Gemfields CEO highlights the dividends of Kagem mine development

Lufwanyama-based Kagem Mining Ltd has been praised for its successful and profitable management.The the world’s single largest-producing emerald mine was highlighted at 2015 UK-Zambia Trade and Investment Forum held in London, in the United Kingdom. The forum promoted public-private sector partnerships and to encourage investment in Zambia. Kagem has thrived under its partnership between the Zambian government and diversified gemstone company Gemfields.

Gemfields chief executive officer Ian Harebottle stressed Kagem’s commitment to its partnership with the Zambian government and praised the country’s strong rule of law during the 2015 UK-Zambia Trade and Investment Forum which was attended by Zambian Vice President Her Honour Inonge Wina and the country’s Minister of Commerce, Trade and Industry, Hon Margaret Mwanakatwe.

Kagem is the world’s single largest-producing emerald mine
Kagem is the world’s single largest-producing emerald mine

Gemfields was a sponsor of the event, which attracted some 200 business people, financiers and investors interested in opportunities for investment in Zambia.

“Kagem is the base from which we grow and it has thrived under the partnership between Gemfields and the Zambian government,” said Mr Harebottle, who was speaking on a panel on Investing in Extractives alongside ZCCM-Investment Holdings CEO Dr Pius Kasolo and Ministry of Mines and Mineral Development chief mining economist Bernadette Mwakacheya.

Kagem recently declared a US$14mn dividend to its shareholders for the year to 30 June 2015, of which US$3.5mn was paid to the Industrial Development Corporation (IDC), which owns 25 per cent of the company on behalf of the Zambian government, and US$10.5mn to Gemfields, which owns the remaining 75 per cent. It was the third dividend paid to shareholders by Kagem and brings to US$30mn the total dividends declared in the last three years. These dividends were in addition to the more than US$43.7mn 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.

Gemfields recently reported that Kagem recorded a 49 per cent year-on-year increase in the volume of gemstones produced: 30.1mn carats of emeralds and beryl in its 2015 financial year, compared with the 20.2mn carats produced in the 2014 financial year. Gemfields supports the delivery of a consistent supply of high-quality coloured gemstones to jewellers, manufacturers and luxury brands worldwide. In January 2013, Gemfields acquired Fabergé – aligning the world’s largest coloured gemstone producer with one of the most recognisable and iconic heritage brands of all time, to create what can readily be described as a true global coloured gemstone champion.

Since Gemfields took over operation of the mine, it has invested US$60mn in turning Kagem around from a loss-making mine to one that is able to achieve viable prices in global markets and become one of Zambia’s larger tax-paying mining companies, contributing over US$360mn 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.

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