One of South Africa’s richest men has amassed a 12.7% stake in Gemfields, taking the shares of coloured gemstones specialist who owns the jewellery brand Fabergé to their highest level in addition to three years.
The stake by billionaire businessman Desmond Sacco, owner of mining company Assore, comes after a difficult year for Gemfields, which operates the world’s largest emerald and ruby mines, respectively, in Zambia and Mozambique
Gemfields, which is listed in London and Johannesburg, reported last week a return to profits for the first six months of 2021 due to rising prices and demand for rubies and emeralds.
Sean Gilbertson, managing director of Gemfields, said he spoke with Sacco’s son Patrick, who is responsible for a new branch of Assore incorporated in the UK which has acquired the stake.
“It would appear that they have ambitions to expand internationally,” Gilbertson said. “It is a smart and well-known mining company and we look forward to forming a good relationship.”
Assore declined to comment. Sacco’s net worth in 2018 was around $ 1.1 billion, according to Forbes.
After 70 years on the Johannesburg Stock Exchange, the Sacco family privatised Assore last year. The company’s main asset is Assmang, a manganese mining company that it jointly owns with African Rainbow Minerals. It also owns a stake in chromium and a 25 percent stake in lithium company Ironridge.
“If they [Assore] are trying to expand, it’s easier to do so out of the public eye, ”said Yuen Low, analyst at Liberum, a London-based brokerage firm. “They must see the value in Gemfields.” The company currently has a market value of $ 233 million.
Assore began to increase its stake this month, initially purchasing 5% of Gemfields from Fidelity International. More buys followed and he said a 12.7 percent turnout last week.
“We understand that Assore has the intention and desire to build a more meaningful stake in Gemfields,” said Gilbertson, a South African mining engineer by training who took over the company in 2015.
South African businessman Christo Wiese resigned from Gemfields board on Friday. He owns a 13.7% stake in the company, which could now be acquired.
Gilbertson said 2020 has been a “truly gruesome year” for Gemfields, which has been forced to shut down its mines.
Auction revenues plunged nearly 90%, punching a $ 178 million hole in its revenue. However, the demand for colored gemstones has started to increase and a shortage of inventory is expected to increase market prices.
“There has been no new offering produced for the gemstone market. . . and luxury spending has been remarkably strong, ” said Gilbertson.
In results announced last week, Gemfields reported a pre-tax profit of $ 38 million for the six months to June, compared to a loss of $66 million for the same period a year earlier.
If its auctions in November and December go well, Gilbertson said Gemfields could return to “normal” annual revenues by the end of the year. Its two mines are operational again and the company hopes to pay a first dividend next year.
When asked if the company intended to get rid of Fabergé, known for the jewelled eggs made for the Russian royal family before the 1917 revolution, Gilbertson said it was an integral part of the business.
“Right now we find it to be a very important tool for marketing coloured gemstones,” he said. “It’s basically a turbocharger for marketing and promotion.”