JOHANNESBURG (miningweekly.com) – JSE-listed Pallinghurst Resources has widened its net loss for the six months ended June 30 to $76.4-million, from a loss of $14.6-million in the comparable prior period, despite record production of 66 000 oz at its newly consolidated Sedibelo Platinum Mines.

The resource investment group attributed its deteriorated financial performance to “unrealised marked-to-market valuations” that arose primarily as a result of the fall in the share prices of its steelmaking materials platform Jupiter and its coloured gemstones business Gemfields.

“We believe those share prices significantly undervalue each of the businesses and that both will swing back into the black as shareholder value is recognised and as we continue to deliver on our strategic objectives,” commented CEO Arne Frandsen.

The company’s overall loss translated into a basic and diluted loss a share of $0.10 apiece for the period.

CONSOLIDATED RESOURCE

The company reported in an interim results statement on Friday that a primary focus during the first half of the year had been on the build-up of operations at its Pilanesberg platinum mine, as well as the integration of other properties into the overall Sedibelo Platinum Mines consolidation.

The developing platinum company was the recipient of a R3.24-billion cash injection by the Industrial Development Corporation, in December 2012, in exchange for a 16.2% stake in the company.

Following the restructuring of the mining contracts and after taking direct control of the pit and plant, Sedibelo had seen significant improvements in its key operating parameters, including record production.

The company had also, in the period under review, appointed global mining industry experts SRK Consulting to complete geological, structural and resource modelling, along with a consolidated life-of-mine plan for the consolidated operation.

It was also currently preparing an initial public offering (IPO) for the operation, which the company planned to implement next year.

“If the recent improvement in equity markets and sentiment continues, Sedibelo Platinum Mines is well set for a successful IPO in 2014,” said Frandsen.

The Pallinghurst head added that, as a debt-free company offering a “strong” balance sheet, Sedibelo also remained alert to potential opportunities triggered by the recent falls in platinum group metal prices.

ONGOING DEVELOPMENT

Looking to the company’s steelmaking materials investment platform, Jupiter continued to ramp-up operations at the developing Tshipi Borwa openpit manganese mine, in the Northern Cape.

Leveraging temporary mining facilities, the mine dispatched 230 000 t of medium-grade lump ore over the period, which was railed to Port Elizabeth.

Pallinghurst expected the rapid load-out station to be commissioned in October, with all remaining permanent infrastructure to support a 2.4-million-tonne-a-year operation to be completed by mid-2014.

“Since June 30, production volumes have increased in line with Tshipi’s ramp-up plan and its rail allocation from State rail operator Transnet, which has committed to making two bulk trains a week available to Tshipi Borwa,” commented Frandsen.

He added that alternative road and rail solutions, which included containers and skiptainers, were being adopted to increase capacity. 

The company announced in March that the estimated capital expenditure for the construction of Tshipi Borwa had increased to R1.8-billion – some R160-million higher than the original budget – owing to a phased introduction of the permanent infrastructure.

Jupiter’s 49.9% share of the increase would be met out of its cash reserves, which were $58-million at June 30. 

Meanwhile, in the Central Yilgarn region of Western Australia, work continued on optimising the capital and operating expenditure at the developing Mount Mason as part of the hematite project’s feasibility study.

While all baseline environmental surveys and studies had been completed and all project approvals were expected by the end of the year, Jupiter noted that port access remained the key infrastructure obstacle to the development of Mount Mason. 

“If Jupiter can secure access to the nearby Port of Esperance, Mount Mason has the potential to rapidly generate significant free cash flows and establish Jupiter as a producer in the Central Yilgarn region,” said Frandsen. 

GEMSTONE ASSETS

Meanwhile, Pallinghurst’s coloured gemstones and luxury goods platform, Gemfields, held only one gemstone auction during the first six months of 2013 and, as a result, the company reported revenues for the period to June 30 of $42-million – a 46% decline on the $77.9-million achieved in the four auctions of the prior year. 

A total of 6.3-million carats were sold for $15.2-million at the Lusaka auction, representing an average price of $2.42/ct.

A second high-quality emerald auction, scheduled to take place in Singapore in June, was delayed as the Zambian government had requested that this auction be held in Zambia. The auction was eventually held in Zambia in July.

A total of 580 000 ct were sold for $31.5-million, representing an average price of $54/ct – a new auction record.

“Gemfields continues to achieve increases in per carat prices, underpinned by solid demand for its ethically-sourced and transparently supplied emeralds,” Frandsen noted.

Over the period, the company also completed construction of the core infrastructure required for bulk-sampling operations at its Montepuez ruby operation, in Mozambique.

In addition, Gemfields completed its merger with Fabergé in January, acquiring the high-end luxury goods brand for 214-million new Gemfields shares.

“Future growth for Gemfields is likely to be seen as the benefits of the merger with Fabergé are realised, and production at the Kagem and the Montepuez operations ramp-up, adding new coloured gemstone assets to the portfolio,” said Frandsen.