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Tanzanite © John Parrish.

TanzaniteOne Goes Public

TanzaniteOne, the company that acquired the interests in the tanzanite mines formerly run by African Gem Resources Ltd. (AFGEM), began trading on the London Stock Exchange's Alternative Investment Market (AIM) in late August.

The shares were initially offered at a price of 42 pence (US$0.76) and over the next few days gradually rose to the 52-to-54 pence range ($0.94 to $0.97). According to a report in the online United Kingdom newspaper telegraph.co.uk, most of the buyers were specialist mining funds.

Although TanzaniteOne is a separate company from AFGEM, company officials have said that management of its tanzanite assets will remain largely the same. Four of the nine directors on TanzaniteOne's board were also members of AFGEM's senior management, including Michael Nunn, TanzaniteOne's CEO (previously Chairman and CEO of AFGEM), and Ami Mpungwe, TanzaniteOne's non-executive deputy chairman (formerly non-executive chairman of Merelani Mining Ltd., AFGEM's Tanzanian subsidiary).

"Tanzanite One Ltd. [TanzaniteOne] is a company registered in Bermuda, which is led by a group of Asian, British, and Australian investors whose main specialty lies in mining projects," said TanzaniteOne spokesperson Leanne Grott. In May 2004, AFGEM shareholders approved the sale of AFGEM's tanzanite assets to TanzaniteOne, including the mining operations in Block C of the tanzanite mines of Mererani, Tanzania.

AFGEM's management had expressed frustration with an unfavorable exchange rate between the U.S. dollar and the South African rand. The company bought and sold tanzanite in dollars but — because they were listed on the Johannesburg Stock Exchange (JSE) — reported in rands, and they claimed that their financial results appeared to be worse than they really were. "AIM is a recognized market for junior mining companies and, as such, the market rating for junior stocks is typically significantly higher than similar companies listed on the JSE," read a statement issued by AFGEM when announcing the sale. "Furthermore, the consistent appetite for such stocks generally creates improved liquidity."

The initial stock offering on AIM raised £5 million ($9 million) for TanzaniteOne. Grott said that the money would be used to further develop and expand their mining operations, develop their trading operations, and market the material.

"Approximately 3,000 tons per month has been processed through our dense media separation (DMS) plant over the past several months," Grott continued. "Our DMS plant has the capacity to process approximately 10,000 tons per month on a single shift. Our mine plan for the next five years sees a steady increase in production levels to a point where our operating capabilities more closely reflect those of our processing abilities."

While the company sells much of its rough tanzanite to buyers in India, it will also market its cut stones through a subsidiary, The Tanzanite Co., in South Africa and the United Kingdom.

BACK TO: News & Updates

September/October 2004 • Style: Two Great Tastes • Sources: Rough Times • Bonus: Inside the Design • Bonus: Mine Production Update • News & Updates • In This Issue