Pallinghurst eyes a deal
• CEO says asset prices are becoming more realistic but deal must still be sensible
Pallinghurst Resources, which has a focus on coloured gemstones and steel-making minerals, was moving close to concluding a deal in either coking coal or manganese as prices for these types of assets became more realistic, said CEO Arne Frandsen.
Pallinghurst Resources, which has a focus on coloured gemstones and steel-making minerals, was moving close to concluding a deal in either coking coal or manganese as prices for these types of assets became more realistic, said CEO Arne Frandsen.
Pallinghurst, which recently took full control of its Londonlisted subsidiary Gemfields, has shaken up its executive management structure as it shifts to being an evergreen mining company instead of a limited life investment holding company, with Brian Gilbertson now a nonexecutive chairman instead of executive chairman.
Gemfields has an emerald mine in Zambia and a ruby mine in Mozambique.
Pallinghurst has long sought another leg to add to its successful Jupiter Mines investment, which gives it exposure to the Tshipi manganese mine in the Northern Cape. Manganese, chrome, coking coal and iron ore are the key ingredients needed in steel and stainless steel production. Jupiter has undeveloped iron ore deposits in Australia, but Pallinghurst is likely to invest in coking coal.
“Coking coal, I like it, but it has to be at a sensible price. The last two opportunities we’ve been looking at have more realistic prices and I wouldn’t be surprised if we don’t conclude something soon,” Frandsen said.
Through its 6% stake in unlisted platinum miner Sedibelo Platinum, Pallinghurst has a small exposure to chrome, with the company commissioning a chrome extraction plant to process its platinum plant tailings in the past five days.
Frandsen declined to give a price of the chrome plant or its production potential.
Pallinghurst management has taken a firm grip on the Kagem mine, with production increasing fourfold to 40,000 carats in the past three months since it took over the company and delisted it compared with roughly 10,000 carats per quarter in the first half of the year, according to Frandsen.
Pallinghurst has dewatered the mothballed Mbuva-Chibolele opencast emerald mine near Kagem, which was closed because it was a marginal operation.
With the steep increase in emerald prices since Gemfields started conducting regular auctions of the stones, the mine was profitable and would significantly add to Zambian emerald production, according to Frandsen.
The first production of gemstones from this operation is expected in the first quarter of 2018.
Pallinghurst intended building up an inventory of emeralds at the two mines, which reduced its operational risk and allowed for the supply of emeralds to the market to cater for any increase in demand or production problems as well as absorbing unbought emeralds if the market slowed.