Gemfields studies 2 grams-a-tonne gold in Mozambique

Africa-focused Gemfields (LSE: GEM; JSE: GML), known by its emeralds and rubies, has produced its first resource estimate for the Nairoto gold project in Mozambique showing high grade from a shallow depth. 

The project in the northern Cabo Delgado province about 100 km from the Tanzania border holds 1.58 million inferred tonnes grading 2.02 grams gold per tonne for 103,000 oz. contained metal in just the TL5 zone, the Guernsey-domiciled company said on Thursday. The target is within 80 metres of the surface, it said. 

The coloured gemstones producer plans to seek a buyer or suitable partner for the project as gold isn’t part of its long-term strategy. It’s aiming for an indicated mineral resource for TL5 by the end of the year.

“This is exciting initial and early stage news for our gold project in northern Mozambique,” Kartikeya Parikshya, Gemfields’ managing director for Mozambique, said in the release. “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.”

Shares in Gemfields closed 1% lower in London on Thursday at 12.75 pence apiece, valuing the company at £150.2 million. They’ve traded in a 52-week range of 11-17 pence. 

Islamic insurgency

The project 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 about 100 km south of the gold asset. 

Gemfields began work on Nairoto in 2020, but had to halt activities due to Covid-19 pandemic. An Islamic extremist insurgency has affected progress since. The company had to evacuate the exploration camp last year following an attack on a nearby village.

Violence in the area since 2017 has claimed more than 4,500 lives and displaced over 1 million people, mostly women and children.

It has also affected multibillion-dollar investments, including France’s TotalEnergies US$20 billion liquified natural gas project, which the firm halted in 2021. Shortly after, it invoked force majeure after the insurgents attacked the coastal town of Palma near the Mozambique LNG project site.

Gemfields has continued to operate and has invested nearly US$20 million in Nairoto as of the end of March.