GEMFIELDS is to press ahead with the sale of its stake in Sedibelo Platinum Mines (SPM), once considered a valuable leg in the tripod of assets that formed Pallinghurst Resources, the former JSE-listed investment firm founded by Brian Gilbertson.
Gilbertson wanted to list SPM separately in 2014 to coincide with an expected improvement in the platinum price which was trading at $1,400/oz. Amid a surfeit of platinum stockpiles, however, automakers opted to buy palladium instead.
Having reached its 10-year maturity date as a fund, a decision was taken to refocus Pallinghurst on its ruby and emerald business, renaming it Gemfields and setting out plans to sell its highly successful manganese and iron ore business, and the platinum group metals (PGMs).
Gemfields said today interested parties in SPM should contact Liberum Capital which has been appointed to manage the sale of the stake.
Gemfields owns 6.54% in Sedibelo via its 23.65% equity holding in Pallinghurst Ivy Lane Capital which is the entity to be sold.
The operating asset housed in SPM is Pilansberg Platinum Mines which dispatched and sold 127,000 4E ounces last year generating earnings before interest, tax, depreciation and amortisation of about $13m, said Gemfields.
According to a first quarter report published on its website, SPM produced 26,109 oz of 4E PGMs generating sales of $55.7m. Mining is from three properties, including chrome recoveries, held in Pilansberg Platinum Mines. SPM controls about 100 million oz of PGM resources, but production in the past has been cash hungry.
After Pallinghurst Resources, the Bakgatla-Ba-Kgafela is the next largest shareholder in SPM with a 25.74% stake followed by the government-owned Industrial Development Corporation which has a 15.75% shareholding.
Commenting in its interim results ended June, Gemfields announced a fair value write-down of its stake in SPM of $12.5m to $45m or R726m.
Asked by an analyst why SPM attracted such a lowly valuation, Gilbertson said the number was per its June 30 half-year close whereas significant re-ratings of companies such as Impala Platinum (Implats) had occurred after that date.