Durban - Pallinghurst Resources gained 11.9 percent on the JSE last month after the company announced it had benefited from a strong surge in manganese prices last year.
Although Pallinghurst’s share price remained flat for the better part of Tuesday on the JSE at R4.70 per share, the price has been positive since the beginning of last month and moved from R4.20 per share to R4.70 a share levels.
Despite the continuing growth trends, the company’s share price is way off from its record high of R5.40 per share recorded in November 2015.
Pallinghurst has been boosted by its subsidiary Tshipi é Ntle Manganese Mining (Tshipi).
Tshipi’s successful production ramp-up and the strong market environment in manganese prices during the year improved dramatically.
The price of manganese increased from less than $1.50 (R21) per dry metric ton unit (DMTU) in January last year to recent prices of more than $7 per DMTU.
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This represents a five-fold increase. The company said Tshipi’s optimisation of its cost base had also contributed to its expectation of record profits during its financial year ending February 28.
Undervalued
An independent trader, who did not want to be named, said Pallinghurst benefited from “a strong uptick in the manganese prices in 2016 as well as a weakened South African currency”.
The company said its net asset value per share was R5.62 as at the end of June. The trader believed the company was still undervalued at R4.70 per share, based on yesterday’s price. Pallinghurst has a primary listing on the JSE and a secondary listing on the Bermuda Stock Exchange.
As a result of anticipated growth in profits, Tshipi aimed to distribute about R1 billion to its shareholders, Jupiter Mines, a 49.9 percent shareholder in Tshipi.
In return Pallinghurst, an 18.45 percent shareholder in Jupiter, expects to receive R140 million at the end of March.
The group said the above distributions were subject to there being no material adverse change in market conditions.