JOHANNESBURG - Pallinghurst, the diversified mining company, yesterday (Wednesday) announced the return of Jupiter Mines to the Australian Securities Exchange (ASX) in a move that will give international investors access to one of the world's biggest manganese deposits.
Jupiter listed on the ASX yesterday after four years and raised AU$240 million through the issue of 600 million shares at AU$ 40 cents a share, valuing the company at AU$780 million.
In 2014 Jupiter, which was18.4 percent owned by Pallinghurst, delisted from ASX as the company believed its valuation was far too low at the time.
Pallinghurst, which was founded by mining tycoon Brian Gilbertson, said yesterday that it had raised AU$83.1 million from the listing process, selling up to 212 028 012 of its Jupiter shares at AU$ 0.40 per share.
The initial public offering (IPO) has significantly reduced Pallinghurst exposure to Jupiter to 145 845 372 shares, valued at AU$ 58.3million at the IPO price, with Pallinghurst saying it would hold on to its its Jupiter shares.
“Pallinghurst will hold these shares 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."
It said Pallinghurst would, in relation to its remaining shares, expect to benefit from the ongoing strong performance signalled by Jupiter, including the possibility of further Jupiter share buybacks.
Des Mayers, an analyst at Afrifocus Securities, said the IPO was good news for the company.
“The cash will be useful to reduce debt which came about following the acquisition of Gemfields. It also vindicates management's decision that the Jupiter investment was going to be lucrative from a shareholder point of view”, Mayers said.
Pallinghurst acquired Gemfields, the UK head-quartered supplier of coloured gemstones, and bought out its minority shareholders in a shake-up that rattled the market.
Mayers said the challenge for Pallinghurst was now to get Gemfields to generate substantial profits following significant changes several months ago.
“Gemfields shareholders were given shares in Pallinghurst without other alternatives. Many shareholders did not like the offer as they accepted shares in a diversified company listed on the JSE,” Mayers said.
Jupiter has a 49.9 percent share in Tshipi é Ntle Manganese Mining which operates the Tshipi Borwa Manganese mine in South Africa.
Tshipi Borwa exceeded its production and profitability targets for the year to February 2017 generating a cash balance of more than R 1.5 billion at year end.
“My view is that Tshipi which at present Jupiter largely depends is doing well due to the manganese price, good cost control, production efficiencies and reliable train service from Transnet. We can continue to look forward to good news from Tshipi and healthy dividends down the road. It is good news from Pallinghurst shareholders,” Mayers said.