Proposed Directors of Tirupati Graphite explain why they have requisitioned an GM. Watch the video here.
As per 31st Dec 2015 financials Gemfields borrowings and other debt is of over US $50 million and have recently taken a significant additional debt • G&A + Corp expenses of over $55 mn/year is too high • Most of their accumulated inventory is not easily saleable as it consists of Faberge jewellery and low grade beryl production from the Kagem Emerald mine, which has insignificant value • They have tried to liquidate all possible inventory to reduce their debt and fund their operations but unable as they don't have any old inventory which is saleable (except current inventory) • Clearly their cash flows are tight • Gemfields Profits have been negligible over the years, hence very little free cash to fund its operations, and thus having to borrow heavily • There have been no major investments or acquisitions where they have required significant cash. The reality is that most of their operations are not very profitable (Faberge losses being a significant drain) and extremely high G&A Costs!! In his earlier posts Eric states that GEM is a “Low Debt company” I see this stock in the low 20s or even teens as soon as their YE June 2016 financials are released and investors will finally understand and realise the actual state of the company's finances
Total Sales over 7 years (2009-2015) is negligible: US$36 mn Source: Gemfields PPT "Proposed Acquisition of Fabergé" Slide 31 - http://gemfields-corporate.s3.amazonaws.com/documents/documents/169/original/21-11-2012_Proposed_Acquisition_of_Faberge.pdf?1411492740 Total Losses over 7 years : US$ 100 mn Source: Gemfields PPT "Proposed Acquisition of Fabergé" Slide 31 - http://gemfields-corporate.s3.amazonaws.com/documents/documents/169/original/21-11-2012_Proposed_Acquisition_of_Faberge.pdf?1411492740 Source: Gemfields Audited Financials for 30 June 2015 Page 94 - http://gemfields-corporate.s3.amazonaws.com/documents/documents/239/original/Gemfields_FY15_presentation_15_10_06_FINAL.pdf?1444208000 Source: Gemfields Audited Financials for 30 June 2014 Page 90 - http://gemfields-corporate.s3.amazonaws.com/documents/documents/178/original/21372_Gemfields_AR14_Final_Proof_03.11.14_WEB.pdf?1416408385 Source: Gemfields Audited Financials for 30 June 2013 Page 68 - http://gemfields-corporate.s3.amazonaws.com/documents/documents/157/original/annual_report_and_financial_statements_2013.pdf?1416936703 Inventory : As of March 2012 Inventory was approx US$30 mn. Total value of inventory lying unsold as of 30th June 2015 is at US$36 mn which is equivalent to the total of last 7 years!! Source: Gemfields PPT "Proposed Acquisition of Fabergé" Slide 31 - http://gemfields-corporate.s3.amazonaws.com/documents/documents/169/original/21-11-2012_Proposed_Acquisition_of_Faberge.pdf?1411492740 Gemfields in November 2012 acquired Faberge issuing 214 mn shares at 42p/share : £90 mn = over US$140 mn Source: Gemfields Press Release dt: 25 Jan 2013 - http://otp.investis.com/clients/uk/gemfields/rns/regulatory-story.aspx?cid=1227&newsid=579396 At the time of the Acquisition Faberge had cumulative sales (2009-2012) of US$13 mn and Cumulative Losses : US$62.5 mn Source: Gemfields PPT "Proposed Acquisition of Fabergé" Slide 31 - http://gemfields-corporate.s3.amazonaws.com/documents/documents/169/original/21-11-2012_Proposed_Acquisition_of_Faberge.pdf?1411492740 Pre-acquisition by Gemfields, the major shareholders and managers of Faberge were "Pallinghurst" themselves Source: The Telegraph article dt: 21 Nov 2012 - http://www.telegraph.co.uk/finance/newsbysector/industry/mining/9693842/Gemfields-buys-Faberge-in-142m-deal.html
As an investor, I’ve done an analysis on Gemfields and it seems Faberge’s acquisition has been used to prop up Gemfields market valuation Faberge’s cumulative sales for last 3 years are ONLY US$ 22.6 mn - whereas Operating expenses for these 3 years is US$ 39mn, incurring huge losses This means that Faberge’s worldwide sales average less than US$ 8 million per year !!!! Pls check the data on this http://docdro.id/Tb6SGuo