Revolt brews at Gemfields

A GROUP of activist shareholders in miner Gemfields Resources are staging a revolt, claiming the firm&rsquo;s management is pushing to secure a takeover bid from rival Rox Conduit which substantially undervalues the company.<br /><br />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.<br /><br />Stockbroker Midas Investment Management is leading around 15 per cent of the shareholders in the protest. The group claims there is a case of &ldquo;split loyalties&rdquo; on the Gemfields board, as director Sean Gilbertson&rsquo;s father Brian is the chairman of Pallinghurst Resources, the firm which controls Rox.<br /><br />A Gemfields spokesman said: &ldquo;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.&rdquo; <br /><br />Gemfields said in March it would write down the value of its Kagem emerald mine in Namibia to zero.<br /><br />&ldquo;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,&rdquo; it said at the time. &ldquo;This in turn complicates valuing the mine.&rdquo;<br /><br />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.