Now’s your chance
GRIM CONDITIONS in world markets are offering investors the chance to ride along with mining businessman extraordinaire Brian Gilbertson at a bargain price. The opportunity has come up because Pallinghurst Resources (Pallinghurst), which listed on the JSE in August, has now dropped below the price at which Gibertson raised his initial funds last year from a select group of 300 well-heeled South African investors.
They put up around US$170m at R7/ share to enable Pallinghurst to list on the Bermuda Stock Exchange and they had to use their foreign exchange allowances to do so. A condition of the fund raising was that Gilbertson commit to listing Pallinghurst on the JSE within a year, so that the SA investors could “migrate” their holdings from Bermuda to Johannesburg and so free up their foreign investment capital for other uses.
Pallinghurst listed in late August and its shares started trading at R9, from which they promptly shot up to a high of R12,21.
From there it’s been downhill traffic. Pallinghurst halved to a low of R6 and currently sits around R6,50/share.
I warned that might happen (28 August), pointing out: “Should the stock be affected by the current doom and gloom conditions pervading SA’s junior mining sector, then investors just might get the chance to buy in at bargain levels.”
Pallinghurst CEO Arné Frandsen commented at the time: “I wouldn’t expect to see price weakness – but it’s an illusion to believe you can be listed and not be affected by market conditions.”
The only real change to Pallinghurst’s fundamentals since mid-August is arguably to its plans to mine top quality “coloured gemstones” – in particular, Zambian emeralds – and market them using the Fabergé brand. Recent developments in the diamond market show even seriously well-heeled consumers are starting to feel the pinch, as revealed by drops in prices being paid for top quality and investment grade diamonds.
That aside, a decision to invest in Pallinghurst really boils down to a decision to back Gilbertson in the belief he hasn’t lost his “Midas” touch.