How the wheels of change have turned for Gemfields
A strategic review of Gemfields is expected to be completed by the middle of September
Diversified miner Pallinghurst Resources expects a strategic review of Gemfields to be completed by the middle of September as it seeks to restore profitability at its newly delisted subsidiary.
JSE-listed Pallinghurst said on Friday it had appointed Sean Gilbertson, Gemfields longest-serving executive director, as CEO. He will be joined on the board by a number of Gemsfield senior managers, as the company deals with record debt levels and turns around underperforming mines.
Gemfields’s debt was caused largely by a material drop in emerald production at Zambia’s Kagem, which is the world’s largest emerald mine.
The drop in production resulted in a $54m year on year decline in that mine’s auction revenues for the year ending June 2017, Pallinghurst said.
The compulsory acquisition process has commenced and it is expected that Gemfields will be 100%-owned by Pallinghurst by the end of August.
The review and analysis of the operations — including processes, plans, budgets as well as the financial position of Gemfields — was expected by mid-September, Pallinghurst said.
The restoration of Gemfields was intended to turn the company into the "De Beers" of coloured gemstones, said Pallinghurst chairman Brian Gilbertson, father of Sean Gilbertson, who will also be chairman of Gemfields’s board.
Pallinghurst made the offer to acquire the 53% Gemfields shares it did not own on May 19. The offer was resisted by an independent committee of the Gemfields board, which described it as "derisory". Pallinghurst said six days later that it had secured irrevocable undertakings to support the bid from holders of slightly more than 28% of Gemfields’ shares, pushing it over the 75% mark.
The advisory and break fees incurred by the previous Gemfields board in opposing the Pallinghurst offer totalled $7m, exacerbating the challenges, Pallinghurst said.
The mining investment company faced criticism earlier in 2017 over the remuneration structure for its executives.
With Allan Seccombe