GOVERNMENT RECEIVES K10.94M DIVIDEND FROM KAGEM
Kagem Mining Limited, Zambia’s largest emerald producer, has declared a dividend of K41.6 million (US$8 million), of which K10.94 million (US$2 million) has been paid to the Government of the Republic of Zambia, which is a 25 per cent shareholder in the company.
The cash pay-out arises from distributable net profits generated by Kagem during recent years. It is believed to be both the first ever dividend paid by Kagem in its 29 year history and the first such payment to the Government from any gemstone operation in Zambia.
The dividend has been facilitated by the turnaround strategy initiated at Kagem in conjunction with Government a little more than five years ago, when London-listed Gemfields plc acquired a 75 per cent beneficial interest in the company. At that time, Kagem was loss-making and its total annual sales (approximately US$ 8.9 million) were broadly the same as the dividend now being paid. In the year ending 30 June 2012, Kagem’s revenues had grown to approximately K405 million (or US$ 78 million).
In October 2008, Kagem also implemented a pioneering emerald incentive scheme, paying a bonus to all Kagem employees for each month in which pre-determined emerald production thresholds are reached. The scheme, in its 5 years of operation, has paid more than K13 million (approximately US$ 2.5 million) to Kagem’s employees, over and above their regular remuneration arrangements.
In the last year, more than K24 million (approximately US$4.6 million) has been invested in new mining and ancillary equipment, as well as the improvement of Kagem’s facilities.
In October 2013, the Mines Safety Department awarded Kagem a certificate recognising more than 2.8 million reportable injury-free shifts, believed to be a record in the Zambian mining industry.
Kagem is at the forefront of developing the international market for Zambian emeralds by investing in exploration, mining, sales and marketing in order to develop a competitive, reliable and trusted source of ethically produced gemstones that buyers can trust.
A key supporting initiative has been the appointment by Gemfields plc of Hollywood movie star Mila Kunis as the company’s global brand ambassador. Ms Kunis visited Kagem and Zambia earlier this year and has been instrumental in branding Zambian emeralds internationally.
Ian Harebottle, CEO of Gemfields plc and of Kagem, said:
“This dividend – a truly remarkable milestone – is the culmination of more than five years of very hard work. First, we invested heavily in the restructuring, redevelopment and expansion of Kagem. Second, we’ve implemented – on a scale never before seen in the Zambian gemstone sector – an innovative and sustained international marketing campaign for Zambian emeralds, promoting them as a reliable, secure and ethical source of supply.
Kagem is the flag-bearer of the Zambian gemstone sector, and one of the finest examples of what can be achieved in partnerships between government and foreign investors in the mining sphere. We would like to thank and congratulate our partners in Government for their role and support in reaching this excellent result.”
Minister of Finance Hon. Alexander Chikwanda said: “Although this is the first time that a dividend is being received from a gemstone mine, I am confident that this is just the beginning of the good things to come from gemstone mining in Zambia. Most likely it is as a result of not only hard work and dedication but also the measures that Kagem undertook in the last five years in conjunction with the government to restructure, re-develop and expand the Kagem mine.”