Gemfields produces 21,700 carats of premium ruby in Mozambique
Having been suspended in April 2020, operations at Montepuez Ruby Mining Limitada (“MRM”) resumed in March 2021, returning to normal operating capacity during May 2021. Production during the period in the premium ruby category was robust at 21,700 carats (six months to 30 June 2020: 28,700 carats) with some 13,250 of those carats coming from June’s production, boding well for the second half of the year.
Total ruby and corundum production was 2.1 million carats in the first six months of 2021 (six months to 30 June 2020: 1.3 million carats), notwithstanding the reduced number of operating months.
Total capital expenditure for the period was limited to USD1.3 million, comprising USD0.5 million invested in the current ore treatment plant and a further USD0.6 million spent on ancillary aspects of the resettlement village constructed near Namanhumbir, thereby completing the first stage of successfully rehousing all 105 censused families.
The independent operational grievance mechanism (“OGM”) officially launched in February 2021, following the conclusion of the pilot scheme which began at the end of 2020. The OGM has been set up by MRM to further its ongoing commitment to transparency and support for the local communities following the voluntary settlement agreement arising from the Leigh Day litigation.
Since the scheme’s launch, a significant number of cases have been filed; however, to date, only a small number of cases have been ruled on by the independent panel. The Group continues to monitor the scheme closely with a view to providing an update in the Annual Report once more data is available.
MRM continues to actively monitor the insurgency situation in the Cabo Delgado province and considers the risk to MRM’s operational continuity to be low in the short term. MRM has observed an increase in displaced persons arriving in the district with a consequent rise in illegal mining activities within the licence area. The Group has appropriate strategies in place relating to site safety and the protection of MRM’s workforce in the event that the insurgency risk heightens. MRM has applied to join the ‘United for the vaccine against Covid-19’ (“Univax”) project under which private companies can import Covid-19 vaccines through the Mozambique Ministry of Health, with 10% of the vaccines applied for donated to the Mozambique Government. Additionally, MRM has benefitted from government vaccination programmes that initially targeted high-risk groups and which has fully vaccinated 38 MRM employees to date. The programme has now been rolled out to low-risk groups with 518 employees receiving their first dose in August 2021.
PRODUCTION
A total of 2.1 million carats of ruby and corundum were produced during the first half of 2021, with a focus on high-quality, lowoccurrence deposits that provide premium rubies. During the same period in 2020, 1.3 million carats of ruby and corundum were produced, with the varying grade of the deposit the reason for variations in recovery. Of the 2.1 million carats of production for the year, 2.0 million carats were recovered from Mugloto secondary ore, 0.05 million carats were recovered from Maninge Nice and the remainder from other sources. MRM’s key operational parameters for the six-month period to 30 June 2021 are summarised in the table below.
Processing
During the period, 204,800 tonnes of ore were mined, primarily from two blocks, Mugloto and Maninge Nice, with 329,400 tonnes processed compared to 346,400 tonnes for the same period in 2020. Of the total ore processed, 329,000 tonnes were washed by the main processing plant and 400 tonnes by the exploration processing plant. The treatment plant has seen an increase in throughput from May 2021 following the commissioning of an apron feeder, which delivers a constant feed for the wash plant. The benefits achieved will continue, with a more pronounced improvement in throughput rate expected in the second half of the year. The overall ore grade realised during the period was 6.2 carats per tonne, compared to 3.7 carats per tonne for the six-months to 30 June 2020. This was mainly due to higher grades achieved in the low ruby and low sapphire categories in 2021 compared to 2020.
OPERATING COSTS
Total cash operating costs for the six-months to 30 June 2021 were USD15.3 million, compared to USD13.3 million incurred in the first half of 2020, giving a unit cash rock handling cost of USD8.74 per tonne compared to USD7.48 per tonne in the prior period.
The total operating costs for the current period were USD21.1 million compared to USD19.7 million in the prior period, with unit operating costs of USD12.00 per tonne. Total operating cost includes mining and production costs, mineral royalties, marketing, management and auction fees, selling, general and administrative expenses, and depreciation and amortisation, but excludes the change in inventory. Cash operating costs include mining and production costs and selling, general and administrative expenses, but exclude intercompany marketing, management and auction fees, depreciation and amortisation, and mineral royalties.
Capital expenditure
All non-essential capital expenditure was put on hold when operations were suspended in April 2020. Total cash capital expenditure in the current period was USD1.3 million, comprising USD0.7 million spent on property, plant and equipment and primarily invested in the centrifuge installed at the treatment plant, and USD0.6 million spent on the Resettlement Action Plan (“RAP”). In respect of the RAP, the major construction work was completed on schedule in 2020, but additional improvement work is being carried out in 2021 at the request of government authorities.
