Gemfields is calling all suitors for its PGM assets

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Gemfields is calling all suitors for its PGM assets

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Published Date: 2022-01-10 | Source: INCE|Community | Author: The Finance Ghost

Gemfields is calling all suitors for its PGM assets

Gemfields is the R3.5 billion company you've perhaps never heard of. The company specialises in emeralds from Zambia and rubies from Mozambique. It doesn't get more exotic than that!

It also owns Faberge, which produces jewellery and timepieces using the stones. The company talks about having a "mine and market" strategy, a nod to vertical integration.

The share price is up a whopping 122% over the past year. That return is almost as exotic as the beautiful stones that Gemfields takes out of the ground. It is now trading well above pre-pandemic levels.

The largest shareholders in Gemfields (based on the latest interim report) are Dr Christo Wiese (13.72%) and Assore (12.74%). There are a couple of substantial asset managers on the register as well.

Back in 2017, Gemfields plc was acquired by Pallinghurst Resources Limited via a share swap. This effectively gave Gemfields a JSE-listed vehicle and the Pallinghurst entity was rebranded as Gemfields. Pallinghurst was focused on platinum group metals and manganese before making the decision to shift towards gemstones, so there were legacy assets in the group that weren't congruent with a gemstones-focused strategy.

One such legacy business is Sedibelo Platinum Mines. Gemfields previously held 6.54% in Sedibelo via another entity, which creates structural complexities. An unbundling by that entity means that Gemfields now owns a 6.54% stake in Sedibelo directly.

Sedibelo generated EBITDA of around USD113 million in the year ended December 2020. In the nine months to September 2021, EBITDA was around USD45 million. The joy of cyclicals is that earnings are more volatile than a West Indian batting performance.

Interestingly, Gemfields also notes an understanding that Sedibelo is planning an IPO in 2022.

Of course, Gemfields highlights this because the stake in Sedibelo is up for sale and the potential of an IPO is a nice selling point. The stake is certainly not core to a gemstones business. The SENS announcement even gives details on who to contact if you are interested in the stake, just in case you have some money burning a hole in your pocket.





2 Comments

Neil Pendock 1 week ago

Dr. Wiese sold most of his shares at R3.50 last September and Assore doubled up. I'm sure they will be contacting Liberum Capital.

AL 1 week ago

Good morning. Assore actually have also taken Wiese shares and own just under 27% now. Take over possibly in coming?



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