Pallinghurst to raise equity funding

Sean Gilbertson, CEO Gemfields

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Pallinghurst to raise equity funding
Brendan Ryan
Posted:

[miningmx.com] -- JSE-listed Pallinghurst Resources may raise funds this year through an equity issue in order to make further asset acquisitions.

That’s according to Sean Gilbertson who is a partner in the Pallinghurst control structure and CEO of Gemfields Plc which is controlled by Pallinghurst.

Interviewed at the African Mining Congress being held in Livingstone, Zambia Gilbertson said Pallinghurst had used up most of its available funds in acquisitions such as the latest deal to buy control of platinum junior Platmin.

"We want to take advantage of the current market situation to buy attractive assets that are available," he said.

take advantage of the current market situation

“While now may not be a great time to raise funds given the drop in the Pallinghurst share price, this is the time to buy assets. Pallinghurst has funding partners it can call on but it needs to be able to invest for the benefit of its own shareholders.”

Pallinghurst was initially listed on the Bermuda Stock Exchange in 2007 after a share placing with private investors at R7 a share. The company shifted its primary listing to the JSE last year and the share initially rose to around R12 but has since dropped to current levels around R4.

Gemfields’ strategy is to consolidate the coloured gemstone market and last year it acquired 40% of tanzanite producer Tanzanite One, but was blocked in its bid for outright control through a corporate ploy by Tanzanite One.

Asked about latest developments concerning Tanzanite One, Gibertson said: "We are now playing a waiting game. Tanzanite One has run out of cash and has just lost three of its top executives who have all resigned. We will see what happens over time.”

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In his presentation to the conference on Gemfields, Gilbertson said Gemfields had built up a $16m inventory of both polished and rough gemstones as part of its business plan to be able to provide a guaranteed supply of product to its customers.

"Clearly, the coloured gemstone market has been hit by the same financial conditions that have badly affected the diamond market so now is not a good time to sell but Gemfields is well funded and we are not under pressure to sell these stones.”

Gilbertson said two key management doctrines at Gemfields were never to do its own exploration work and never to get involved in jewellery manufacturing and retailing.

“You should never go exploring for coloured gemstones because you will lose your house and your shirt. It’s far better to find existing operations that are underperforming and then fix them up.

“For as long as I am involved with Gemfields we will also never get into jewellery manufacturing or retailing.”

Gilbertson said he drew a clear distinction between beneficiating rough gemstones through cutting and polishing which Gemfields was doing and the manufacture of jewellery.