Small Talk: Battle of the miners reignited as Gemfields goes on the attack

Mining Round two: Gemfields, the coloured gemstone hunter based in Africa, has raised the temperature in its bid for fellow Alternative Investment Market (AIM) miner Tanzanite One (T1), after publishing a letter, which launches a full frontal assault on T1's directors.

The spat, which was reported in this column several weeks ago, concerns the takeover battle between the two. Gemfields originally made a rather cheeky £33m bid for T1, valuing the group at below the market capitalisation. Gemfields said the offer reflected the fact that its target was unlikely to be able to fund an $8m capital expenditure programme, leaving it with insufficient cash. T1 naturally took umbrage at the suggestion.

The jousting started again a fortnight ago on news of Gemfields' new unsolicited bid, which is structured as a first come, first served arrangement under which the group will offer 42.75p a share for as much as 57 per cent of the group. Sean Gilbertson, the chief executive of Gemfields, stoked the flames by saying: "We believe that this offer represents exceptional value given the prevailing market conditions, the outlook for the US economy, the performance of Tanzanite One's share price over the past year, and indeed, its performance over the last month."

On Tuesday, Gemfields criticised T1 directors' response, which came in the form of issuing themselves unlisted B shares, representing 50.2 per cent of the enlarged issued voting share capital.

"This action disenfranchises half the shareholders through the loss of over 50 per cent of their voting rights," said Gemfields. It added: "This means the shareholders can no longer appoint or remove T1 directors [this power now rests solely with the T1 directors themselves]. Gemfields regards the B share scheme as a gross violation of the principles of good corporate governance, and were implemented without consulting shareholders."

Incendiary stuff. Predictably, T1 was out with its own statement just a few hours later, justifying the move by saying that the first come, first serve bid "would have had the effect of giving Gemfields control of the company without making an offer to all shareholders".

Gemfields is clearly intent on getting its target, and T1 seems equally determined to stave them off. It is a battle that looks likely to continue for some time.

Victoria's African adventure

One of the good things about the impending doom faced by AIM-listed companies is that those with funds are going to find it increasingly easy to pick up cheap acquisitions in the coming months. One of the hardest hit sectors is likely to be oil and gas exploration, where a plethora of companies have persuaded investors to part with their money for years and in some cases have produced nothing more than hot air, literally. The teaming-up has already started. Last week, Victoria Oil & Gas signed a 12-month option to buy the entire share capital of Falcon Petroleum, a Cyprus-based company that has exploration interests in Ethiopia and Mali. The option has cost Victoria $400,000 in cash, which will be treated as a loan if the option is not exercised. If Victoria does decide that Falcon's assets are worth anything and the group exercises its option, the fee will be determined by an independent expert.