruby and corundum deposit (75% ownership) FY2016 highlights Outlook • 10.3mct of ruby and corundum (2015: 8.4mct) and grade • Target of 10-12mct of ruby and corundum production for FY2017 of 35ct/t (2015: 26ct/t) supported by an up
Slide 69: Leading the way and growing the business
Leading the way and growing the business Other gemstone opportunities – targeting low cost, high value acquisitions Geographic and product diversification Dogogo South Block in early June 2016 and through investment in exploration and drilling commenced in July 2016 development of existing assets in
Slide 70: Fabergé
Fabergé (100% ownership) • Revenues grew 33% to US$11.8m for the year (2015: US$8.9m) following a number of agreements with multi-brand retail partners • Number of units sold and delivered increased by 81%. • At 30 June 2016, Fabergé products were available in 14 countries and the total number of bo
Slide 71: Outlook
Outlook Gemfields Plc 70
Slide 72: Driving further value – upcoming milestones
Driving further value – upcoming milestones Significant growth opportunities Mining Auctions and sales • Stable demand for coloured gemstones expected Kagem • Target of four emerald and beryl (two high and two commercial quality • Increasing production target to 30-35mct of emerald and beryl auction
Slide 73: Sales & Marketing
Sales & Marketing Gemfields Plc 72
Slide 74: Market overview
Market overview World records continue to be broken in the gemstone sector pushing up prices and demand • The market of worked emeralds, rubies and sapphires • European jewellery showed diverging dynamics – France’s continued to expand during 2015 imports of the top three coloured gemstones doubled
Slide 75: Auction results
Auction results Higher Quality Emerald Commercial Quality Emerald Rubies Total sales realised at auction (US$m) Total sales realised at auction (US$m) Total sales realised at auction (US$m) 36.5 34.9 34.7 19.2 44.3 31.6 31.5 33.1 15.2 16.4 15.5 14.5 43.3 14.3 26.2 26.8 33.5 29.3 19.6 10 11 9 28.8 7.
Slide 76: Chopard – Case Study, May 2016
Chopard – Case Study, May 2016 Gemfields continued to champion industry- • To mark the occasion, Chopard unveiled a new capsule collection of Green Carpet High Jewellery within its Red leading partnerships through a notable Carpet Collection, showcasing Gemfields emeralds. The collaboration with Cho
Slide 77: Sustainability
Sustainability Gemfields Plc 76
Slide 78: Corporate social responsibility
Corporate social responsibility Sustainability We don’t use any chemicals in our mining process and over the last five years we’ve planted over 300,000 trees on the land around our sites. We’re transforming old mines into lakes, and we’re seeding them with fish, creating a steady supply of fresh wat
Slide 79: Sustainability - five key pillars
Sustainability - five key pillars Setting new benchmarks for environmental, social and safety practices in the coloured gemstone sector Environmental Product • All operations aim to meet international good practice, taking steps • Gemfields policy is to ensure that whether rough or cut and to minimi
Slide 80: Appendix
Appendix Gemfields Plc 79
Slide 81: Revealing the value of Mozambican Rubies
Revealing the value of Mozambican Rubies Auction Six ruby auctions up to June 2016 generated total revenues of US$ 195.3 million. A part of revenue from the ‘Rhino Ruby’ has been given for the cause of anti-rhino-poaching aircraft operated by Game Reserves United. A part of revenue from the latest s
Slide 82: Company overview
Company overview Directors and Management Analyst Forecasts Target Price BMO Capital Markets – 1 Nov 2016 80p FinnCap – 6 Oct 2016 100p Investec Securities – 31 Aug 2016 80p JP Morgan Cazenove – 30 September 2016 53p Graham Mascall Ian Harebottle Janet Boyce Macquarie – 30 September 2016 90p Chairma
Slide 83: Gemstone Price Index
Gemstone Price Index Upper Fine Quality Gemstones Price Index: 1 - 1.5 Carat Lower Quality Commercial Gemstones Price Index: 1 – 1.5 Carat 2.00 3.5 1.80 3 1.60 1.40 2.5 1.20 2 1.00 0.80 1.5 0.60 1 0.40 0.5 0.20 0.00 0 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2015 Source: Gemg
Slide 84: Rough emerald and beryl sales (Commercial quality)
Rough emerald and beryl sales (Commercial quality) AUCTION RESULTS MAR ’10 MAR ’11 NOV ’11 JUN ’12 APR ’13 NOV ‘13 AUG’14 FEB ’15 NOV ’15 MAY ’16 (COMMERCIAL AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION QUALITY) Dates 11-15 Mar ‘10 10-14 Mar ‘11 21-25 Nov ‘11 9-13
Slide 85: 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 APR ’16 AUCTION RESULTS AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION 20-24 Jul 23-27 Nov 19-23 Jul 6-10 Dec 11-15
Slide 86: Rough ruby and corundum auctions
Rough ruby and corundum auctions (Mixed quality) AUCTION RESULTS JUNE ’14 DEC ‘14 APRIL ’15 JUNE ‘15 DEC ‘15 JUNE ‘16 (RUBY & CORUNDUM) AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION Dates 12-17 June ‘14 3-8 Dec ‘14 17-22 April ‘15 16-21 June ‘15 14-18 Dec ‘15 13-19 June ‘16 Location Singapore Sing
Slide 87: Mining and production costs
Mining and production costs Increased mining and production costs driven by ramp up in mining activity at Kagem and Montepuez Mining and production costs $20m 18,323 $18m 16,141 $16m $14m 2016: US$61.0m $12m 2015: US$46.5m $10m $8m 7,340 6,185 $6m 4,928 4,264 $4m 2,502 $2m 1,287 $0m Mineral royaltie
Slide 88: Selling, general and administrative expenses
Selling, general and administrative expenses % Year on In thousands of US$ 2016 2015 year change Labour and related costs 18,527 20,563 (10) Selling, marketing and advertising 14,568 16,224 (10) Professional and other services 6,173 5,720 (8) Travel and accommodation 5,008 3,537 42 Rent and rates 3,
Slide 89: Contact us
Contact us Gemfields Plc 1 New Burlington Place Mayfair London W1S 2HR United Kingdom Tel: +44 (0)20 7518 3400 Fax: +44 (0) 20 7197 8193 Gemfields Plc