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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gemfields Group Limited | LSE:GEM | London | Ordinary Share | GG00BG0KTL52 | ORD USD0.00001 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 6.25 | 6.00 | 6.50 | 6.25 | 6.25 | 6.25 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Miscellaneous Metal Ores,nec | 262.02M | -10.09M | -0.0083 | -7.53 | 76.43M |
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Gemfields Resources Plc
Final results for the year ended 30 June 2008
21 December 2007
Gemfields Resources Plc ("Gemfields" or "the Company", Ticker "GEM") is pleased
to report its final results for the year ended 30 June 2008.
Highlights
* Acquisition of the Kagem Emerald Mine
* Raising of £30,000,000 through the placing of 66,666,667 ordinary shares
* Increase in mining capacity.
The Chairman's Statement and the primary financial statements are set out
below. The full financial statements have been sent to shareholders and they
can also be viewed on the company's website at www.gemfields.co.uk.
Enquiries:
Gemfields +44 (0)20 7016 9416
Richard James, CFO richard.james@gemfields.co.uk
Canaccord Adams Limited
Mike Jones/Tarica Mpinga +44 (0)20 7050 6500
Chairman's statement
__________________________________________________________________________________________
Dear Shareholder,
Welcome to the consolidated financial statements for Gemfields Resources PLC
("the Company"). A great deal has been achieved in the year ended 30 June 2008.
Highlights
* Acquisition of the Kagem Emerald Mine
* Raising of £30,000,000 through the placing of 66,666,667 ordinary shares
* Increase in mining capacity.
Acquisitions
* Kagem Emerald Mine
On 5 June 2008 Gemfields acquired a group of companies from Rox Limited ("Rox",
a Pallinghurst Resources portfolio company) giving it control over a 75%
interest in the Kagem emerald mine in Zambia. The Kagem mine is the largest
emerald mine in Zambia and one of the most attractive emerald operating assets
in Africa, having produced 6.5 million carats pa in the last three years.
Rox also granted to Gemfields an option to acquire a portfolio of in excess of
15 licences and licence applications for gemstone exploration in Madagascar
held through its subsidiary Oriental Mining S.a.r.l. This option has since been
exercised by the Company.
In addition, Fabergé Limited, another Pallinghurst Resources portfolio company,
granted Gemfields an option to acquire a worldwide and exclusive 15 year
licence to use the Fabergé brand name in respect of coloured gemstones
(excluding diamonds). This option has also now been exercised.
Under the Kagem transaction, Gemfields acquired Greentop International Inc.
("Greentop") (a BVI company) and Krinera Group SA ("Krinera") (a Panamanian
company), the holding companies through which Rox's interest in the Kagem mine
is held (via intermediate holding companies). In consideration for the
acquisition of Greentop and Krinera and the grant of the options, Gemfields
issued to Rox 137,910,340 new ordinary shares in the Company which constituted
56% of Gemfields' issued share capital after implementation of the transaction.
Kagem has a long and demonstrated history of producing high quality emeralds
and Gemfields believes that its production levels can be significantly
improved. Kagem has in excess of 350 employees and a modern processing plant.
While Kagem's licence area is extensive and includes five emerald bearing
belts, production to date has focused on a single pit known as "FF-F10" which
lies on the Fwaya-Fwaya belt.
* Jagoda Pink Tourmaline Mine
The option to acquire Jagoda expired on 31 March 2008. Exploration had been
carried out throughout the period of the option but the results proved
inconclusive as to whether it would be possible to establish a commercially
viable operation at the mine. Gemfields therefore decided not to exercise the
option and the US$100,000 paid for it has been written off in the financial
statements.
Placing of Shares
At the same time as the Kagem acquisition, the Company raised a further £
30,000,000 with a placing of 66,666,667 ordinary shares at £0.45 per share to
institutional investors.
Operations
* Mbuva-Chibolele Emerald Mine
The directors decided to cease production at Mbuva-Chibolele from the end of
the first quarter of 2008. It was decided that all mining management and staff
resources and also machinery should be devoted to Kagem for the time being
given its proven history of production which suggests that greater yields will
be achieved.
The intention is possibly still to return to Mbuva-Chibolele at some stage in
the future. The directors anticipate that the selling prices of emeralds could
improve over time as a result of Gemfields' overall marketing and coloured
gemstone strategy and this could make Mbuva-Chibolele profitable. However,
given that no time-frame can be predicted as yet with regards to a return to
production at this mine, it has been decided to provide for the full amount of
the Mbuva-Chibolele asset in the financial statements.
* Kamakanga Emerald Mine and NRERA Prospecting Licences
With the Group's emerald focus turning to Kagem for the foreseeable future, in
terms of both operations and exploration, it has been decided to also fully
write off the Kamakanga Mine and the NRERA prospecting licences in the
financial statements.
* Kariba Amethyst Mine
Production at Kariba has continued throughout the period although it has been
lower than previous years. However the privatisation agreement to purchase a
further 26% of the joint venture remains unsigned by the Government of Zambia.
The Group has requested an explanation regarding the delay and will make a
decision on Kariba's future once this has been received.
* Kagem
Gemfields was awarded a management contract by Hagura Mining Ltd ("Hagura") on
1 November 2007 to manage and operate Kagem in advance of the acquisition.
Hagura is the direct owner of the Kagem mine.
Several steps were taken during the year to improve operations at Kagem
including the following:
* A mining contract was awarded to speed up the removal of a backlog in
waste;
* The in-house mining machinery has undergone a major overhaul to increase
capacity;
* Mining capacity has already risen significantly by the use of Gemfields
equipment from the Mbuva-Chibolele operation;
* Management has been revamped and strengthened. Staffing levels in various
departments have been rationalised in numbers and skills by recruitment,
promotions and terminations;
* The security department has undergone a complete revamp with the
introduction of expatriate security personnel;
* An infrastructure upgrade on the mine is in progress with additional
buildings, a training centre for personnel and various facilities being
erected;
* Exploration drilling is in progress to further define the resources of the
FF-F10 pit and other prospects.
* An upgrade of the treatment plant has taken place to increase its capacity.
Result
No emerald sales took place during the period. This decision was taken by the
directors in order to build up a larger inventory of emeralds than what was
offered at previous sales.
The result for the year has been adversely affected by the impairment of
Mbuva-Chibolele, Kamakanga, the NRERA prospecting licences and the Jagoda
option. The lack of sales during the period is due to the directors' decision
to build up a larger inventory of emeralds as explained above. The decrease in
production costs compared to the prior year was due to the scaling down and
then ceasing of operations at Mbuva-Chibolele. The increase in corporate costs
was due to the Group's expanding infrastructure and the acquisition of Kagem.
Tanzanite One Limited
Subsequent to the year end, Gemfields began a stakebuilding exercise in
Tanzanite One Limited (T1). The exercise saw Gemfields purchase 11,668,330
shares in T1. This was funded by the placing of 14,712,143 new Gemfields shares
at a price of 29p per share to Rox Limited.
The stakebuilding exercise culminated in a tender offer for 30,754,970 T1
shares on 21 October 2008. The offer was oversubscribed within four days of its
announcement but not all conditions of it were satisfied so the offer lapsed.
Gemfields has no current intention of making any revised or further offer for
T1.
Outlook
* The anticipated quality of the Kagem resource is expected to improve the
performance of Gemfields.
* Exploration drilling at the Kagem property has produced encouraging
preliminary results.
* Subsequent to year end, the Company has opened its new cutting and
polishing facility in Jaipur, India. The higher quality emeralds from Kagem
will be processed here with the first parcel having already been sent.
* The Company also plans to actively pursue its strategy of integrating the
supply chain and improving the marketing of coloured gemstones during the
coming year. It is anticipated that these efforts will increase the selling
prices achieved for coloured gemstones significantly therefore enhancing
Gemfields' margins.
* Negotiations are continuing for further acquisitions as Gemfields looks to
expand into other coloured gemstones.
Graham Mascall
19 December 2008
Gemfields Resources PLC
Consolidated income statement
for the year ended 30 June 2008
Note 2008 2007
US$'000 US$'000
Revenue - 1,796
Mining and production costs (3,024) (5,865)
________ ________
Gross loss (3,024) (4,069)
Other operating income 739 186
Administrative expenses
Impairment 25 (19,500) -
Depreciation 9 (3,002) (1,520)
Other administrative expenses (6,370) (2,323)
Total Administrative expenses (28,872) (3,843)
________ ________
Loss from operations 3 (31,157) (7,726)
________ ________
Finance income 5 935 763
Finance expenses 5 (419) -
Share of loss in joint venture - (188)
________ ________
Loss before taxation (30,641) (7,151)
________ ________
Tax credit/(expense) 6 433 (116)
________ ________
Loss for the year (30,208) (7,267)
________ ________
Attributable to:
Equity shareholders of the parent (29,330) (7,267)
Minority interest (878) -
________ ________
(30,208) (7,267)
________ ________
Loss per share
Basic and diluted 7 US$(0.25) US$(0.07)
All amounts relate to continuing
activity.
Gemfields Resources PLC
Consolidated balance sheet
at 30 June 2008
Note 2008 2007
US$'000 US$'000
Non-current assets
Intangible assets 8 - 12,461
Property, plant and equipment 9 268,663 9,713
________ ________
268,663 22,174
________ ________
Current assets
Inventory 11 7,500 2,190
Trade and other receivables 12 1,151 1,051
Cash and cash equivalents 48,078 9,836
________ ________
Total current assets 56,729 13,077
________ ________
Total assets 325,392 35,251
________ ________
Non-current liabilities
Deferred taxation 16 (90,827) (177)
Other non-current liabilities 13 (17,039) -
________ ________
(107,866) (177)
Current liabilities
Trade payables 15 (2,275) (606)
Current tax 15 (329) (11)
Other current liabilities 15 (4,140) ( 1,727)
________ ________
(6,744) (2,344)
________ ________
Total liabilities (114,610) (2,521)
________ ________
________ ________
Total net assets 210,782 32,730
________ ________
Capital and reserves attributable to
equity holders of the parent
Share capital 17 5,904 1,871
Share premium 89,686 33,776
Merger reserve 121,005 10,500
Option reserve 1,111 858
Cumulative translation reserve (7) (7)
Retained earnings (43,568) (14,268)
________ ________
174,131 32,730
Minority interests 36,651 -
________ ________
Total equity 210,782 32,730
________ ________
Gemfields Resources PLC
Consolidated cash flow statement
for the year ended 30 June 2008
Note 2008 2007
US$'000 US$'000
Cash flows from operating activities
Loss for the year (30,208) (7,267)
Depreciation 9 3,002 729
Amortisation - 792
Share-based payments 283 415
Gain on sale of property, plant and - (186)
equipment
Finance income (935) (763)
Finance expense 419
Share of loss in joint venture - 188
Tax expense/(credit) (433) 116
Impairment of property, plant and 9 6,708 -
equipment
Impairment of intangible assets 8,25 12,514 -
Impairment of inventory 278 -
(Increase)/Decrease in trade and other 136 (317)
receivables
Increase/(Decrease) in trade and other (8,293) (367)
payables
(Increase)/Decrease in inventory (2,159) (2,178)
________ ________
Net cash outflow from operating (18,688) (8,838)
activities
Cash flows from investing activities
Acquisition of subsidiary, net of cash 18 (22) -
Interest received 260 524
Purchase of property, plant and (737) (979)
equipment
Sale of property, plant and equipment - 290
Purchase of intangible assets (50) (50)
Exploration and development expenditure (3) (145)
________ ________
Net cash outflow used in investing (552) (360)
activities
Cash flows from financing activities
Issue of ordinary shares (net of issue 57,227 5,918
costs)
Exercise of share options - 4
Finance expense (419) -
________ ________
Net cash inflow from financing 56,808 5,922
activities
Net increase/(decrease) in cash and 37,568 (3,276)
cash equivalents
Cash and cash equivalents at start of 9,836 12,873
period
Exchange differences on translation 674 239
________ ________
Cash and cash equivalents at end of 48,078 9,836
period
________ ________
The financial information contained in this statement does not constitute the
Group's statutory accounts for the years ended 30 June 2008 or 2007, but is
derived from those accounts. Statutory accounts for 2007 have been delivered to
the Registrar of Companies and those for 2008 which were approved by the Board
on 19 December 2008 will also be lodged there following the company's annual
general meeting. The auditors have reported on those accounts; their reports
were unqualified and did not include references to any matters to which the
auditors drew attention by way of emphasis without qualifying their reports.
END
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