[miningmx.com] – SHARES in Johannesburg-listed Pallinghurst Resources reached a three-year high today just as its 48%-owned Gemfields generated $33.5m in revenue from its maiden ruby action – twice better than guided.
The auction took place in Singapore and sold gems mined from Gemfields’ 75%-owned Montepuez ruby mine in Mozambique, an operation on which it had spent $35m to date. The auction takes aggregate revenues for rough stones of ruby and emeralds produced by Gemfields to $143m for the year to date.
Shares in London-listed Gemfields had aggressively run up from 39 pence/share in May to 52p/share on June 17 on expectations of good sales. Profit-taking was in clear evidence, however, with shares in the company falling back 5% at the time of writing.
The improvement in the value of Pallinghurst Resources, however, has been steady since the beginning of the year partly on Gemfields, but also in expectation that the investment house will list its platinum business, Sedibelo Platinum Mines.
The share has also been assisted by the buying activity of its non-executive director, Christo Wiese, the well-known South African entrepreneur who, with a stake of 19.3% as of end-December, was the largest single shareholder in Pallinghurst Resources.
Wiese has been steadily picking up more shares in Pallinghurst from about May 14 this year when the stock was trading at around R32/share. All in all, he has bought about 1.78 million shares in the last two months worth about R6.5m in round numbers. Shares in Palllinghurst were last trading at R40/share giving the company a market capitalisation of R3.1bn.
This doesn’t include some R7.8m in Pallinghurst shares Wiese divided equally between his daughters after the close out of single stock future contracts in June.
Including the conversion of single stock futures, however, Wiese has only added about 0.5% to his total Pallinghurst Resources holdings taking his total stake in the firm to just under 20%.
Arne Frandsen, CEO of Pallinghurst Resources, said recently that the company was now into its harvest mode after having bought up unloved assets which it has nurtured over the last seven years.
Commenting on the Gemfields auction, Investec said: “A great result for the company which had been downplaying expectations for the maiden auction”.
SP Angel, the UK broker that recently visited the Montepuez ruby mine, said the future success of the operation depended on how many high value stones are recovered as a small number of high value stones fetched the bulk of the auction’s value.
“Having said this, it is still tremendously exciting to stand in a pit with millions of carats of rubies and corundum shining all around,” it said.
