Gemfields Grou. Regulatory News (GEM)

18 Dec 2007 07:01

Gemfields Resources PLC18 December 2007 18 December 2007 Gemfields Resources plc ("Gemfields") Acquisition of Kagem Gemfields Resources plc (AIM: GEM), the AIM-listed Zambian gemstone mining andexploration company, is pleased to announce that it has conditionally agreed toacquire from Rox Limited ("Rox", a Pallinghurst Resources portfolio company) a75% interest in the Kagem emerald mine in Zambia. Rox has also granted to Gemfields an option to acquire a portfolio of in excessof 25 licences and licence applications for gemstone exploration in Madagascarheld through its subsidiary Oriental Mining. In addition, Faberge Limited, another Pallinghurst Resources portfolio companyhas agreed to grant Gemfields an option to acquire a worldwide and exclusive 15year licence to use the Faberge brand name in respect of gemstones (excludingdiamonds). Under the proposed transaction, Gemfields is to acquire Greentop InternationalInc. (a BVI company) and Krinera Group SA (a Panamanian company), the holdingcompanies through which Rox's interest in the Kagem mine is held (viaintermediate holding companies). In consideration for the acquisition ofGreentop and Krinera and the options referred to above, Gemfields will issue toRox 137,910,340 new ordinary shares in Gemfields (constituting 55% of Gemfields'issued share capital after implementation of the transaction on a fully dilutedbasis). As the proposed transaction is classified as a reverse takeover under the AIMRules, the transaction is conditional, amongst other things, on Gemfieldsobtaining the approval of its shareholders. Gemfields' shares have beensuspended from trading pending the preparation and publication of a re-admissiondocument and notice of extraordinary general meeting ("EGM") setting out thedetails of the proposed transaction and seeking shareholder approval. Acompetent persons report is being prepared and will form part of there-admission document. It is expected that the re-admission document and noticeof EGM will be sent to shareholders as soon as they are available, which iscurrently intended to be in the first quarter of 2008. Graham Mascall, Chairman of Gemfields said: "This transaction adds significant value-adding building blocks to Gemfields'vision of becoming a leading supplier of both rough and polished colouredgemstones. Since its IPO in November 2005, Gemfields has assembled a world classoperational team with extensive experience in all aspects of the gemstonebusiness. Significant operational synergies will be generated from thecombination of these two sets of assets. Gemfields will now be the dominant company on Zambia's Fwaya-Fwaya emerald belt,and this bodes well for further consolidation of the belt. Gemfields' currentposition in the emerald industry will form the basis for targeting significantinterests in other coloured gemstones." Mr Brian Gilbertson, Chairman of Pallinghurst Resources said: "We have long held the view that the coloured gemstone industry is unusuallyfragmented and undercapitalised. Given the increasing popularity of colouredgemstones, and the resulting price increases in recent years, PallinghurstResources believes that a significant opportunity exists in pursuingconsolidation and vertical integration of the coloured gemstone industry. The vision of supplying a range of ethically sourced coloured gemstones withguaranteed provenance, and with the premium stones bearing the Faberge brandname, creates an attractive value proposition. The combination of the assets ofGemfields and Rox establishes a solid framework for the development of anintegrated company involved in the exploration, mining, processing, marketingand sales of coloured gemstones on an international scale. " Kagem Kagem is the largest emerald mine in Zambia and is one of the most attractiveoperating emerald assets in Africa. Notably, Kagem has a long and demonstratedhistory of producing high quality emeralds. During the last three years, Kagemhas produced an average of 6.5 million carats of emeralds annually. Gemfieldsbelieves that these production levels can be significantly improved. Kagem presently has in excess of 350 employees and has two processing plants.The Kagem assets include a cutting works in nearby Kitwe where lower gradeemeralds will be cut and polished. While Kagem's licence area is extensive and includes five emerald bearing belts,production to date has focussed on a single pit known as "FF-F10" which lies onthe Fwaya-Fwaya belt. Under the terms of the proposed transaction, Gemfields would acquire Rox's 75%indirect interest in Kagem. The Government of the Republic of Zambia owns theremaining 25%. Faberge Under the terms of the proposed transaction, Gemfields will acquire an option tobe granted a 15 year worldwide and exclusive licence to use the Faberge name inbranding, marketing and selling coloured gemstones (excluding diamonds). Thename carries exceptional branding potential and would, in terms of the proposedtransaction, become Gemfields' flagship brand. The option will be exercisable byGemfields in the three months following completion of the transaction, however,if it has not done so, Faberge Limited can require it to. Madagascar Madagascar is presently one of the most prospective mineral provinces in theworld for coloured gemstones. Gemfields would, in terms of the proposedtransaction, be granted an option to acquire Oriental Mining which holds aportfolio in excess of 25 licences and licence applications in Madagascarcovering rubies, sapphires and emeralds, as well as garnets and tourmalines. Theoption is exercisable by Gemfields at any time in the three months followingcompletion of the proposed transaction, however, if it has not done so, Rox mayrequire it to. Enquiries: Gemfields Richard James, CFO richard.james@gemfields.co.uk +44 (0)20 7016 9416 Conduit PR Leesa Peters/Ed Portman +44 (0)20 7429 6600 +44 (0)781 215 9885 Canaccord Adams Limited Robin Birchall +44 (0)20 7050 6500 About Gemfields Resources plc Gemfields is an AIM-quoted gemstone exploration, mining and processing company.Gemfields existing assets include: • The wholly owned Mbuva-Chibolele emerald mine on the Fwaya-Fwaya belt, where trial mining commenced in July 2006. A 10,050 carat emerald was recovered from Mbuva-Chibolele in August 2007; • The wholly owned Kamakanga emerald mine on the western limb of the Fwaya-Fwaya belt in Zambia, which was acquired in December 2005; • The 50% (an agreement to increase to 76% is expected to be signed shortly) owned Kariba amethyst mine where production is being ramped up, and a large-scale amethyst prospecting licence in the surrounding area; • An option (valid until 31 March 2008) to acquire the Jagoda pink tourmaline mine for USD 1.95 million. Geological mapping is presently underway on this property; • Substantial prospecting licences in the Ndola Rural Emerald Restricted Area. About Rox Limited Rox Limited is incorporated in the Cayman Islands and is a portfolio company ofPallinghurst Resources (see www.pallinghurst.com for more information). Rox wasestablished by Pallinghurst Resources as a special purpose vehicle for thepursuit of consolidation and vertical integration of the coloured gemstonesector. About Faberge Limited Faberge Limited, another portfolio company of Pallinghurst Resources, acquiredthe worldwide rights to the Faberge brand name from Unilever in January 2007. First established in 1842 in Russia (but originally of French descent), Fabergeis one of the most revered luxury names in history. Faberge's catalogues ofluxury items and objets d'art are intimately associated with the use of colourand of coloured gemstones. A Faberge egg belonging to the Rothschild Family wassold at auction in November 2007 by Christies for a record breaking GBP 8.9million. In a reversal of the Faberge family's loss of the rights to the Faberge name ina legal settlement in 1951, the historic re-unification of the Faberge brandwith the direct descendents of Peter Carl Faberge was announced in October 2007.Mark Dunhill, the former president of Alfred Dunhill Ltd, was appointed as CEOof the unified Faberge in November 2007 (see www.faberge.com for moreinformation). End. This information is provided by RNS The company news service from the London Stock Exchange