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A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Africa-focused Gemfields (LON: GEM) (JSE: GML), known by its emeralds and rubies, announced on Thursday “noteworthy” drilling results from its Nairoto gold asset in Mozambique.
The maiden mineral resource estimate suggests the presence of 103,000 ounces of gold averaging over two grams per tonne within 80 meters of the surface. The results, the company noted, come from just one of its target areas, called TL5.
Gemfields does not include gold mining in its long-term strategy, so the coloured gemstones producer plans to seek a buyer or suitable partner for the project in the future.
“This is exciting initial and early stage news for our gold project in northern Mozambique. Given we have yet to drill deeper in order to understand the depth extension, these results are a good first step as we continue our exploration to better understand both TL5 and our other target areas,” Kartikeya Parikshya, Gemfields’ managing director for Mozambique, said in the statement.
“All being well, we hope to provide an indicated mineral resource for TL5 by the end of the year,” Parikshya said.
The project, located in the resource-rich Cabo Delgado province in northern Mozambique, is being advanced by Nairoto Resources, a joint venture in which Gemfields has a 75% interest. The rest is held by Mwiriti, its local partner in the Montepuez rubies mine.
Gemfields began work on Nairoto in 2020, but had to halt activities due to Covid-19 pandemic. Islamic extremist insurgency has affected progress since, and the company had to evacuate the exploration camp last year, following an attack on a nearby village.
Violence in the area has claimed more than 4,500 lives and displaced over 1 million people, mostly women and children, since 2017.
It has also affected multibillion-dollar investments, including France’s TotalEnergies $20 billion liquified natural gas project, which the firm halted in 2021. Shortly after, it invoked force majeure after the insurgents attacked the town of Palma, very near the Mozambique LNG project site.
Gemfields has continued to operate and, since beginning to explore the Nairobi assets, it has invested nearly $20 million in the project as of the end of March.
