Processing plant at
Tanzanite One’s
Merelani Mine
 
London, England — MININGREVIEW.COM — 26 September 2008 – Gemstone producer Tanzanite One Limited has outlined expansion plans and vowed to fight a takeover bid by its bigger rival, Gemfields Resources plc.
 
Gemfields – which has the rights to the Faberge luxury goods brand – announced a US$61.31 million (R490 million) takeover proposal earlier this month in a move aimed at expanding its range of products from emeralds.

Reuter reports that Tanzanite One claimed that the offer “extremely undervalues” the company. “It is opportunistically timed and there is also some significant uncertainty surrounding some elements of the proposal,” company secretary Willi Boehm told a conference call here.

“The proposed offer – in which shareholders would be able to choose 45 pence in cash or 1.4 Gemfields shares for each Tanzanite One share held – would create the world’s leading miner of coloured gemstones,” Gemfields said. Tanzanite One is the biggest miner of the blue-violet gemstone, which is found only in the east African nation of Tanzania.

Gemfields is majority-owned by Pallinghurst Resources, which is led by former BHP Billiton CEO Brian Gilbertson and is reviving the Faberge brand it bought from consumer goods group Unilever.

Meanwhile Tanzanite One has revealed that it plans to increase production to 3.1 million carats by 2011 – up from 1.7 million in 2007 – and that it saw good prospects for the company by expanding into another gemstone, tsavorite. Last October the firm announced it was buying 12 prospecting licences in Tanzania to expand into tsavorite, a vivid green gemstone.

Reuters reports that the expansion into tsavorite was expected to be more profitable than tanzanite, which achieved gross margins of 49% in the first half of 2008. “The potential margins could be huge,” external advisor Bernard Olivier told the news agency. “Your running costs would be lower than, for instance, those of tanzanite, yet the price could be double, if not more,”