Johannesburg - Mining impresario Brian Gilbertson said his Pallinghurst Resources, scheduled to debut on the JSE on Wednesday, was continuing with plans to buy a portion of diamonds exported by Russia's Alrosa.
"This is still one of our live projects," he said in an interview. "If we had anything to report, we would have. But the logic [of the deal] is obvious."
A portion of Pallinghurst's business is the production and sale of coloured gemstones, such as emeralds. But in addition to mining gemstones, Pallinghurst also owns the rights to sell them under the aegis of the Fabergé brand. This was by dint of a $26.4m deal in 2007 in which Pallinghurst bought Fabergé from US giant, Unilever.
However, Gilbertson has been desirous of adding diamonds to the mix and was thought to have tussled with Russian billionaire, Viktor Vekselberg over such plans.
In 2007, it emerged he was lining himself up to partly replace De Beers which buys Russian diamond goods in a $700m marketing deal. The marketing deal is due to expire in 2009 by order of the European Commission.
Pallinghurst already controls about a quarter of the world's emerald production through an earlier takeover of Gemfields Resources, an Australian-listed business. Gilbertson said there was scope for extending production into rubies and sapphires.
"If you walk down Bond or Sloane Street [in London] you see coloured gemstones in the shop windows. Just look at the market and colour is in," he said.
"Coloured gemstones also sell for more than diamonds at auctions," said Gilbertson. "If you can supply ethically sourced stones and provide manufacturers with reliable supply, then you've got an opportunity."
Gemfields Resources' mine is in Zambia with the opportunity of consolidating similar mining operations, typically inefficient and poorly secured.
The Pallinghurst offering
In addition to gemstones, Pallinghurst also has a stake in a manganese joint venture project in South Africa and a couple of interests in platinum with Platmin, which is listed in Toronto, and with the Bakgatla-Ba-Kafela, a community in the north Pilanesberg.
However, Gilbertson, who is chairperson of Pallinghurst, and his CEO, Arné Frandsen, formerly an investment banker with JP Morgan, are tight-lipped on further plans. "I don't think we want to go there," said Gilbertson when asked how Pallinghurst hoped to crack the tightly-owned platinum market in South Africa.
"The Pallinghurst listing is very much based on the idea of 'trust me I'm Brian Gilbertson'," said Liston Meintjes, chief investment officer for Lion of Africa. "But I genuinely believe that Brian has enough to make this stick."
Pallinghurst raised about $1bn in private equity with the intention of capitalising on China?s demand for steel, which required key raw material such as nickel, manganese, iron ore and, to some extent, coal.
Gilbertson's plan from the advent of Pallinghurst, named after the street in South Africa's plush Westcliff suburb in which he once lived, was to breathe new life into "unloved" assets in the steel-feed sector.
Local access to investments
Pallinghurst's listing on the JSE follows an earlier quotation on the Bermuda Stock Exchange but which provides significantly low liquidity. "There's only been one trade [of about 500 shares]," said Gilbertson.
The Pallinghurst listing, which also signals Gilbertson's homecoming to the JSE after more than a decade building companies in London and Sydney, is also aimed at honouring an earlier commitment to provide South African shareholders, including Investec, with local access to its investments.
Last year, Investec helped back Pallinghurst's ultimately failed bid for ConsMin, an Australian steel-feed company.
Pallinghurst does not intend raising money at the listing although Gilbertson said it was possible a fund-raiser could be arranged at a later stage. Of the $1bn in seed capital, some $750m was still to be committed.
- Fin24.com