Gemfields to de-list, Game changer or Game Over?

Gemfields has reportedly applied to London Stock Exchange for the cancellation of admission to trading on AIM. The said cancellation is to take effect on 28th July 2017. On 26th June 2017, Pallinghurst announced that it has received 96 per cent shareholder support for Gemfields acquisition – making its offer for Gemfields wholly unconditional.  

Gemfields said that cancellation will significantly reduce the liquidity and marketability of any Gemfields shares not acquired by Pallinghurst and Gemfields shareholders will no longer be able to effect transactions in Gemfields shares on AIM.

Gemfields share fell from 42 in June 2008 to its lowest to 2.75 in April 2009. In July, 2009, it took over Kagem Mine to dig Zambian Emeralds and it took 3 years to bounce back to 42. Company has organized 22 auctions and generated revenue of around US$426M till date. It touched its lifetime high of 68 in 2015 and now trading less than half at 32.5.

It was 2016 only, when it reported half yearly revenue (July 16 to Dec 16) down to $51m from $91 a year earlier and blamed it to Indian Demonetization. A thorough look at balance sheet shows a debt of $58m as of Dec 16. Company could have been suffering from cash deficit, as its monthly expense was at $10m amount to approx $60m by Dec 2016 and if put against sales of $51m and debt of $58m, and only $12m cash in book, any layman would have called it bankrupt or on the verge of.