4th Dec 2008 07:00
Gemfields Resources Plc ("Gemfields")
4 December 2008
Tanzanite One Limited ("T1") - Requisition of Special General Meeting ("SGM")
Gemfields announces that on 3 December 2008 it joined with Amarivest Limited ("Amarivest") and Pallinghurst Resources (Guernsey) Ltd ("Pallinghurst") to requisition a SGM of T1 for the purpose of considering:
a. the removal of Mr Edward Nealon, Mr Nicholas Sibley and Mr Bernard Olivier
from their office as directors of T1 with immediate effect; and
b. the re-appointment of Mr Mark Summers and Mr Ian Harebottle as directors of
T1 with immediate effect. Mr Harebottle is the former CEO of T1 (having
left T1 in February 2008).
Gemfields is taking this action having considered the statement released byAmarivest on 2 December 2008 (a transcript of which is set out below) which,among other things, refers to a letter from the South African Reserve Bank("SARB") stating that the B Share Scheme (as defined below) recentlyimplemented by the board of T1 (the "T1 Board") be dismantled with immediateeffect and raises concerns regarding corporate governance and the treatment ofT1 shareholders. Gemfields fully supports the views expressed by Amarivest inthe statement below.
Amarivest statement dated 2 December 2008
"Amarivest wishes other T1 shareholders to be aware of the requirement of theSouth African Reserve Bank ("SARB") that the B Share Scheme (as defined below)recently implemented by the board of T1 (the "T1 Board") be dismantled withimmediate effect. Criminal sanctions against T1 group companies and theirdirectors may result if the T1 Board does not comply with the SARB'srequirements.Amarivest is the largest shareholder in T1. Shortly after implementation of theB Share Scheme, Amarivest's representation on the T1 Board was terminated bythe forced removal from the T1 Board of Mr Mark Summers.
Pursuant to the Bye-laws of T1 and Section 74 of the Companies Act 1981 of Bermuda ("the Act"), Amarivest will imminently requisition the T1 Board to proceed to convene a SGM of T1, for the purpose of considering:
c. the removal of Mr Edward Nealon, Mr Nicholas Sibley and Mr Bernard Olivier
from their office as directors of T1 with immediate effect; and
d. the re-appointment of Mr Mark Summers and Mr Ian Harebottle as directors of
T1 with immediate effect. Mr Harebottle is the former CEO of T1 (having
left T1 in February 2008).
Amarivest has contacted Gemfields Resources plc ("Gemfields") and PallinghurstResources (Guernsey) Ltd ("Pallinghurst") who have indicated their intention tojoin Amarivest in requisitioning the SGM. Together, Amarivest, Gemfields andPallinghurst represent 27.6 million T1 shares representing 33.2 per cent. ofthe paid up common share capital of T1 and 16.5 per cent. of the enlargedissued share capital of T1 when aggregated with the new B shares issued by theT1 Board pursuant to the B Share Scheme (as defined below).
Reasons for requisitioning the SGM
On 21 October 2008, Gemfields announced a tender offer to all T1 shareholdersto purchase up to 30,754,970 T1 common shares of US$0.0003 each ("T1 Shares")at 42.75 pence per share (the "Tender Offer"). As referred to in Gemfields'announcement, at 6.59 a.m. on 27 October 2008, the Tender Offer wasoversubscribed by 5,448,249 T1 Shares with 36,203,219 T1 Shares having beentendered in aggregate. By 10 November 2008, the Tender Offer was oversubscribedby 8,974,665 T1 Shares with an aggregate of 39,729,635 T1 Shares having beentendered.In response to the Tender Offer, on 27 October 2008, T1 announced that it hadissued 83,739,976 nil paid issued and unlisted B shares in T1 to Tanzanite OneMining Ltd, a wholly owned subsidiary of Tanzanite One (SA) Limited, which isin turn a wholly owned subsidiary of T1 (the "B Share Scheme"). The new Bshares represent 50.2 per cent. of the enlarged issued voting share capital ofT1.The B Share scheme prevented the holders of more than 30 million shares fromrealising 42.75p per share for their T1 Shares. The T1 Share price has sincefallen to 23.5p per share.
Amarivest is, inter alia, concerned by the following:
1. In its open letter of 29 October 2008, Gemfields noted that it was in
possession of two professional opinions stating that it was likely that the
B Share Scheme contravened South African exchange control regulations.
Gemfields noted that such a contravention may result in criminal sanctions
being brought against T1 group companies and their directors, and more
importantly place T1 Shareholders' interests at risk. In its letter to T1
Shareholders dated 4 November 2008, T1 said "the T1 board is also satisfied
that, as announced on 29 October 2008, the issue of the B shares does not
contravene the exchange control regulations of South Africa".
The SARB, in a letter dated 27 November 2008 to Amarivest, concurs that the BShare Scheme constitutes a "loop structure" in contravention of applicableregulations. The SARB further notes that T1 failed to seek the requisiteapproval to expand the foreign activities of Tanzanite One Mining Limited. TheSARB states that the B Share Scheme should "be dismantled with immediateeffect". A copy of the SARB letter can be viewed on [the Amari Resourceswebsite].
As outlined above, in the face of concerns regarding the legality of the B Share Scheme, the T1 Board gave a public assurance that the B Share Scheme does not contravene applicable regulations. The SARB letter suggests otherwise. Accordingly, Amarivest believes that the handling of the SARB issue raises fundamental concerns about the competence of the T1 Board.
2. On 31 October 2008, the T1 Board removed Mr Mark Summers as a T1 Board
director. Mr Summers, a founding T1 Board member, had raised corporate
governance and SARB related concerns in a letter to the T1 Board only 4
days prior to being removed. The T1 Board did not respond to the concerns
raised by Mr Summers, opting instead to dismiss him.
In addition, Mr Summers was one of two remaining independent directors of T1overseeing the tsavorite transaction (announced on 22 October 2007) wherebyMessrs Nealon and Sibley would receive new T1 Shares in return for sellingcertain tsavorite licences to T1. Immediately prior to his dismissal, MrSummers had questioned certain aspects of the T1 Board's public stance that allconditions to the tsavorite transaction had been met. In its open letter dated25 September 2008, Gemfields also noted its concerns about the tsavoritetransaction (and the T1 Board's failure to remind T1 Shareholders that MrNealon and Mr Sibley were beneficiaries of the transaction).Mr Summers' removal (and his replacement by Bernard Olivier, who is and hasbeen employed in a number of businesses associated with Mr Edward Nealon) givesAmarivest further cause for concern about the standards of corporate governanceat T1.These concerns regarding corporate governance and the treatment of shareholdershave prompted Amarivest to requisition a SGM at which a motion will be proposedto allow T1 Shareholders to decide whether the incumbent T1 Board shouldcontinue to lead the company.
Pursuant to T1's Bye-laws and to the Act, T1 must call the meeting forthwith and provide 21 days' notice thereof.
Amarivest trusts that the T1 Board will now dismantle the B Share Scheme and allow T1 Shareholders (whose T1 Shares are admitted to trading on AIM) to decide the destiny of T1.. "
Gemfields calls upon the T1 Board to promptly convene the requisitioned T1 SGMin accordance with T1's Bye-laws and the Act. T1 Shareholders wishing tosupport Gemfields in this action may write to Gemfields [email protected]:Richard James Tel: +44 (0)20 7016 9416 Gemfields Resources Plc
Gerard Kisbey-Green/Paul Gray/Avital Tel: +44 (0)20 7597 4000 Lobel Investec Bank (UK) Limited Financial Adviser to Gemfields
Mike Jones/Tarica Mpinga Tel: +44 (0)20 7050 6500 Canaccord Adams Ltd
Nominated Adviser and Joint Broker to Gemfields
Gemfields Press Enquiries Tel: +44 (0)20 7429 6666 Charlie Geller/Ed Portman Conduit PR
vendorRelated Shares:
Gemfields Grou.