London-listed Gem Resources has raised £2.12-million, before expenses, to support production optimisation and cost reduction at its Gravelotte emerald mine, in South Africa, and to restart activities at the Curlew emerald mine, in Australia.
At Gravelotte, funds will be used for in-pit exploration, openpit optimisation and upgrades to processing and sorting systems to increase production and reduce unit mining costs, while at Curlew, funds will be used for exploration, development and progression towards a restart of operations.
Net proceeds will also be used to fund working capital and liabilities.
Gem Resources explains that the funds raised comprise a subscription of £617 320 from newly appointed executive chairperson Louis Ching and the issuance of unsecured convertible loan notes in the principal amount of £1.5-million.
The company appointed Ching as executive chairperson and Hin Shek (Hans) Wong as nonexecutive director, both with immediate effect. Edward Nealon will remain on the board as nonexecutive director.
"On behalf of the board, I am delighted to welcome Louis Ching as our new executive chairperson and largest shareholder and to welcome Hans Wong to the board,” says Nealon.
He notes that this recapitalisation materially strengthens Gem Resources’s financial position, addresses the near-term going concern uncertainty and provides the working capital runway to execute the company’s operational plans at Gravelotte and Curlew.
Nealon acknowledges that, on completion of the subscription, Ching will hold 50% plus one share of the voting rights of the enlarged issued share capital.
Until completion of this transaction, he explains that the board members were themselves among the company's largest shareholders and, throughout a challenging period, worked tirelessly to evaluate a range of funding alternatives.
Importantly, unlike other potential proposals presented to the company which would have required a steep discount to the prevailing share price, this transaction has been completed at market price for the subscription and at a premium to market for the convertible loan note, he says.
“Louis's strategic vision and commitment, together with Hans's international capital markets experience, bring fresh leadership and momentum to Gem Resources at a pivotal time,” Nealon continues.
"I believe Gem Resources has enormous potential. The company has good assets but has historically been underfunded. I look forward to working with the board to unlock this potential and to build long-term value for all shareholders,” adds Ching. 
