Revolt brews at Gemfields
A GROUP of activist shareholders in miner Gemfields Resources are staging a revolt, claiming the firm’s management is pushing to secure a takeover bid from rival Rox Conduit which substantially undervalues the company.
The dissident group believes Gemfields is trying to secure a rapid sale to Rox Conduit, which owns a 63.9 per cent stake through one of its subsidiaries, at a knock-down price. Gemfields said earlier this month it was in talks regarding a possible 8p-a-share bid from Rox Conduit.
Stockbroker Midas Investment Management is leading around 15 per cent of the shareholders in the protest. The group claims there is a case of “split loyalties” on the Gemfields board, as director Sean Gilbertson’s father Brian is the chairman of Pallinghurst Resources, the firm which controls Rox.
A Gemfields spokesman said: “Under the takeover code Gemfields is not in a position to comment. However, the firm is of course run in the interests of all shareholders.”
Gemfields said in March it would write down the value of its Kagem emerald mine in Namibia to zero.
“The ongoing uncertainty in the global economy, the loss-making performance during the period and the lack of reliable emerald prices make it difficult to justify forecasts showing a positive cashflow with reasonable certainty,” it said at the time. “This in turn complicates valuing the mine.”
But the rebel shareholders say that writing down the value of the mine was unnecessary and believe a fair valuation of the company would be around 30p per share, based on the substantial reserves Gemfields has in the ground.