Montepuez Ruby Mining Limitada (Ruby)

The Montepuez ruby deposit is located in the northeast of Mozambique within the Cabo Delgado Province, believed to be the most significant recently discovered ruby deposit in the world, covering an area of 34,966 hectares. MRM is 75% owned by Gemfields and 25% owned by local Mozambican minority partner, Mwriti Limitada.

For more information on Gemfields, please visit: www.gemfields.com

Production

MRM produced 62,400 carats of premium ruby in 2023.

Auction Results

MRM’s has generated total cumulative auction sales revenue of USD 1.12 billion through 22 auctions since June 2014.

Assets

MRM

Montepuez Ruby Mining Limitada (“MRM”) is accessing the Montepuez ruby deposit, which is in northeast Mozambique within the Cabo Delgado province, with a licence that covers an area of 349 square kilometres. MRM is believed to be the most significant recently discovered ruby deposit in the world, supplying approximately 50% of the global supply of rubies.

Gemfields, together with MRM, aim to lead a sector that has historically remained unregulated and largely illicit, by showcasing the benefits of a more systematic, modern and transparent approach to coloured gemstone mining so that the industry becomes more responsible and legitimate, providing sustainable long-term social, economic and environmental benefits to both the country and local communities.

MML

Megaruma Mining Limitada (“MML”) is a venture between Gemfields, which owns 75% of the company, and EME Investments SA, Mozambique, which holds the other 25%. MML ruby-mining licence 7057C is located in the Montepuez District of Mozambique, sharing a boundary with the existing MRM licence and covering approximately 155 square kilometres.

ERM

Eastern Ruby Mining Limitada (“ERM”) is a venture between Gemfields, which owns 80% of the company, and Taibo Mucobora, who holds the other 20%. ERM’s mining licence 8277C is valid for 18 more years and covers an area of approximately 116 square kilometres, sharing a western boundary with NMML’s licence.

CDJ

Campos De Joia Limitada (“CDJ”) is a Gemfields holding company, entirely owned by it and registered in Mozambique. Mining title 7427C is held by this holding company and is located 10 kilometres to the northwest of MRM. Three other registered companies, Novo Campos De Joia Lda 1 (“NCDJ1”), Novo Campos De Joia Lda 2 (“NCDJ2”) and Novo Campos De Joia Lda 3 (“NCDJ3”), hold contiguous exploration licences 6114L, 9059L and 9060L respectively, located immediately south of the NMML concession. In total, these four licences cover an area of 456 square kilometres.

Pioneering Auction System

Gemfields implemented an innovative grading and auction system for selling its rough gemstones. The auctions are held in secure locations with the material separated into homogenous lots and certified as either having been produced by Gemfields or obtained by Gemfields from third parties. The world’s leading rough gemstone buyers submit sealed bids for individual lots. A sale occurs if the highest bid received exceeds a pre-determined, but undisclosed, reserve price. The auctions have brought a level of professionalism and transparency previously not seen in the industry.

As there was no industry standard for evaluating rough coloured gemstones, Gemfields established its own grading system to assess each gem according to its individual characteristics (size, colour, shape and clarity). This approach has been instrumental in providing buyers with confidence in the consistent quality of the material on offer. Gemfields used this grading system to develop two auction classes, one offering higher-quality gemstones and the other offering a larger volume of lower quality gems, called commercial-quality gemstones. Rubies are typically sold together at a mixed-quality auction.

Strong Ruby Auction Results

MRM’s 22 auctions of held since June 2014, have generated USD 1.12 billion in total revenues.

June 2023

An auction comprised of mixed-quality rough rubies was held in June 2023. The auction generated USD80.4 million, at an average price of USD256.99 per carat.

September 2023

Gemfields completed an auction of commercial and low-quality ruby on 13 September 2023 with the auction generating USD1.47 million, at an average price of USD1.70 per carat.

December 2023

An auction comprised of mixed-quality rough rubies was held in December 2023. The auction generated USD69.5 million, at an average price of USD290.02 per carat.

June 2024

An auction comprised of mixed-quality rough rubies was held in June 2024. The auction generated USD68.7 million, at an average price of USD316.95 per carat.

MRM’s Operations

Mining

Production

Security

Health, safety and environment

CSR

MRM Beneficial Ownership

The mining operations at MRM comprise of several shallow, open-cast pits split between three main operating areas: the Mugloto Block, the Maninge Nice Block and the Glass Block. Mining is carried out as a mechanised open-pit operation utilising excavators, loaders, articulated dump trucks and associated ancillary equipment. Loaded trucks haul ore to stockpiles adjacent to the processing plant while waste is backfilled into mined-out areas, which are then revegetated, thereby returning the area to its natural aesthetic.

Total rock handling increased in 2023, up 13% to 8.0 million tonnes (2022: 7.0 million tonnes), while ore production fell by 14% to 1.0 million tonnes (2022: 1.2 million tonnes). In total, 6.9 million tonnes of waste material was handled, up 19% (2022: 5.8 million tonnes) with an overall stripping ratio of 5.9.

With MRM’s current constraints on processing, the focus continues to be on the higher-quality but lower-incidence ore. The production of premium rubies in 2023 was down 20% to 62.4 thousand carats (2022: 78.4 thousand carats). Total gemstone production was down 52% to 1.3 million carats (2022: 2.6 million carats).

The overall grade achieved in the period (total production divided by ore processed) of 1.2 carats per tonne (“cpt”) is down 46% (2022: 2.3 cpt), whereas the premium grade (premium ruby production divided by ore processed) of 0.06 cpt is down 18% (2022: 0.07 cpt). This does not take into account the value that different carats may have, and the overall reduction has been driven primarily by less production of the lowest quality/value material such as low sapphires.

The Protection Services Department works on principles of combined team mobile operations, the usage of Unmanned Aerial System, CCTV and of force multipliers, that are maintained. Mobile patrol is carried out 24/7 in risk illegal mining areas and pits with deployment of static guarding at key installations. The company drives the focus on continuously creating awareness on the Voluntary Principles of Human Rights in all aspects of its operations with specific focus on the communities surrounding the operations as well as public security forces at play.

Health and safety policies and procedures continue to evolve and improve across the operation to create a safer and healthier working environment at MRM. Safety training has focussed on toolbox talks, assessing risks in work environments and improving the culture associated with near-miss reporting.

MRM’s community engagement and project activities are aligned with the policies of the Government of Mozambique and supplement the Government’s efforts in improving the quality of life of the community. Through its community engagement process, the key focus for the community team during the year has been the continuation of existing health and livelihoods projects, as well as the implementation of a number of new projects.

MRM is 75% owned by Gemfields. Gemfields is in turn owned by thousands of shareholders via Gemfields’ public company listings on the London (AIM) and Johannesburg stock exchanges. Gemfields has no controlling shareholder.

The remaining 25% of MRM is owned by Mwiriti Limitada, a Mozambican company which first registered and held the prospecting licences over what is today MRM’s licence package. As announced at the time, Gemfields and Mwiriti completed a deal in 2012 whereby they established MRM and Mwiriti’s rights were transferred and converted into mining licences in the name of MRM. Mwiriti may appoint one of the five directors on the board of MRM.

Mwiriti is in turn 60% owned by Raimundo Domingos Pachinuapa (“RDP”) and 40% owned by Asghar Fakhr.

RDP is categorised as a PEP, or politically exposed person. As a result of RDP’s 60% ownership of Mwiriti, and Mwiriti’s 25% ownership of MRM, RDP has an indirect beneficial interest of 15% in MRM. RDP, born in 1938, is a former freedom-fighting general who played a key role in the independence of Mozambique from Portugal, which was achieved in 1975. He was then Governor of Mozambique’s Cabo Delgado province from 1975 to 1986 and was Inspector General of Mozambique from 1986 to 2005. Today he holds no official role or title in the Mozambican Government (nor do any of his siblings or descendants). He remains a member of the political party Frelimo and holds one of the 118 seats on the FRELIMO Central Committee.

Financial

In 2023, MRM held two mixed-quality auctions and one small commercial and low-quality auction generating total auction revenues of USD151.4 million (2022: USD166.7 million).
Total cash operating costs were USD47.0 million (2022: USD46.1 million), giving a rock handling cash unit cost of USD5.90 per tonne (2022: USD6.57 per tonne).

Costs at MRM are rising through inflation with high cost of fuel, labour, spare parts and additional security elements put in place as a preventive measure on account of insurgency activities in the region. Inflation cooled in the second half of 2023, with costs remaining at heightened levels.

The total operating costs in the period were USD94.9 million (2022: USD96.6 million).
Total cash capital expenditure in 2023 was USD25.9 million in the period (2022: 10.5 million), with a split of 28% sustaining capex and 72% expansionary capex. USD13.2 million of the total spend in 2023 was the first payment for the construction of MRM’s second processing plant. A second payment of USD6.7 million was made in February 2024.

Capital expenditure will remain at heightened levels in 2024, as payments continue for MRM’s second processing plant with a further USD42 million expected to be paid in the year (expected total project cost of USD70 million at exchange rates at August 2023 announcement) and with final payments totalling USD7 million in 2025, alongside other sustaining and expansionary capex.

From The Directors

We’ve seen ruby prices at our auctions go from strength to strength in recent years and our final auction of 2023 has further endorsed that trend. This auction has shown that the demand and pricing for rough rubies is decidedly healthy.

Adrian Banks

February 2019 - Gemfields unveils US$15M state-of-the-art, industry-leading sort house

February 2019 – Gemfields unveils US$15M state-of-the-art, industry-leading sort house
Gemfields has unveiled a new ruby sort house at its Montepuez Ruby Mine in Mozambique. The first of its kind in the coloured gemstone industry, it will be on a par with the best diamond facilities in the world.

Please click below to download the full press statement.

File: Gemfields-unveils-USD15M-state-of-the-art-sort-house.pdf

February 25, 2019
Public

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Resettlement Action Plan (RAP)

MRM has an obligation to compensate the households and other land users who are physically or economically displaced by the proposed mining in its concession area, in accordance with the local legislative requirements.

Please click below to download the Montepuez Ruby Mine’s Resettlement Project Fact Sheet.

File: 20200622-Resettlement-Action-Plan-Update.pdf

January 17, 2020
Public

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Operational Grievance Mechanism

MRM established an Operational Grievance Mechanism (“OGM”) in February 2021 to allow local communities to raise historic and ongoing grievances relating to MRM’s operations. The original OGM followed a quasi-judicial model and ended in July 2023 after recognising that grievances were not being addressed in a sufficiently timely manner.

In the light of the above, the OGM was redesigned using expert human rights consultants and following an intensive period of intensive community engagement, including two independently mediated sessions. This culminated in the executive of a Community Mediation Agreement on 30 June 2023 which provided for the agreed close-out in bulk of all historical grievances (pre-1 January 2019), collective remedies and new system for resolving grievances in relation to the period from 1 January 2019. The new OGM, known as “OGM 2.0”, follows a dialogue and mediation-based approach with direct communication between claimants and MRM representatives and also follows the United Nations Guiding Principles on Business. and Human Rights (“UNGPs”). The performance of OGM 2.0 will continue to be assessed periodically by independent monitors.

The below documents provides further information relating to this initiative:

File: 20210204-Outlining-the-Operational-Grievance-Mechanism.pdf

February 3, 2021
Public

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The OGM’s first full independent monitoring report has recently been finalised and a summary of this report can be found below:

File: 20220223-MRM-OGM-Independent-Monitor-Public-Report.pdf

March 23, 2022
Public

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The OGM’s second full independent monitoring report has recently been finalised and a summary of this report can be found below:

File: 20221028-MRM-OGM-Independent-Monitor-Public-Report-II.pdf

November 24, 2022
Public

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Anna Triponel, an independent business and human rights advisor and Toby Hewitt, Gemfields’ Group General Counsel, discussed the OGM’s development and process at a discussion on private grievance mechanisms hosted by the Office of the UN High Commissioner for Human Rights (OHCHR) on 4 March 2022.

You can view the Q&A by clicking here.

Ruby Auction Results

Date21 Jun 2023

Gemfields is pleased to announce the results of a ruby auction comprised of mixed-quality rough rubies held during the period 5 – 20 June 2023. Highlights: June 2023 Mixed-Quality Ruby Auction Total auction revenues of USD 80.4 million 91 of the 94 lots offered for sale were sold (97%) Average realised price of USD 265.99 per carat The 19 auctions of Montepuez Ruby Mining Limitada’s (“MRM”) gemstones held since June 2014 have generated USD 978.5 million in total revenue One lot of 26.8kg (representing some 30% of the total weight offered) remained unsold. As a result, the average price per carat realised at this auction was considerably higher than it would have been had this lot also been sold.

Ruby Auction Results

Date09 Dec 2022

Gemfields is pleased to announce the results of a ruby auction held in Bangkok from 21 November – 8 December 2022. The auction contained a selection of grades that are typically offered at Montepuez Ruby Mining Limitada’s (“MRM”) auctions of mixed quality rubies.

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