GEMFIELDS’ Montepuez Ruby Mine (MRM) in Mozambique is currently unable to pay management and auction fees to the group, as weak ruby grades continue to weigh on the operation despite a sharp increase in processing capacity.
“In short, no,” said Gemfields interim CEO David Lovett on Wednesday when asked during the group’s interim results presentation if MRM could pay its way. Gemfields nevertheless expects MRM to meet its debt repayments. It is also in early talks with banks about possible refinancing.
“We are speaking to the banks at a group level as well as at a local level to see if there are interesting ways of refinancing our current debt position,” Lovett said. “But those conversations are very early stage, so we will continue along those routes. And if anything interesting comes, we’ll report that to the market.”
Gemfields didn’t give further details of mine liabilities.
The pressure comes after substantial investment in PP2, MRM’s second processing plant, which was built to lift processing capacity.
The plant had a difficult start to the year, running at 300 and 390 tons an hour. Since mid-June, however, it has operated more consistently at between 410 and 450t/h, above its 400t/h target.
Lovett said PP2 was now running consistently above 400t/h. Together with PP1, this gives MRM an annualised processing rate of about 3Mt to 3.2Mt.
But the higher processing rate has not solved MRM’s bigger problem.
Ore production rose 133% in the first half compared with a year earlier, while premium ruby production fell 13%. Gemfields said the weaker grades were the main reason it cut its assumptions for future ruby recoveries and took a $125.2m impairment against MRM.
Across PP1 and PP2, total throughput has roughly tripled, while total carat production has approximately doubled. “If we can stabilise grade, the additional throughput should translate into materially higher recoveries,” Lovett said.
Gemfields is looking at operating costs and capital spending as it tries to preserve cash. But Lovett said MRM’s main problem was not spending. “Quite frankly, it’s a production issue rather than a spending issue. We need the production to improve. We need to bring more stability,” he said.
Gemfields also cautioned that existing ore stockpiles are expected to fall materially before the end of 2026, after which fresh ore will have to be mined to keep the plants supplied.
Gemfields is considering contract mining and said additional mining equipment may be needed to support the higher processing rate. Management is also expanding bulk sampling and changing its geological analysis to get a better understanding of ruby grades across the deposit.
Mining consultancy SRK is expected to work towards an updated mineral resource estimate in 2027.