Illegal mining and grade volatility, restricted premium ruby production

LONDON – Sean Gilbertson, CEO of Gemfields, says that it has been a difficult year for Gemfields. The well documented operational interruptions at both Montepuez Ruby Mining (“MRM”) and the Kagem emerald mine (“Kagem”) weighed on output and cash generation. The delays to MRM’s second processing plant, PP2, combined with high levels of illegal mining and grade volatility, restricted premium ruby production and disrupted Gemfields auction cadence. While it has been producing rubies since September 2025, thedelay in the final commissioning of PP2 is  expected to continue well into the first half of 2026.

Auction outcomes during the year were mixed. Gemfields held seven auctions realising only USD 129 million, with demand uneven and skewed away from lower-quality, smaller-size goods. While overall sentiment was fragile and volatility persisted, we have been encouraged by improved pricing throughout the year for high-quality emeralds and rubies. Cash generation was constrained despite disciplined cost control and a strong safety performance.

The recent escalation of conflict in the Middle East adds further uncertainty to global energy markets. While diesel prices remain volatile, it is too early to quantify any potential cost impact on Gemfields operations; however, Gemfields continues to monitor developments closely.

Gemfields priorities for 2026 are clear: stabilise operations, ramp PP2 up methodically to nameplate capacity, continue strict cost and capital discipline, and restore a predictable auction cadence. The need to further strengthen Gemfields balance sheet means that deleveraging is the primary focus of our capital discipline in the short term, with a view to providing Gemfields with the opportunity to broaden its capital allocation options in the medium term.