Pallinghurst to keep platinum ‘newco’ private

Arne Frandsen, CEO, Pallinghurst Resources

[] – PALLINGHURST Resources said that its platinum assets, comprising principally of the proposed 250,000 ounces/year Pilansberg Platinum Mines (PPM), had achieved break-even this year.

However, they would continue to remain unlisted as there was no need yet to access the capital markets.

“You list because you want access to capital. Right now, why do we need to list?” said Arne Frandsen, CEO of the R1.6bn Pallinghurst Resources. “We don’t need the cash and the company is debt-free,” he added.

Pallinghurst Resources de-listed the platinum assets held in Platmin at the end of 2011 as it sought to consolidate several farms, including PPM’s neighbouring property Sedibelo, which separates PPM from another Platmin-owned farm, Magazynskraal.

However, Pallinghurst subsequently sold 16% of Platmin to the South African government’s Industrial Development Corporation (IDC) for R3.24bn which provided the platinum firm with some $500m in net cash.

Pallinghurst told the SA Reserve Bank in December 2011 it would undertake to re-list the platinum assets before January, 2013, but Frandsen said the SA Reserve Bank would roll this forward every three months provided it was informed.

Operationally, PPM was performing well, said Frandsen, although he declined to disclose whether it had achieved the 250,000 oz/year annualised target as intended. “We have improved in the last 12 months by multiples, and on a month-on-month basis, it has been extremely encouraging,” he said.

Up to 60% of South Africa’s platinum industry was loss-making, according to Mark Cutifani, president of the Chamber of Mines of SA. This was before platinum companies agreed to lift wages for entry-level employees.

Pallinghurst had made “… good progress during H1-12 both in consolidating its PGM properties and improving production at PPM” said SBG Securities in a note in October. It added, however, that the IDC investment had not been consummated.

“Although the IDC’s investment is subject to some remaining conditions and financial details surrounding the deal are scant, management believes that completion of the transaction will positively affect Pallinghurst’s net asset value,” said SBG Securities.

Frandsen said various conditions precedent, involving exchange controls, were due to be completed “within the next 10 days”.

Palllinghurst has said in the past that it hopes to become a top four platinum producer within four to five years, targeting 1.1 million oz in output.

Frandsen said the platinum assets would eventually list on either the London or Hong Kong stock exchanges, with another listing in Johannesburg.