Coloured gemstone producer Gemfields, which has been delisted from the London Stock Exchange’s Alternate Investment Market (AIM) and is now a subsidiary of Pallinghurst Resources, says it is in the process of reformulating its development plan given its current record levels of debt.
The company said the financial situation has in large measure been caused by a material drop in emerald production at Kagem, which resulted in a $54 million year-on-year decline in Kagem’s auction revenues for the fiscal year that ended June 30 last.
The miner added that advisory and break fees, incurred by the previous board in opposing the Pallinghurst offer, and totalling approximately $7 million, have further exacerbated present challenges.
Pallinghurst, which had a majority shareholding in Gemfields, had made an unsolicited bid for a complete takeover of the miner. Minority shareholders said the bid grossly undervalued the company and a bitter takeover battle ensued. Pallinghurst prevailed when a counter-bid by Fosun Gold was nullified by shareholders voting to accept the Pallinghurst offer.
With the takeover behind it, Gemfields has, meanwhile, reconstituted its top management. Pallinghurst Chairman Brian Gilbertson’s son Sean has taken over as Chairman of the board and Chief Executive after the resignation of former CEO Ian Harebottle. Pallinghurst Chief Executive Arne Frandsen is now the Gemfields Vice Chairman.
Gemfields stated it is conducting a comprehensive review and analysis of all its operations, including processes, plans, budgets and financial position. This will form the basis of an updated development plan for the company.
Pallinghurst Resources said it intends to report the findings of its strategic review to its board by mid-September, and will engage with shareholders shortly thereafter.
https://www.gemkonnect.com/news/gemfields-reviewing-future-plans-light-record-debt