PGL - Pallinghurst - Sells part of its Tshipi Manganese Investment to Posco

PGL - Pallinghurst - Sells part of its Tshipi Manganese Investment to Posco     
Pallinghurst Resources Limited                                                  
Registration Number: 47656                                                      
(Incorporated in Guernsey)                                                      
ISIN: GG00B27Y8Z93                                                              
BSX share code: PALLRES                                                         
JSE share code: PGL                                                             
("Pallinghurst" or the "Company")                                               
(formerly Pallinghurst Resources (Guernsey) Limited)                            
PALLINGHURST SELLS PART OF ITS TSHIPI MANGANESE INVESTMENT TO POSCO             
Introduction                                                                    
Pallinghurst Resources Limited ("Pallinghurst") is pleased to announce the      
purchase by a subsidiary of POSCO of South Korea of an effective 11.36% interest
in Tshipi e Ntle Manganese Mining (Pty) Ltd ("Tshipi") from the existing        
Pallinghurst co-investors, for a total consideration of US$34.3mm.              
Pallinghurst, as one of the existing Pallinghurst co-investors in Tshipi, has   
disposed of an effective 2.27% stake for US$6.9mm.  The disposal is effective 1 
July 2009 and is subject to the award of a mining permit to the Tshipi project. 
The total interest of the Pallinghurst co-investors in Tshipi will remain       
constant at 49.9%. The 50.1% remaining interest in Tshipi will continue to be   
held by the broad based BEE group, Ntsimbintle Mining (Pty) Ltd.                
Rationale                                                                       
Manganese is a key raw material mainly used in the production of steel and POSCO
is one of the world`s leading steel producers.  The inclusion of POSCO as a     
Tshipi partner will allow the Tshipi project to benefit from POSCO`s technical  
capability and experience. Additionally, POSCO have negotiated the right to an  
off-take agreement once the mine enters production.  POSCO will purchase a      
minimum of 11% and a maximum of 20% of the total manganese ore production from  
Tshipi each year, at market related prices.                                     
Consideration                                                                   
Pallinghurst`s share of the disposal consideration is US$6.9mm with the disposal
decreasing Pallinghurst`s effective stake in Tshipi from 9.98% to 7.71%. It is  
anticipated that the consideration will be used for further investments or      
general corporate purposes.                                                     
Financial effects                                                               
The fair valuation of Pallinghurst`s remaining 7.71% stake is US$23.1mm based on
the price paid by POSCO in this transaction and is consistent with the fair     
valuation used in the most recent audited annual report to 31 December 2008.    
The headline earnings, net assets and net tangible assets per share of          
Pallinghurst will therefore not change by more than 3% as a result of the       
implementation of the transaction.                                              
Condition precedent to the sale                                                 
The sale is subject to the award of a mining permit to the Tshipi project by the
South African Department of Minerals and Energy.                                
Categorisation of the disposal                                                  
The disposal has been categorised as a category 2 transaction in terms of       
section 9.5(a) of the JSE Listings Requirements.                                
Pallinghurst Chairman Brian Gilbertson said: "I welcome POSCO as a partner in an
exciting manganese project, and see this as a vote of confidence in the project 
from one of the world`s leading steel producers. For South Africa, this is also 
an important transaction, since this direct investment into the resources space 
shows international investor confidence and is set to create new jobs".         
Pallinghurst CEO Arne H. Frandsen said: "I look forward to a long-term          
partnership with POSCO in Tshipi as we unlock value in what is set to be one of 
the world`s largest unmined manganese deposits, which can be brought to market  
at a very attractive cost profile."                                             
For further information please contact:                                         
College Hill                  +27 11 447 3030                                   
Johannes van Niekerk          +27 82 921 9110                                   
Guernsey                                                                        
4 June 2009                                                                     
Investment Bank and Sponsor: Investec Bank Limited                              
Date: 04/06/2009 15:14:02 Supplied by www.sharenet.co.za                     
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