Gemfields - a gem of a story, shares at 6p could easily double in 2026, TP 13p

Mark Watson-Mitchell - 05.12.2025

This morning Gemfields (LON:GEM) announced the results of an auction comprised of commercial-quality rough emeralds held during the period 17 November - 4 December 2025.

Highlights: December 2025 Commercial-Quality Emerald Auction

· Total auction revenues of $25.4 million

· 46 lots were offered for sale and 45 were sold (98%)

· Average price of $7.46 per carat

· The 53 auctions of Kagem gemstones held since July 2009 have generated $1.147bn in total revenues

The specific auction mix and the quality of the lots offered at each auction vary in characteristics such as size, colour and clarity on account of variations in mined production and market demand.

Therefore, the results of each auction are not always directly comparable.

The auction lots were made available for private, in-person viewings by customers in Jaipur, India.

Following the viewings, the auctions took place via an online auction platform specifically adapted for Gemfields and which permits customers from multiple jurisdictions to participate in a sealed-bid process.

The rough emeralds sold were extracted by Kagem (which is 75% owned by Gemfields and 25% by the Industrial Development Corporation of Zambia).

The proceeds of this auction will be fully repatriated to Kagem in Zambia with all royalties due to the Government of the Republic of Zambia being paid on the full sales prices achieved at the auction.

Management Comment

Adrian Banks, Gemfields' Managing Director of Product & Sales, stated that:

"Today's auction results mark a successful conclusion to a challenging year for Kagem.

Following the temporary suspension of mining operations during the first half, the business has nonetheless delivered a strong performance for 2025, culminating in this auction's solid contribution to $79m of total Kagem auction revenues for 2025.

The firm pricing seen across all quality categories demonstrates that the pressures experienced at the end of 2024 and early 2025 have largely subsided.

Market sentiment has strengthened and the sustained demand observed since the third quarter of 2025 continues to underpin robust performance."

The Business

Gemfields is a world-leading miner of coloured gemstones, which is dual-listed on the Johannesburg and London AIM stock exchanges.

The group is the operator and 75% owner of both Kagem Mining in Zambia (a world-leading emerald mine) and Montepuez Ruby Mining in Mozambique (situated on one of the most significant recently discovered ruby deposits in the world).

In addition, it holds controlling interests in various other gemstone mining and prospecting licenses in Zambia, Mozambique, Ethiopia and Madagascar.

The group introduced a proprietary grading system and pioneering auction platform which have transformed the coloured gemstone industry.

Today, the company implements and invests in industry-leading policies, practices and infrastructure across its operations; aligns with relevant industry standards to underpin its responsible approach, plays an active role in working groups to modernise the sector and raises the profile of African gems through its global marketing efforts.

Broker's Views

Analysts Duncan Hay and Tom Price, at Panmure Liberum, rate the group's shares as a Buy, with a Target Price of 13.0p per share.

For the year to the end of this month, they estimate a fall in sales to $133.0m ($213.0m), but with a significant reduction in the group's losses to $42.4m ($103.6m).

However, for the coming year to end-December 2026, the analysts look for $366.0m in sales, with pre-tax profits bouncing back to $107.7m, generating $0.03 per share in earnings.

They state that:

"GEM has ended 2025 with a solid CQ emerald auction.

Prices are back to 2023 levels and there was good appetite to take decent volume, esp. given upcoming competitor auctions have been flagged.

In the H1 results (see note) GEM advised that the US$70m ‘PP2’ expansion at Montepuez was “substantially complete” and on track to be fully operational by the end of the year.

This means a tripling of throughput and a step-change in cash generation.

GEM is well capitalised (rights issue + Fabergé sale) and can now fully focus on mining, and the PP2 (ruby) expansion ramp-up."

My View

I consider the shares of this £103m-capitalised group to be jewels, trading at just 6p each.

Based on the broker estimates, the group could end the next year with nearly $52.0m in cash in the bank, which would inevitably lead to a significant upward re-rating of the shares.

(Profile 23.06.25 @ 4.50p set a Target Price of 5.75p*)

(Profile 13.08.25 @ 5.65p set a Target Price of 7.00p)