Gemfields Group Limited (GML) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Bruce Cleaver, and I am the Chair of Gemfields Group Limited. This is an extraordinary general meeting of Gemfields Group Limited. To avoid repetition, I shall abbreviate Gemfields Group Limited to Gemfields. The quorum for this meeting is 3 members entitled to vote, whether they are present in person, by corporate representative or by proxy. As there is a quorum present, and it is now 10:00 a.m. British Standard Time, I declare the meeting open. This meeting is to consider 2 ordinary resolutions and 1 special resolution. All 3 resolutions have the full support of the Board of Directors and have been set out in full in the notice of EGM. The notice of EGM was distributed to Gemfields' shareholders in a circular issued on April 11, 2025, which I shall refer to as the circular, and the circular sets out the resolutions now to be proposed. In the absence of any objections, I shall take the notice of this meeting as read. In accordance with Gemfields articles of incorporation, voting will be held by way of a poll, and every shareholder present in person or represented by proxy and entitled to vote shall be entitled to one vote for every share held. Gemfields registrar, Computershare, have been appointed official scrutineers of the poll. Only shareholders present in person, by corporate representative or by proxy are entitled to vote. Shareholders present in person who have already lodged proxy forms prior to the meeting should not complete a poll card, unless there's an intention to change their vote. Shareholders who are participating online are able to view a live webcast of the meeting via the London Stock Exchange Group's SparkLive service. Shareholders who wish to ask questions remotely were requested to join a conference call line or to pre-submit written questions by 4:00 p.m. on Friday, 16 May. We do not have any requests for questions via the phone lines and will therefore only respond to questions that were presubmitted or asked in the room.

We will now take questions from shareholders on the business of the meeting. Starting with questions from those shareholders in person today and then those that were presubmitted in advance by e-mail. Do we have any questions from shareholders in person? If so, kindly state your name and which shareholder you are representing.

No questions in person here.

Thank you. I will now ask the company secretary to read out the pre-submitted written questions, and I'll then ask Mr. Sean Gilbertson, Chief Executive of Gemfields, to provide answers to the presubmitted questions. Mr. Secretary?

Thank you, Mr. Chairman. We have received a number of questions from the shareholder, [ Mr. Michael McLoughlin ]. The first question is as follows. How does the rights issue clearly benefit both the minority shareholders and the company by volume of new shares being issued at the price that are being issued, as it is not raising funds at any premium, which is why rights issues are invariably done and as it is, the staved off liquidation?

Good morning, ladies and gentlemen, and thank you for the question. The proposed rights issue is required in order to address our shortfall in working capital, which arises from Gemfields encountering a number of challenges simultaneously, whilst, at the same time, we've been completing the group's single largest ever investment, namely the second processing plant at Montepuez Ruby Mining in Mozambique, which will triple our throughput capacity at that mine. And I would like to direct you to our notice of EGM and the circular, which sets out more details in that regard.

The second question is as follows. To what percentage extent are minority shareholders following their rights in full?

Thank you. The rights issue process itself can only begin once shareholder approval has been obtained at today's EGM and the prospectus has been published after receiving the regulatory approval from both the Johannesburg Stock Exchange and also the U.K.'s Financial Conduct Authority. As such, until the rights issue commences and completes, the extent to which minority shareholders will follow their rights cannot be known. Obviously, all qualifying shareholders are able to participate in the rights issue pro rata to their shareholdings should they wish to do so.

Thank you. The next question reads as follows. Will the majority shareholders be allowed to take up shares in excess of the maximum allowed by the JSE? And why?

Thank you, Mr. Secretary. The notice for this EGM and the associated circular set out the possible maximum shareholdings, which the 2 underwriting shareholders could reach in the event that no other shareholders take up their rights. The U.K. takeover panel has granted a waiver to allow Assore International Holdings Limited to go above a 30% shareholding without triggering the mandatory offer for all shares, but that waiver is naturally subject to shareholders' approval at this EGM.

Thank you. The next question is as follows. What alternative sources of income have been investigated to avoid dilution of minority shareholders' interest?

Very good question. Thank you, Mr. Secretary. Both the company and the Board explored a number of options to fill the shortfall in working capital, and that included the possibilities of both additional debt and also a strategic transaction involving Faberge, as has been set out in the circular. Despite those efforts, however, the proposed rights issue was deemed the most secure and deliverable in the time frame required and therefore, in the best interest of all shareholders.

Thank you. The next question reads as follows. Why is the company proceeding to commence underground mining without the necessary funding being fully in place in advance?

Gemfields does not currently have any and no plans in the near term either for underground mining either at the Kagem emerald mine or indeed at Montepuez Ruby Mining. In fact, we do only, at this stage, operate open pit mining.

Thank you, Mr. Gilbertson. The next question is as follows. Unless this rights issue is clearly in the interest of both company and the minority shareholders, why is it being proceeded with?

Thank you. As previously stated, the proposed rights issue addresses the shortfall in working capital for Gemfields as a result of the multiple challenges we encountered. And it was, therefore, deemed the most secure route for addressing that working capital shortfall. As set out in the circular, the independent Directors believe that the posed rights issue is in the best interest of the company and our shareholders as a whole.

Thank you. The next question is as follows. Unless the company is either technically or actually insolvent, have bank or alternative funding been refused? And if not, why hasn't this been utilized in the short to medium term until the share price recovers without resorting to major shareholder funding of the rights issue, which will benefit them at the expense of minority shareholders who choose or cannot [ flow ] their rights?

Thank you. As previously pointed out, both the company and the Board explored a number of options to fill the shortfall in working capital, with the proposed rights issue prevailing as the choice best serving the interest of all our shareholders as a whole. The company's debt position and the efforts to secure a strategic transaction in respect to Faberge are set out, inter alia, in the circular and also in the annual results presentation.

Thank you. And the final question from [ Mr. McLoughlin ] is as follows. What share options, bonuses and remuneration packages, if any, are being forfeited by the management?

Thank you. The executive directors did not receive any bonus in respect of 2024, as is set out in the Remuneration Report section of our most recent annual report regarding 2024's performance. In addition, the Chair, the independent nonexecutive directors, the executive directors, in other words, the CEO and the CFO, and a number of our senior management team volunteered at the beginning of this year to reduce their gross annual fees and salaries by 20% from 1st of January 2025. The nonindependent nonexecutive directors volunteered to receive no fees at all and which are typically paid to Assore International Holdings Limited. These various reductions remain in place at this time and will be reconsidered as circumstances allow. That concludes the number of questions.

Thanks very much, Mr. Hewitt and Mr. Gilbertson. As there are no further questions, I'll now move to the main business of the meeting. Mr. Secretary, I understand there are no shareholders in the room, and therefore, there is no necessity for poll cards to be distributed. Please confirm that's correct.

[indiscernible] Chairman.

Thank you. Since no poll cards were distributed, the registrar will calculate the results of the poll from the proxy votes exercised by those shareholders who have lodged their proxy forms before the start of this meeting. As the Chair, I intend to vote all undirected proxies available to me in favor of all 3 resolutions. As a reminder, resolution 1 is the following: to approve the Rule 9 waiver. Resolution 2 is the following: to grant the directors the authority to allot and issue new shares in connection with the proposed rights issue. Resolution 3 is the following: to approve the underwriting issue to the underwriters. Resolutions 1 and 3 are proposed as ordinary resolutions, and therefore, to be passed, require more than 50% of the votes cast to be in favor. In addition, in accordance with the requirements of the takeover code, only independent shareholders as defined in the circular are entitled to vote on resolution 1. Resolution 2 is proposed as a special resolution and therefore, to be passed, requires votes in favor of not less than 75% of the votes cast. The results of the resolutions. In respect to resolution 1, I am informed by the registrar that the required majority of more than 50% of the independent shareholders have voted in favor of this resolution. Accordingly, I declare resolution 1 carried as an ordinary resolution. In respect to resolution 2, I'm informed by the registrar that the required majority of not less than 75% have voted in favor of this resolution. Accordingly, I declare resolution 2 carried as a special resolution. In respect to resolution 3, I'm informed by the registrar that the required majority of more than 50% have voted in favor of this resolution. Accordingly, I declare resolution 3 carried as an ordinary resolution. The final summary of the total votes cast in respect of each [ rep ] of the resolutions will be announced via RNS and SENS and published on our website as soon as practicable after the conclusion of this meeting. Ladies and gentlemen, that concludes the formal business of this meeting, and I declare the meeting closed. I thank you for your participation.