Pallinghurst cuts executive team in cost reduction drive

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Brian Gilbertson, chairman, Pallinghurst Resources

THE departure of Palllinghurst Resources executive director and COO, Priyank Thapliyal, for Jupiter Mines where he will be CEO was “rational on all fronts” as the group sought to reduce its overhead costs, said Arne Frandsen, CEO of the Johannesburg-listed mining firm.

Thapliyal, who has been at Pallinghurst since formation in 2007, would take up his responsibilities immediately, leaving Pallinghurst’s remaining directors – chief investment officer Sean Gilbertson, his father and Pallinghurst chairman, Brian, the finance director Andrew Willis and Frandsen – to absorb his duties.

“We have almost finished the restructuring after the Gemfields acquisition, and have determined that the right thing is to have Priyank working exclusively for Jupiter, as that company formulates its future strategy,” said Frandsen in an e-mailed response to Miningmx questions.

“Also, for PRL [Pallinghurst], it makes sure we are not too ‘top heavy’. Whilst important and valuable, Jupiter is ‘only’ an 18.4% minority investment for Pallinghurst, so Priyank moving full time into Jupiter is rational on all fronts.”

It’s through its stake in Jupiter Mines that Pallinghurst has exposure to Tshipi é Ntle Manganese Mining (Tshipi), a manganese miner operating in South Africa’s Northern Cape province. Tshipi has been Pallinghurst’s best performing asset: of R1.5bn in dividends Tshipi booked in the past 12 months, Pallinghurst has taken home income of R144m ($10m).

Pallinghurst said on September 26 that it had hired Bank of America Merrill Lynch to advise it on its options in respect of its Tshipi investment. It is thought the group may be considering exiting its investment either through a listing of the company, or a trade sale.

Tshipi sold 2.3 million tonnes (Mt) of manganese ore in its financial year to 28 February 2017 – a 53% increase over the previous financial year – and has targeted three million tonnes in production for the current year.

2017 has been a transformational year for Pallinghurst Resources. It has changed its focus from an investment to an operating company. As part of that restructure it bought out minority shareholders in Gemfields – a process that was opposed by Gemfields management and some shareholders – but which was subsequently successful. Gemfields was delisted from the London Stock Exchange.

Providing an update on Gemfields’ latest auction, Pallinghurst said the subsidiary had generated $55m from ruby sales totaling 605,000 carats our of 683,000 carats for an average realised price of $90.71 per carat. “This is a strong auction update from Gemfields with a value per carat reflecting the higher quality nature of the stones offered at auction,” said Investec Securities in a note.

Shares in Palllinghurst Resources have been under pressure over the last three months having traded down about 16% to its current value of R249/share valuing the company at R3.4bn on the Johannesburg Stock Exchange.

9 COMMENTS

  1. David, can you get Arne to let us know what happened to the $10m they have received from Jupiter? Don’t think shareholders will see any of it. I expect it has gone mostly to management and their advisors. I’d be surprised if less than 50% has been paid to the “Top heavy Team”!

  2. Here comes a move on Jupiter! Can’t imagine it’s anything more than a move to entrench management even further and get more of the Jupiter cash to fund their fees!

  3. bwaaa ha ha ha reduce overheads?!! they should have never agreed to pay each of their once 5 strong management team $50 000 per month plus 10% of the equity of Pallinghurst issued over 5 years by way of share options and fat bonuses issued in ZAR determined PRL shares based on easy share price targets.
    I pity the Jupiter minorities – they get lumped with a fat lazy incompetent CEO – I wonder what his pay is going to be??

    They make no mention of his sign on terms or his departure terms – he is likely to earn massive upfront fees based on giving up a lucrative PRL contract… who knows maybe he keeps it….

  4. Is moving someone “sideways” really a cost cutting move? Looks more like they are wanting to entrench their influence more on Jupiter further?

  5. While they’re cutting cost, why not send Arne to Harare to run the lucrative Kell process expansion! I’m sure he’d like it more than Europe and we can pay him $50k a month in local Zollars instead! Brian can join him and see if he can get cheap accommodation bunking down with Mugabe or even better, Grace! All that’s left is FD and Sean. Can’t imagine Sean would stick around for long with Dad away, he might get home sick!

  6. The ability of the Gilbertsons to enrich themselves at the expense of shareholders should have been expected… The blame should really be on all the weak PGL shareholders like Oasis and so called independent board members of PGL that went along with them and signed these irrevocables which essentially sold everyone (including’s Ian and Gemfields management) down the river and gave the Gilbertson’s even more money and more control at the expense of minority shareholders !

  7. Gilbertson turned away an offer for shareholders of 45p for Gemfields so his son can run it into the ground! Now poor Gemfields shareholders are looking at 25p per share equivalent! No wonder he is despised in London.

  8. Was it not for our PLATMIN shareholders ,Sedibelo would never been born.And i wonder if we will ever get our money back with this management around.

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