PALLINGHURST ANNOUNCES CAPITAL RAISING OF R800 MILLION BY WAY OF A RENOUNCEABLE RIGHTS OFFER TO ALL SHAREHOLDERS

HAMILTON, Bermuda - 11 August, 2009 - The board of Directors ("Directors") of Pallinghurst Resources (Guernsey) Limited (Ticker: PALLRES.BH) is pleased to announce, in advance of the commencement of the renounceable rights offer to all shareholders ("Rights Offer") as detailed herein, that the Company has pre-placed and received irrevocable underwriting commitments for 228,571,376 shares ("Rights Offer Shares") at a price of R3.50 per Rights Offer Share ("Rights Offer Price") for an aggregate consideration of R800 million (representing 100% of the total Rights Offer Shares available in the Rights Offer).

Since its incorporation, Pallinghurst, in conjunction with its co-investors, has established four unique investment platforms ("Investment Platforms"), which the Directors and Pallinghurst (Cayman) GP L.P, the Company's investment manager ("Investment Manager"), believe are significantly advanced in achieving the strategic objectives that were set out for each Investment Platform at the time of the Company's initial investment therein.

With three of the four Investment Platforms nearing and/or achieving operating status, the Rights Offer proceeds will enable the Company, alongside its co-investors, to participate in its pro rata funding entitlement to each Investment Platform. The Directors and the Investment Manager believe that the dilution by the Company in the Investment Platforms, at their current stage of development and at relatively modest investment valuations, would not be in the best interests of the Company and its shareholders ("Shareholders"). To this end, the Directors have resolved to implement the Rights Offer on the terms and subject to the conditions set out herein.

Terms of the Rights Offer

As set out in paragraph 3 below, in advance of the commencement of the Rights Offer, the Company has pre-placed ("Pre-placement") and received irrevocable underwriting commitments for 228,571,376 Rights Offer Shares at the Rights Offer Price representing 100% of the total Rights Offer Shares available in the Rights Offer.

To afford all Shareholders the opportunity to participate the Rights Offer, the Company will implement the Rights Offer through the offer of 228,571,376 Rights Offer Shares to Shareholders at the Rights Offer Price in the ratio of 92.452 Rights Offer Shares for every 100 shares currently in issue ("Rights Offer Entitlement").

The Rights Offer Price represents a 12.00% discount to the 30-day volume weighted average price of a Pallinghurst share listed on the JSE and a 15.66% discount to the closing price of a Pallinghurst share listed on the JSE Limited ("JSE") on Wednesday, 8 July 2009, being the day on which the Rights Offer Price was determined.

Pre-placement and Underwriting

1.1.    Pre-placement

In advance of the Rights Offer, the Company has entered into written agreements ("Subscription Agreements") with certain existing Shareholders ("Pre-placement Participants") in terms of which the Pre-placement Participants have irrevocably undertaken to subscribe for 127,752,391 Rights Offer Shares ("Pre-placement Shares") at the Rights Offer Price for an aggregate consideration of approximately R447 million ("Pre-placement Commitment"). Under the terms of the Subscription Agreements, the Company will receive the proceeds from the Pre-placement Shares 5 business days prior to the record date of the Rights Offer, which is anticipated to be on or about Friday, 28 August 2009.

108,243,230 of the Pre-placement Shares represent the Pre-placement Participants' Rights Offer Entitlement, being those Rights Offer Shares to which such Pre-placement Participants are irrevocably entitled ("Firm Placed Rights Offer Shares"). The Firm Placed Rights Offer Shares will be issued to the Pre-placement Participants on the first business day following the record date of the Rights Offer.

19,509,161 of the Pre-placement Shares represent irrevocable applications for Rights Offer Shares by Pre-placement Participants in excess of their Rights Offer Entitlement, being Rights Offer Shares whose allotment and issue to Pre-placement Participants is conditional upon Shareholders who are not Pre-placement Participants and to whom such Rights Offer Shares represent their Rights Offer Entitlement ("Remaining Shareholders") not taking-up, disposing of or renouncing such Rights Offer Shares to a third party ("Conditionally Placed Rights Offer Shares") in the Rights Offer. Conditionally Placed Rights Offer Shares, if any, will be issued to Pre-placement Participants on the 2^nd business day following the closing of the Rights Offer, which is anticipated to be on or about Wednesday, 30 September 2009 ("Second Issue Date").

1.2.    Underwriting

Pallinghurst has entered into underwriting arrangements ("Underwriting Agreements") with Oasis Asset Management Limited, Oasis Crescent Capital (Proprietary) Limited and Trinity Asset Management (Proprietary) Limited (collectively the "Underwriters"), whereby the Underwriters have irrevocably agreed to collectively underwrite 100,818,985 Rights Offer Shares ("Underwritten Rights Offer Shares") at the Rights Offer Price for an aggregate consideration of R353 million ("Underwriting Commitment"). To the extent that the Remaining Shareholders do not take-up,

 dispose of or renounce their Rights Offer Entitlement to a third party, the Underwriters will, on the Second Issue Date, subscribe for such number of Rights Offer Shares up to a maximum of the Underwritten Rights Offer Shares. The allocation of the Underwritten Rights Offer Shares, if any, to the Underwriters will rank in priority to the irrevocable subscriptions for Conditionally Placed Rights Offer Shares by Pre-Placement Participants and the application in the Rights Offer by Remaining Shareholders for Shares in excess of their Rights Offer Entitlement ("Excess Applicantions").

As consideration for the Underwriting Commitment, the Underwriters will collectively receive an underwriting fee of R10.6 million representing 3% of the Underwriting Commitment which will be payable by the Company to the Underwriters on the Second Issue Date.

The Rights Offer

Remaining Shareholders will be afforded the opportunity to participate in the Rights Offer, by either taking-up, disposing of, or renouncing, as the case may be, all or part of their Rights Offer Entitlement and/or to apply for Excess Applications. Excess Applications, whether by Pre-placement Participants who have applied for Conditionally Placed Rights Offer Shares and/or Remaining Shareholders, will be allocated and excess Rights Offer Shares issued on an equitable basis, provided such excess Rights Offer Shares are available for issue, on the Second Issue Date.

The Rights Offer will be implemented on the JSE and in Rand only and will be made to all Shareholders who, for the avoidance of doubt, will include:

·         Shareholders whose shares are registered and traded on the Bermuda Stock Exchange ("BSX") register; and

·         Remaining Shareholders who are entitled to take-up such number of Conditionally Placed Rights Offer Shares allocated to Pre-placement Participants, equal to their Rights Offer Entitlement.

Accordingly, all Shareholders will be afforded the opportunity to participate in the Rights Offer, with all Rights Offer Shares issued pursuant to their listing on the JSE.

Further details of the Rights Offer will be included in the circular to Shareholders which is anticipated to be posted to Shareholders on or about Monday, 7 September 2009 ("Circular").

Intention of the Directors and Investment Manger

The Directors and partners of the Investment Manager collectively have a Rights Offer Entitlement to 10,169,720 Rights Offer Shares. In accordance with their undertaking to Shareholders to invest an incremental USD5 million in the Company under the terms of the Rights Offer, the Directors and partners of the Investment Manager (as Pre-Placement Participants) have subscribed for 11,214,286 Rights Offer Shares for an aggregate consideration of R39,250,001, 1,044,566 of which represents Excess Applications and collectively amounts to 110% of their Rights Offer Entitlement.

Overview of Investment Platforms

1. Platinum Group Metals ("PGMs")

Pallinghurst has investments in and rights over various PGM properties situated in the Bushveld Igneous Complex of South Africa, an area which is estimated to hold in excess of 80% of the world's platinum resources, including a controlling interest in Platmin Limited, a PGM producer listed on the Toronto Stock Exchange, AIM of the London Stock Exchange plc and the JSE. The PGM strategy is being pursued through a unique partnership between Pallinghurst, its co-investors and the Bakgatla-Ba-Kgafela Tribe, a traditional community and tribe established according to indigenous custom, who own land and mineral rights in the Pilanesberg area.

2. Steel Feed Corporation

Competition for raw material supplies (particularly iron ore and manganese) to the global steel industry is intensifying and the major steel producers are seeking to secure their raw material supplies through equity ownership of mining companies. Pallinghurst is developing a Steel Feed Materials Investment Platform through two vehicles, Tshipi Manganese Mining (Proprietary) Limited and Jupiter Mines Limited (a company listed on the Australian Stock Exchange), for the supply of mainly manganese and also iron ore. This strategy is at an early stage of development. Regardless, Posco, a Pallinghurst co-investor and one of the world's largest steel companies, has recently invested in each of these vehicles.

3. Coloured Gemstones

Pallinghurst has identified the coloured gemstone industry as having attractive dynamics and prospects. The coloured gemstone industry has historically been overlooked, and is fragmented and undercapitalised. This presents a unique opportunity to create an integrated coloured gemstone producer, simplifying the coloured gemstone value chain and thereby enhancing investment returns. Pallinghurst and certain co-investors are jointly the controlling shareholder of AIM-listed Gemfields plc ("Gemfields") - one of the world's largest emerald producers. Gemfields is committed to bringing ethically produced, conflict-free coloured gemstones of certified provenance directly from the mine to the market.  

4. Fabergé

The Fabergé name is one of the most revered names in history and to this day remains synonymous with artistry and craftsmanship of the highest order.  Pallinghurst, in conjunction with certain co-investors, acquired the global portfolio of trademarks, licences and associated rights relating to the Fabergé name from Unilever in 2007. Pallinghurst has reunited the Fabergé name with the Fabergé family, which had lost the rights in a legal settlement more than 50 years ago. In September this year, Fabergé will celebrate its renaissance by unveiling to the world its first high jewellery collection since 1917. 

Salient dates and times

Notes:

⁽¹⁾       No shares may be dematerialised or re-materialised from the commencement of trade on Monday, 31 August 2009 to Friday, 4 September 2009.

⁽²⁾       No removal of shares between the JSE and the BSX may occur from the commencement of trade on Monday, 31 August 2009 to Monday, 28 September 2009.

⁽³⁾       These dates and times may be subject to further change. All such changes will be announced on SENS.

⁽⁴⁾       Above times are South African times.

Conditions precedent

The Rights Offer is subject to the fulfilment of the following conditions precedent:

§  the JSE granting a listing of the Rights Offer Shares to be allotted and issued pursuant to the Rights Offer;

§  the JSE granting a listing of the renounceable (nil paid) letters of allocation in respect of the Rights Offer; and

§  the registration by the South African Companies and Intellectual Property Registration Office of all documents required to be registered in terms of the South African Companies Act (Act 61 of 1973), as amended, for the implementation of the Rights Offer.

Financial effects of the Rights Offer

A summary of the unaudited pro forma financial effects after the implementation of the Rights Offer is set out in the table below. In this context, it has been assumed that the Rights Offer was implemented with effect from 1 January 2008 and 31 December 2008 for income statement and balance sheet purposes, respectively. The Directors are responsible for the preparation of the unaudited pro forma financial effects. The pro forma financial effects set out below have been presented for illustrative purposes only and may, because of their nature, not give a fair reflection of Pallinghurst's results, financial position and changes in equity post the implementation of the Rights Offer.

(1)       The figures in the "Before Rights Offer" column have been extracted without adjustment from the published audited results for the year ended 31 December 2008.

(2)       Transaction costs (including the underwriting fee as set out in paragraph 3.2 above) estimated at USD4,430 million have been taken into account against share premium as costs directly attributable to the issue of shares.

(3)       Assuming the Company raises R800 million before expenses (approximately USD100 million based on an assumed exchange rate of R8:USD1).

(4)       Assuming all 228,571,376 Rights Offer Shares are issued.

Further announcements and the Circular

Pallinghurst intends, subject to the fulfilment of the conditions precedent, to release a finalisation date announcement on SENS on Friday, 21 August 2009 and post the Circular on or about Monday, 7 September 2009.

ADVISORS

Investment Bank: INVESTEC Corporate Finance

BSX Sponsor: First Bermuda Group

Investment Manager: PALLING

Legal Advisors (South Africa): edward nathan sonnenbergs

Legal Advisors (Guernsey): OZANN

Reporting Accountants: SAB&T

                                                    
BSX Sponsor: First Bermuda Group Limited

Michael Schroter, First Bermuda Group                (441) 295-1330