Maputo, 04 Oct (AIM) – The London-based mining company Gemfields has recorded an impairment of 125.2 million dollars on its ruby operation in the northern Mozambican province of Cabo Delgado, after a downward revision of recovery outlooks for high-quality gemstones.
Gemfields owns 75 per cent of Montepuez Ruby Mining (MRM), the main ruby mining company in Mozambique, which employs over 1900people, of whom approximately 95 percent were Mozambican.
In its semi-annual report, the company says that the adjustment reduced the carrying value of MRM, from 205.5 million dollars to 80.3 million dollars.
“The company explains that the decision stems primarily from revised estimates for high-quality ruby recovery, which command the highest prices at international auctions and delays in fully commissioning the new processing plant. High-quality ruby recovery fell below expectations”, reads the statement.
However, despite the impairment, the company points out that MRM’s total ruby and corundum (from the same mineral group) production increased 89 percent in the first half of the year to 2.16 million carats, driven by higher volumes of processed minerals.
“High-quality ruby production decreased 13 percent, falling from 34,823 to 30,408 carats. The trend in recovering these rubies will be decisive in evaluating the benefits of the investment made in expanding the operation. In this context, the company is completing a second ore processing plant representing an investment valued at 70 million dollars, of which 64.1 million dollars have already been disbursed”, reads the document.
The infrastructure is expected to increase minerals processing capacity from 200 to 600 tons per hour, tripling the mine’s installed capacity.
The new unit, the document says, entered an advanced commissioning phase and has already reached target operational capacity during certain periods.
The report also highlights challenges associated with illegal mining within the Montepuez concession, which spans an area of 349 square kilometers in Cabo Delgado province.
Gemfields reported more than 60,000 incursions by illegal miners between April and May of this year, including days when over 1,000 entries were recorded in a single day.
“Damages caused included the destruction of infrastructure, equipment, and water supply systems. The incidents caused operational losses and required a strengthening of security measures. However, the Defense Armed Forces of Mozambique continued to guarantee protection for the mining concession and that insurgent activity remained at an estimated distance of 30 to 40 kilometers from the operational area”, reads the note.
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