KAGEM MINING PAYS US$14M DIVIDEND
LUSAKA, ZAMBIA, October 20, 2015 – Lufwanyama-based Kagem Mining Ltd, the world’s single largest producing emerald mine, has paid a US$14 million dividend to its shareholders – the Industrial Development Corporation (IDC), which owns 25 per cent of the company on behalf of the Zambian government, and Gemfields plc, which owns the remaining 75 per cent.
The dividend for the year to June 30, 2015, is the third dividend paid to shareholders by Kagem and brings to US$30 million the total dividends declared in the last three years.
These dividends are in addition to the more than US$43.7 million in corporate taxes and mineral royalties that have been generated by the company in the last three years.
The last three years of dividends – the first in the Kagem’s history – have been facilitated by the turnaround strategy initiated at Kagem, in conjunction with the Zambian government, since 2008 when London-listed Gemfields plc acquired a 75 per cent beneficial interest in the company.
“Kagem is now profitable and paying dividends. That is good news for the government of Zambia and its people and it demonstrates what can be done when national resources and world-class private sector expertise join forces to create a flagship global business,” said Chief Executive Officer Ian Harebottle. “Our three consecutive years of dividends, supported by the considerable increase in jobs and skills that have been created at the mine, show that the benefits of that collaboration can be shared by all parties and in an equitable manner.”
Gemfields recently reported that Kagem recorded a 49 per cent year-on-year increase in the volume of gemstones produced.
The mine produced 30.1 million carats of emeralds and beryl in its 2015 financial year, compared with the 20.2 million carats produced in the 2014 financial year. This is the second highest recorded annual production ever achieved at the Kagem mine. The highest production was 33 million carats in 2011 (a carat is equal to 0.2 grams).
The figures were reported in Gemfields’ final audited results, which showed a 7 per cent increase in revenue for the group to US$171.4 million and profit before interest, tax, depreciation and amortisation of US$64.4 million compared with the US$59.3 million achieved in the 2014 financial year. Despite the reduction in profit after tax to US$12.3 million from the US$16.3 million in 2014 and the various other challenges currently facing the global mining sector, Gemfields remained optimistic about the prospects for the gemstones sector in the coming years.
“Global appreciation and demand for coloured gemstone continues to increase at a steady pace, largely supported by Gemfields global marketing efforts, as we remain committed to developing our pipeline of growth projects such as our recent moves into Ethiopia and Colombia reflects,” said Mr Harebottle.
The company’s operations in Zambia – the Kagem emerald mine and Kariba Minerals amethyst mine – contributed US$65 million or 38 per cent of the group’s revenue and US$9.36 million or 30 per cent of its operating profit. Kagem saw its unit operating cost, assisted by the companies continued drive to ever improving operating efficiencies, reduce from US$ 1.58 per carat in 2014 to US$ 1.48 per carat during the year.
According to the report by UK-based mine analysts SRK Consulting released last month, the Kagem mine has a projected lifespan of 25 years with a combined measured, indicated and inferred mineral resource of 1.8 billion carats of emeralds and beryl expected over that period of time – an average of 44.7 million carats annually. With a carat being equal to 0.2 grams, the mine could yield up to 360 million grams or 360 tonnes of gemstones over the updated estimate of its projected future mine life.
Since Gemfields took over operation of the mine it has invested US$60 million in turning Kagem around from its long history as a loss making mine to one where it has been able to increase achievable prices on the global markets tenfold and become one of Zambia’s larger taxpaying mining companies, contributing more than US$360 million to Zambia’s direct foreign earnings in the past few years alone. Taxes paid to government are expected to grow during the life of the mine.