Gemfields Resources has hit back at fellow AIM counter Tanzanite One’s attack on its proposed £33 million bid.

Yesterday, Tanzanite One declared that the intended bid from Gemfields at 45p in cash or paper was opportunistically timed and ‘significantly undervalues’ the company. Now Gemfields, headed by mining tycoon’s son Sean Gilbertson, has retaliated with vigour, raising questions about Tanzanite One’s £6 million acquisition for shares of green tsavorite projects in Tanzania, sharply falling grades and rising costs at the company’s core (blue) tanzanite operations in the same country and its payment of an increased dividend.

Gilbertson has written to Tanzanite One’s directors, pointing out that Gemfields has several times offered to meet to discuss its bid. He argues that the offer price is fair, given the long-term fall in Tanzanite’s shares, which went from 275p in 2006 to 25.6p last August.

Gilbertson’s letter concentrates on the tsavorite deal. The Gemfields chief argues that three Tanzanite directors had beneficial interests in one of the tsavorite projects’ vendors and says it ‘would have been appropriate’ for Tanzanite to remind shareholders of this, though it was disclosed when the deal was originally struck last year.

The tsavorite acquisition means the Tanzanite directors will receive a greater share of the dividend payment, which, contends Gemfields, leaves the company with £720,000 cash. Gilbertson questions Tanzanite One’s ability to fund £4.4 million of necessary capital expenditure.

Advisers to Bermuda-registered Tanzanite say that its cash flow will improve radically in the second half-year, and regret the public airing of all these issues. Tanzanite shares are 1p better at 47p. 

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