Gemfields Halts Buyback As Ruby Mine Operations Suspended

(Alliance News) - Gemfields Group Ltd said Wednesday its Mozambique ruby mine has halted operations and it has suspended its share buyback programme.

At the Montepuez ruby mine, all but critical operations have been suspended as of Wednesday.

"Security, maintenance and other essential services will continue in order to ensure that MRM is well placed to resume normal operations as soon as it is safe and practicable to do so," Gemfields said.

The company continued: "Given recent episodes of illegal mining activity on the concession, attacks on MRM's security teams and the recent release of prisoners in the town of Montepuez, including approximately 150 illegal miners, as part of the government's Covid-19 response relating to overcrowded prisons, MRM has introduced additional security measures, increased the size of the security team and deployed patrol dogs. In addition, trained members of its security service providers have been equipped with firearms in accordance with the Voluntary Principles on Security and Human Rights."

Gemfields has suspended all expansionary capital expenditure at the mine for the foreseeable future.

Gemfields noted it has access to USD30 million of undrawn overdraft facilities for its ruby mine.

Elsewhere, the miner said it is looking to preserve costs. Staff have moved to a four-day workweek and have agreed a 20% pay cut.

Gemfields has also suspended its share buyback programme, due to the "considerable level of uncertainty".

Shares in Gemfields were 2.8% lower in London on Wednesday at 7.90 pence each. In Johannesburg, the shares were 3.2% lower at ZAR1.50 each.

By Paul McGowan; paulmcgowan@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

Gemfields Grou.