Pallinghurst Resources Limited announced that it has now completed the integration of Gemfields, which it had acquired some months ago.

The Company says  there are already signs of a turn-around. To substantiate this,  Pallinghurst cites several points: the strong operating performance since Gemfields was acquired;    revitalised production at Kagem; record auction results with US$ 77 million generated. Pallinghurst also noted that Gemfields’ debt level has reduced since acquisition, and significant cost savings have been achieved. The Company said that it had set six strategic priorities   for 2018; and that the Board has approved a share buy-back programme.  

 Pallinghurst  noted that  the debt position of Gemfields plc (Gemfields), “had grown almost five-fold from circa US$ 17 million (gross) in the middle of 2014 to circa US$ 84 million at completion (when the legal, advisory and break fees incurred by the then Gemfields Independent Committee in the last month of the acquisition are included)”.

In order to remedy this, the Company put together measures to  reduce costs “as far as reasonably possible” and sought  ways to increase revenues.

The other challenge before Pallinghurst   was the fall in Kagem revenues.   In the financial year to end-June 2017 compared to 2016 the decline amounted  to US$ 54 million; which was  “caused essentially by a sharp fall in the production of premium emerald”, the Company said. 

Among the measures taken were both cost reductions and streamlining of the management team.

“The integration of the Gemfields and Pallinghurst teams has been successfully implemented, with the headcount at the London administrative head-office reduced by approximately 15%,” Pallinghurst announced. “Further staff rationalisation was implemented at the Gemfields offices in New York and India.”

Along with this, the Pallinghurst executive team and remuneration packages have also  been restructured.

While  Pallinghurst Executive Director, Priyank Thapliyal, has stepped down to become full time CEO of Jupiter Mines Limited (Jupiter Mines); Brian Gilbertson will become non-executive Chairman from end of December 2017, Pallinghurst stated. “Those changes and additional voluntary salary reductions, will reduce the total compensation to the executive management team by more than 50%,” Pallinghurst said.

 The Company also announced that hereon,  Arne H. Frandsen (Chief Executive), Andrew Willis (Finance Director) and Sean Gilbertson (Gemstones) will constitute Pallinghurst’s executive management team.

Several changes were made across Gemfields operations; and specifically at Kagem where now the focus is now on extraction of carats in the “premium emerald” category.

The Company has also commenced the re-opening of the shut  Mbuva-Chibolele mining pit, located across the Kafubu River from the Kagem mine, in order to increase available production areas and boost overall gemstone production. The first production of gemstones from this operation is expected in the first quarter of 2018.

 Similarly, bulk sampling has commenced at one of the two Megaruma ruby licences, located adjacent to the Montepuez Ruby Mining (MRM) operations.

Arne H. Frandsen, Chief Executive of Pallinghurst said: “It has been a very busy four-month period since the completion of the Gemfields acquisition and I am happy to report that the integration is now complete, with solid financial and operational improvements already being achieved. The Management Team’s focus is now on moving forward as one team, meeting our six key strategic objectives, which in turn will unlock the full value of Pallinghurst’s assets for the benefit of all our shareholders.”