Montepuez Ruby Mining: Hostile Gemfields takeover succeeds

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Montepuez Ruby Mining: Hostile Gemfields takeover succeeds

9:46 CAT | 29 Jun 2017

File photo / The takeover Gemfields leadership had bitterly opposed will go ahead after Pallinghurst Resorces confirmed it had gained the necessary shareholder support.

Gemfields announced this week 37% of shareholders had backed Pallinghurst’s move and encouraged the rest to take up the share swap that will give them 1.91 shares in the South African company per Gemfields share owned.

Pallinghurst confirmed the move with almost full support from its shareholders at a meeting in Guernsey on Monday, while also passing the 75% Gemfields shareholder support needed to pull the miner from the AIM board.

Gemfields has two main operations, both 75%-owned; the Kagem emerald mine in Zambia and the Montepuez ruby mine in Mozambique.

Sales at the end of last year were hit by Indian demonetisation but the full year results were positive.

There had been hope in the Gemfields camp that a £256 million (US$326 million) cash offer from the conglomerate Fosun International would break the irrevocable agreements a large chunk of shareholders had made with Pallinghurst.

Now chairman Brian Gilbertson’s gang will take a long hard look at the Gemfields c-suite.

Pallinghurst said when it launched the takeover Gemfields needed changes at the top.

“Following the completion of the offer, Pallinghurst intends to engage with Gemfields management to identify opportunities for cost reduction, including, but not limited to, streamlining the management, administration and removing any overlapping functions,” the company said.

Gemfield’s independent committee – basically the board without the Pallinghurst nominees Finn Behnken and Sean Gilbertson – was still insistent the takeover would lose its shareholders money.

“The independent committee believes that the unsolicited Pallinghurst offer significantly undervalues Gemfields and its prospects as a leading player in the coloured gemstone sector and denies Gemfields shareholders the ability to realise the material future upside potential of the company on a standalone basis,” the committee said.

This is now the second swing former BHP boss Gilbertson has had at Gemfields retail subsidiary Fabergé.

He sold it to Gemfields for the equivalent of US$214 million in 2012, when Pallinghurst was the majority shareholder of the miner.

Source: Mining Journal