Gemfields Group (AIM:GEM) raised $23.1 million from its first Trade Select ruby auction, held from 22 to 29 June, with 82 of 89 lots sold at an average price of $66.30 per carat.
The coloured gemstone miner said 348,409 carats were sold from 374,008 carats offered, a sell-through rate of 93.2% by weight.
The new Trade Select format, designed to sit between Gemfields' standard mixed-quality auctions and the smaller mini-auctions introduced in 2025, widened the offering to include newly introduced sapphire categories alongside ruby grades.
"Whilst market conditions remain challenging in certain sectors of the coloured gemstone market, customer attendance was strong and bidding demonstrated continued demand across the categories offered," said Adrian Banks, Managing Director of Product and Sales.
Beneath the auction result, the company disclosed a significant deterioration in grade at its 75%-owned Montepuez Ruby Mining operation in Mozambique.
Premium ruby grade at the mine fell to 0.03 carats per tonne in the five months to 31 May, from 0.06 carats per tonne in full-year 2025, with the Mugloto domain, which accounts for 78% of ore processed to date, dropping to 0.02 carats per tonne.
Premium rubies represent more than 70% of Montepuez's revenue but less than 5% of production by weight, making the grade decline material to earnings.
Commissioning of the mine's second processing plant remains incomplete, with a replacement scrubber expected on site in August.
The mine also faces $28.3 million in outstanding VAT refunds from Mozambican authorities, with no payments received since October 2024, though the first refund under new 2026 legislation is due on 7 August.
Gemfields said a production update for the first half of 2026 is expected on or before 31 July, with the next mixed-quality ruby auction scheduled for October.
Separately, the company announced that CEO Sean Gilbertson is stepping down and will be replaced on an interim basis by CFO David Lovett.
In London, Gemfields shares fell 3.9% on Tuesday to change hands at 3.7p.
Difficult, but a Buy
Panmure Liberum, which sees Gemfields as a Buy, responded today by acknowledging that conditions at Montepuez Ruby Mining remain difficult across multiple fronts, with Gemfields, the 75%-owner and operator of premium emerald and ruby mines in Zambia and Mozambique, facing low grades, high rainfall restricting site access, a stalled ramp-up of the second processing plant, deteriorating security, persistent illegal mining and delayed VAT refunds weighing on cash flows.
The potential concern is the continued grade deterioration at Montepuez, where premium ruby grade had already fallen to 0.03 carats per tonne in the five months to 31 May, against 0.06 cpt for the full year 2025.
Nevertheless, Panmure Liberum's price target of 7.5p suggests some considerable (nearly 100%) upside to the current market price of 3.7p.
