Gemfields Group Limited

Good morning and welcome to Gemfield's 2025 full-year results shareholder and investor webcast. Sean Gilbertson, CEO, and David Lovett, CFO, will present Gemfield's financial results. At the end of the presentation, we will go into a Q&A. If you'd like to ask a question, please write it in via the webcast page by clicking the Ask a Question button. Before we start, please take a note of the important information in our disclaimer on slide 2. with a full disclaimer in the appendix. And with that, I'll now pass you on to Sean. Thank you very much, Heinrich.

Good morning and welcome. Thank you for your time and interest in what was an extremely difficult year for Gemfields. Ignoring the COVID year of 2020, 2025 saw us deliver our weakest annual auction revenues since 2013, more than a decade ago. and only 41% of the peak auction revenues which we achieved in 2022, which was the height of the post-COVID so-called revenge spending boom for us. I think it's worth recapping on what transpired in getting us to this situation. First, buoyed by the post-COVID boom, we paid out $80 million in dividends to shareholders between May 22 and May 24, and we also did a $10 million share buyback. We then went on to initiate a growth strategy, which included the largest CapEx project Gemfields has ever undertaken, being our second processing plant at MRM in Mozambique at a cost of $70 million. Then, in the second half of 2024, we saw the deterioration of the Chinese economy and a marked decline in China's share of luxury goods consumption. That was followed by the contested general election in Mozambique in October 24, giving rise to civil unrest in many parts of the country and a direct attack on MRM on the 24th of December 2024, leading in turn to significant illegal minor incursions during the first quarter of 2025 and multiple disruptions. We also experienced increased premium ruby production from our Maglotto area at MRM. In the third quarter of 24, one of our emerald competitors started selling considerable quantities of emeralds at low prices, damaging the emerald market. And in January 2025, of course, we saw the Zambian government's surprise introduction of a 15% export duty on gemstones and resulting in our suspending Karjam's exports entirely until the issue was nimbly remedied by the government just a couple of months later in March 25. All of those prevailing circumstances led us to suspend mining at Karjam altogether from January through May of 2025. And at the same time, we were experiencing significant logistics and work permit delays in Mozambique, affecting particularly the specialist electrical installations that were required for MRM's second processing plant. April of 2025 infamously saw President Trump's tariff shocks and their considerable jolts to the luxury and jewelry sectors. And we suffered in 2025 from being unable to recover meaningful proportions of the VAT owed to us by the governments of Zambia and Mozambique, and which reached circa $45 million at peak. And finally, we had the impact of widespread geopolitical instability arising from Israel, Gaza, Syria, Ukraine, and now, of course, Iran. Despite that long list of excuses, and save, of course, for the potential impact of the latest round of Trump-induced turbulence, our overall position as Gemfields is, of course, markedly better than where we were just 12 months ago. In addition, MRM, our Ruby mine, has so far in the first quarter of this year already exceeded by a modest $3 million the whole of 2025's meager $50 million of Ruby revenue. With that scene now set, I'll pass you on to David to lay out the bare facts.

Thank you, Sean, and good morning, everybody. I won't repeat the overview of 2025 that Sean has just given, but the financial results you'll see over the next few slides certainly show how tricky a period it has been for Gemfields. Both revenue and cash generation came in significantly below expectations, largely due to the delayed year-end Ruby auction. But the actions taken in 2025, both operationally and strategically, have materially strengthened the group's footing heading into 2026. I will now take each of the key financial metrics in turn on the next slide. Starting at the top left, we have revenues. Group revenue came in $135 million, which is down sharply from the strong levels seen in 22 and 23 and from the $199 million we achieved in 2024. This was driven primarily by weaker Ruby production throughout the year and the postponement of the planned December Ruby auction. On the cost side, operating expenses were down by approximately 17% to $129 million and reflecting cost discipline and the pause in operations at Kajem in the first half of the year. This then resulted in an EBITDA of 6.25 million, a significant reduction year on year, and adjusted earnings per share of negative 1.3 cents and a pre-cash outflow of $29 million, driven primarily by the reduction in revenue and the capex spending at MRM. Finally, on this slide, we had net debt, which closed the year at $39 million. If you include the auction receivables, this falls to $19 million. There's no doubt that this is a weaker position than we would have liked, but the heavy investment in PP2 is now behind us, and as PP2 stabilizes, we should see our cash position improve. Looking at revenues, In more detail, here we have our rolling 12-month auction profile. This highlights the decline since the post-COVID peak we saw in 2022 and the core challenge we're facing at MRM. On the next slide, we split out CADGEM and MRM separately. On the left, you see CADGEM's auction track record. We generated $78 million in 2025, which is in line with 2024, despite the pause in mining activity in the first half of 2025. Our next CADGEM auction is expected in May this year. On the right-hand side, MRM tells quite a different story. Revenues were significantly lower than the previous year at $50 million. The reduced recovery of premium quality rubies had a clear impact through the postponement of the year-end auction and the reduced revenue seen earlier in the year. This graph is a clear example of why PP2 and general improvements in operational stability at MRM are key for both MRM and Gemfields. It's worth noting that MRM's auction in February generated $53 million, and we expect the next Ruby auction to take place in Q3 of this year. Moving on to CapEx. This slide shows rolling 12-month CapEx at both Kagem and MRM on an actual cash cost basis. At Kagem, on the left-hand side, CapEx remained controlled, reflecting the focus on disciplined capital allocation at that operation. On the right-hand side, MRM CapEx has been elevated because of the new plant. As we move into 2026, CapEx spending is tapering as the project moves towards completion, but it should be noted that there is still some mining fleet purchases to come in 2026. Looking at operating costs, here we have the cash cost operating for Kajem, MRM, the UK corporate and the development assets. At Kajem, we made material reductions in the year, but that is largely due to the pause in mining operations in the first half. The bars will start to move back up as mining activity starts to normalise. At MRM, operating costs have reduced somewhat, but security concerns and increased operations to feed the new plant will see these costs tick up in 2026. Corporate costs, again, made some progress, but it should be noted that they were impacted by one-off costs relating to the capital raise in the year. And finally, on development project costs, they continue to fall as we wind down activity in almost all of those projects. Cost control remains a key focus as we move through 2026. Finally, from my side, we'll have a look at the net debt position. At the year end, we reported gross cash of $64 million and gross debts of $103 million, which gives us a net debt position of $39 million. As we said earlier, if you include the auction receivables of 20 million, that net debt reduces to 18.7 million. Still plenty of work to do here, but we're certainly in a stronger position than we were at the end of 2024. I'll hand back to you now, Sean.