The global coloured gems market is estimated to turn over between $2bn and $3bn per year in rough gemstones and in some circles are being touted as the new diamond market. While the market has drummed up some interest, two of the major listed players (Gemfields and Fura Gems) have failed to fire to dat.
Gemfields (listed on the JSE), owns 75% of the world’s largest emerald mine, Kagem, and 75% of Montepuez, the world’s largest ruby mine. Fura Gems (with a primary listing in Canada) – which is looking to break into the Australian sapphire market – also has an extensive ruby exploration project in Mozambique and owns the Coscuez mine in Columbia.
Both have their supporters in amongst small and mid-cap traders but neither has succeeded in delivering a positive investment return.
Gemfields is down 25% over the past 12 months while Fura is off 57%.
Gemfields has a market capitalisation of $139m while Fura is significantly smaller with a market cap of $18.37m
They both remain loss-making with Fura trading on a negative price to earnings ratio of -5.7 while Gemfields currently is trading on a -3.7 times earnings.
Below we map the two shares against one another since the start of the year:
Sedibelo a potential value-add unlock for Gemfields?
One of the short-term considerations for Gemfields is the action in the platinum market. Gemfields holds a 6.7% stake in the unlisted Sedibelo Platinum mining operations.
The platinum price has gathered some momentum in recent months and finished the week trading at $930/ounce and the miners will be enjoying something of a windfall from the weaker Rand.
Listed platinum miners have enjoyed a great run over the past 12 months:
- Impala Platinum is up 382% (+43% in past 6 months)
- Royal Bafokeng Holdings is up 60% (13.6% in past 6 months)
- Anglo American Platinim is up 116% (21% in past 6 months)
With Sedibelo hosting its AGM on the 16thof September, investors at Gemfields will be curious to see whether there will be any corporate action around the Sedibelo stake. Having already disposed of its assets in Jupiter mining, this could make sense considering the improvement in sentiment in platinum stocks.