JOHANNESBURG (miningweekly.com) – The integration of Gemfields is beginning to realise cost benefits, Pallinghurst reported on Tuesday when it reiterated its transformation into a long-life operating mining company from being a former closed-end investment vehicle.

In presenting half-year results of the company on Tuesday, Pallinghurst restated its conviction that the restructuring and integration of Gemfields would materially improve the company’s trading liquidity and promote a re-rating of the enlarged group.

“The period from January 2017 has proven to be one of the most important in our ten-year life,” Pallinghurst CEO Arne Frandsen commented in a release to Creamer Media's Mining Weekly Online.

The Pallinghurst group’s manganese-mining company Tshipi distributed R1-billion to its shareholders in February, and a further R500-million in September.

In the period, Gemfields, now a wholly owned subsidiary, also achieved its highest ever single-auction revenue when $55-million of rough rubies were sold in Singapore. Two emerald auctions in the first half of this year, generated a further $37-million.

Now the key aim of the management team is to restore Gemfields to a strong financial position by revitalising its operations.

Under the new management team, the initial operating results from both the Kagem emerald mine in Zambia and the Montepuez ruby mine in Mozambique are described as being encouraging.

In the steelmaking materials division, Jupiter delivered an outstanding performance with Pallinghurst anticipating a further distribution of cash in the second half of 2017.

The company reports that the drastic cost cutting measures implemented at its challenged Sedibelo platinum group metals mine have not stood in the way of the company recording nearly 4.5-million fatality free shifts, a safety record that remains one of the best in the industry.

MANGANESE MUSCLE

Pallinghurst reports that the large decline in the manganese price in the first six months was partially due to industry-wide production increases, resulting in the 37% free-on-board spot manganese price falling 46% from $7.45/dmtu to $4.03/dmtu over the first six months of the year.

Since then, with the spot price remaining relatively strong at long-term levels as China’s demand for steel has held firm, Tshipi has responded rapidly to the stronger prices by increasing production, while continuing to optimise its costs.

The logistically-enabled Northern Cape manganese operation, which sold a 53%-higher 2.3-million tonnes of manganese ore in its financial year to February 28, is now targeting exports of three-million tonnes for the current financial year, after being well on target with sale of more than 1.5-million tonnes in the six months to the end of August.

Tshipi's 1.3-million-plus tonnes exported in the five months to July made it South Africa’s largest manganese exporter in the period and at these levels it is the third largest seaborne manganese producer globally.

Tshipi’s commitment to the safety of its employees has resulted in zero lost-time injuries in the first six months of this year.

Pallinghurst’s share price fell 5% to R2.47 a share in early morning trade on the Johannesburg Stock Exchange.