Gemfields Makes Offer for TanzaniteOne

Gemfields Resources Plc. said Friday it has proposed an offer for TanzaniteOne Ltd. that values the largest miner of Tanzanite at approximately $59 million.

Gemfields a U.K.-based colored gemstone producer, said in a statement that TanzaniteOne shareholders could choose cash, Gemfields shares, or a combination of the two. Both companies trade on the London Stock Exchange.

The offer, if approved, would create the world’s leading miner of colored gemstones, Gemfields said. 

Gemfields holdings include controlling interests in the Kagem Emerald Mine, Kamakanga Emerald Mine, Mbuva-Chibolele Emerald Mine, and the Kariba Amethyst Mine (all in Zambia). The company also has eight prospecting licenses in the Ndola Rural Emerald Restricted Area region of Zambia. And it recently acquired Oriental Mining s.a.r.l., of Madagascar, which holds 15 licenses in the island nation off Africa’s east coast that covers rubies, sapphires, emeralds, garnets, and tourmalines.

The company also recently opened a cutting and polishing facility in Jaipur, India, and was granted a 15-year exclusive worldwide license to use the Fabergé brand name in regards to colored gemstones (excluding diamonds). Gemfields and Fabergé are holdings of Pallinghurst Resources, which pursues strategic investments and partnerships in the natural resources sector. Rajiv Gupta is founder and executive vice chairman of Gemfields. Sean Gilbertson serves as chief executive officer of the company. Pallinghurst Resources is headed by Brain Gilbertson, former CEO of BHP-Billiton plc., and father of Sean Gilbertson.

Gemfields offer would be reduced pro rata should TanzaniteOne pay any dividend or make any other payment to shareholders prior to completion, Gemfields said. The offer values the whole of the issued common share capital of TanzaniteOne at approximately 33 million pounds ($59 million), which Gemfields said represents a premium of approximately 76.5 percent over the middle-market quotation of a TanzaniteOne Share of 25.5 pence (45 cents) at the close of business on Aug. 29 (the last dealing day before Gemfields began acquiring shares in TanzaniteOne).

TanzaniteOne shareholders electing to receive Gemfields shares for all or part of their TanzaniteOne shares will receive 1.4 Gemfields shares for each TanzaniteOne share, equivalent to 32 pence (57 cents) for each Gemfields share. The 30-day and 60-day volume weighted average share prices for Gemfields were 32 and 34.4 pence per share respectively at the close of business on Aug. 29.

On Sept. 1, Gemfields said it purchased 7.5 million TanzaniteOne shares at 30 pence (53 cents) per share and a further 0.5 million shares at 37 pence (65 cents) per share on Sept. 2. Pallinghurst Resources (Guernsey) Ltd., owns an additional 2.1 million TanzaniteOne shares. Together, the shares represent approximately 13.7 percent of TanzaniteOne’s issued common share capital, Gemfields said.

In addition, Gemfields said it received a conditional irrevocable undertaking of approximately 14 million TanzaniteOne shares to accept any offer by Gemfields at 45 pence (80 cents) per TanzaniteOne share, representing approximately 19 percent. of TanzaniteOne issued common share capital.

The TanzaniteOne shares owned by Gemfields and Pallinghurst, together with the irrevocable undertaking represent approximately 24 million TanzaniteOne shares, or approximately 32.6 percent of TanzaniteOne’s issued common share capital.

“This announcement does not amount to a firm intention to make an offer,” Gemfields said in its statement. “The proposal is at an early stage and there can be no certainty that any offer will ultimately be made, even if the above pre-conditions are waived.”