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Jupiter announces intention to IPO. PRL commits to coloured gemstone strategy.
PALLINGHURST RESOURCES LIMITED
(Incorporated in Guernsey)
(Guernsey registration Number: 47656)
(South African external company registration number 2009/012636/10)
Share code on the BSX: PALLRES ISIN: GG00B27Y8Z93
Share code on the JSE: PGL
("Pallinghurst", “PRL” or the "Company" or the “Group”)
Jupiter announces intention to IPO. PRL commits to coloured
gemstone strategy.
- Jupiter, supported by excellent operating performance, announces ASX IPO with AUD780
million valuation.
- PRL consequently commits to a new strategy focussed on coloured gemstones.
- Arne H. Frandsen and Andrew Willis to step down from PRL; will manage PRL’s Sedibelo stake.
Strong growth from Tshipi/Jupiter
Over the past 12 months the Tshipi manganese mine has achieved record levels of production and
profitability, and has made significant distributions to its shareholders, among which Jupiter Mines
Ltd (“Jupiter”) holds 49.9%. The most recent distribution, via an equal access share buyback, has just
been completed and was accepted by nearly 97% of shareholders, bringing to some AUD150 million
the returns to Jupiter’s shareholders since the start of 2017. The strong manganese prices and sound
performance of Tshipi continue, and Jupiter has indicated the likelihood of a further and enhanced
distribution in the next six months. PRL is presently an 18.4% shareholder in Jupiter and benefits
accordingly.
Jupiter announces an IPO on the Australian Stock Exchange
Yesterday, 19th March 2018, Jupiter announced its intention to relist on the Australian Securities
Exchange (“ASX”) to provide liquidity for all of its shareholders. This is expected to be achieved via a
AUD200 million to AUD240 million offer of existing Jupiter shares to new investors at AUD0.40 per
share, implying a value of AUD780 million for Jupiter. PRL has committed to supporting Jupiter in this
initiative, with Jupiter thereafter continuing its development as an independent ASX-listed
company. To achieve the “free float” reasonably required for a successful IPO, four of the large Jupiter
shareholders have agreed to sell down some of their shareholding to new institutional investors on
the ASX. Accordingly, PRL has agreed to make available between 176,411,010 shares (in an AUD200
million raising) and 212,028,012 shares (in an AUD240 million raising) at the placing price of AUD0.40
per share, and would thus, subject to successful completion of the IPO, receive the corresponding cash
inflow of between AUD70.6 million and AUD84.8 million (less associated sale costs). PRL will retain
the balance of its shares (between 145,845,372 to 181,462,374) for realisation at an appropriate later
time and has agreed to restrict the sale of this remaining interest for up to approximately 20 months
under the escrow arrangements detailed in the Jupiter Prospectus. Until then, PRL would, in relation
to its remaining shares, expect to benefit from the ongoing strong performance signalled by Jupiter.
Rationale for the disposal of Jupiter shares
In order to support Jupiter in this initiative and to meet the free float requirements which are essential
for a successful IPO, PRL has agreed to sell a proportion of its interest, recognising that the IPO price
is significantly above its most recent valuation.
Financial Impact on PRL
PRL currently holds 357,873,384 Jupiter shares, which at the proposed IPO price of AUD0.40 per share
(USD0.31 per share at the prevailing exchange rate of USD1:AUD1.2961), before sale costs, would be
valued at approximately USD110.4 million (AUD143.1 million).
PRL held 395,779,567 shares in Jupiter at 30 June 2017, which were valued at USD0.19 per share,
totalling USD75.6 million. Since then, Jupiter has bought back 15,831,182 Jupiter shares from PRL, in
December 2017 for USD4.6 million at USD0.29 per share, and a further 22,075,001 Jupiter shares from
PRL in March 2018 for USD7.7 million at USD0.29 per share. At the proposed IPO price of AUD0.40 per
share, the increase in valuation of the investment in Jupiter since 30 June 2017, including the two
share buy-backs, is approximately USD47.1 million.
It is PRL’s intention to dispose of a maximum of 212,028,012 shares at the placing price of AUD0.40
per share resulting in a cash inflow of AUD84.8 million (approximately USD65.4 million), less
associated sale costs. No decisions have yet been made by PRL regarding the application of the sale
proceeds, but this will be considered upon the listing taking place.
In Jupiter’s most recent published financial information, the unaudited six-month period to 31 August
2017, it reported a Net Profit After Tax of AUD32.7 million (approximately USD25.2 million).
Effect on the PRL portfolio
As a consequence of the above, PRL’s exposure to steel-making-materials (specifically manganese) will
decrease substantially, leaving PRL focussed essentially on 100% of the Gemfields business, and with
minority holdings in Jupiter and Sedibelo Platinum Mines. Those two minority interests would not be
core to PRL, and would be available for realisation when the right opportunities might present
themselves. Reflecting a new strategy focussed on coloured gemstones, PRL would – subject to
shareholder approval – change its name to Gemfields Group Limited.
Conditions Precedent
The Jupiter IPO is conditional on the ASX’s approval of the listing and a minimum subscription level of
AUD200 million.
Categorisation
The disposal is categorised as a Category 2 transaction in terms of the JSE Limited Listings
Requirements.
Changes to executive management team
As a logical consequence of this change in strategic focus, the senior executive management positions
have been revisited. After 11 years as PRL’s CEO, Arne Frandsen will step down and be replaced by
Gemfields CEO Sean Gilbertson. Similarly, Andrew Willis, after 11 years as PRL’s Finance Director, will
step down and be replaced by Gemfields CFO David Lovett. An orderly handover process has
commenced and will take place during March 2018 with the changes becoming effective on 31 March
2018.
Management of PRL’s financial investment in Sedibelo
After stepping down as executives in PRL, effective from 31 March 2018, Arne Frandsen and Andrew
Willis will take up positions as the Managing Partners of Pallinghurst Capital Partners (“PCP”). PCP is
the private equity platform which they were part of creating in 2006 and which has successfully raised
and invested in excess of USD1.5 billion and which will be run independently of PRL. Brian Gilbertson,
who remains Non-Executive Chairman of PRL, has agreed to continue his decades long partnership
with Arne and Andrew as Non-Executive Chairman of PCP. As part of the change in PRL’s strategic
focus, PCP has agreed to manage PRL’s financial investment in Sedibelo Platinum Mines with a focus
on maximising exit value for the benefit of PRL’s shareholders.
Chairman Brian Gilbertson commented: “The Jupiter IPO and consequent sell-down of a significant
part of PRL’s shareholding are important steps in our strategic development. Henceforth our
shareholders will hold their interests in two essentially “Pure Play” vehicles - Jupiter in manganese, and
(a re-named) PRL in coloured gemstones. Each will focus separately and independently on developing
their full values for their separate shareholders. I hope to see strong benefits flow in future to those
shareholders.
On behalf of the Board, I pay tribute to and thank Arne and Andrew for their 11 years of leadership to
PRL in their roles as its founding Chief Executive and Finance Director. They have been instrumental in
developing the Company since its establishment, culminating in its transformation into an evergreen
operating mining company last year. They hand over a financially sound vehicle with a focussed
strategy to further unlock value for shareholders. I look forward to continue working with Arne and
Andrew as they seek to unlock value from PRL’s interest in Sedibelo.”
Guernsey
20 March 2018
Sponsor
Investec Bank Limited
Enquiries
CapitalVoice
Johannes van Niekerk + 27 82 921 9110
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