Pallinghurst will need to placate antsy shareholders
The next six months will be crucial for Pallinghurst, which has been restructured from a private equity investment company to a mine operator, as it needs to deliver to increasingly frustrated shareholders.
The company, which since its inception and listing in 2008 has seen its share price shrink from R10 to 300c, is hoping that the shift in focus will start bringing in returns.
Pallinghurst and chairman Brian Gilbertson, who started the company, have recently been criticised for big pay-outs for non-executives while its share price dwindled.
Pallinghurst CEO Arne Frandsen said the share price had underperformed because of its huge exposure to platinum and platinum companies and stocks.
"Our biggest division is in platinum and if you look at the share price of Lonmin, Impala, et cetera, platinum has been in a very tough place, it's impossible for us to be immune to that. Any company with a platinum exposure would have suffered," Frandsen said.
The Pallinghurst group has a 42% investment in platinum.
However, Peter Major, analyst at Cadiz Corporate Solutions, said Pallinghurst's share price has underperformed since day one this year and "if it has underperformed in the greatest commodities boom we have ever seen, would I want to touch it now"?
Sedibelo Platinum is an open pit, underground platinum mine based in Pilanesberg, in which Pallinghurst has invested for the past 10 years, but its performance has been average. The company is now going to start mining chrome at the mine, which they hope will yield positive results.
Frandsen said on Friday: "All our eggs are in this mining basket. It's about the operations, getting cash flow and paying dividends to shareholders."
The focus in the next six months would be on ensuring that the company reduced the debt it took over from its Gemfields, UK-based business.
"In the manganese and platinum [divisions], we have no debt. We have a strong balance sheet," Frandsen said.