Gemfields announces R578 million rights offer as share price falls

GEMFIELDS Group's share price plunged 22% on Friday after it announced a $30 million (R577.8m) rights offer due to funding constraints caused by unrest in Mozambique.

- EDWARD WEST

The share, which is also listed on the London AIM market, was trading at R1.16 on the JSE on Friday afternoon, and the day’s decline meant it has fallen 58.2% over a year. Shareholders usually do not like rights issues, as it dilutes their interests and indicates that the company requires additional funding.

London-based Gemfields is seeking shareholder approval to issue 556,203,396 new shares to raise about $30m ina fully underwritten rights issue.

“While our planning of Gemfields’ growth program did not envisage the requirement of additional funds from shareholders, the scope and scale of the difficulties we have encountered have unfortunately necessitated a change in approach,” CEO Sean Gilbertson said.

He said they had faced significant operational challenges in 2024, including an attempt to invade the residential area of the Montepuez Ruby Mine (MRM) in Mozambique, following the contested general election and associated civil unrest and supply chain interruptions in that country.

The increased risk was subsequently reflected in a big reduction in share price, said Gilbertson.

MRM mining operations were temporarily paused towards the end of the year.