Pallinghurst Resources Ltd – Market Announcement

HAMILTON, Bermuda – 07 December 2012 – In a filing with the Bermuda Stock Exchange dated 21 November 2012, Pallinghurst Resources Limited (the “Company”; Ticker: PALLRES.BH), made the following market announcement.

Successful consolidation of Pallinghurst’s PGM assets, establishment of Sedibelo Platinum Mines and ZAR3.24bn investment by the IDC

1.   Introduction

Pallinghurst is pleased to confirm the successful consolidation of the Platinum Group Metals (“PGM”) interests held by the Company, along with the Pallinghurst Co-Investors and the Bakgatla Ba Kgafela Tribe (the “Bakgatla”) to create a new entity intended to be called Sedibelo Platinum Mines Limited (“Sedibelo Platinum Mines”). The completion of the consolidation enabled the Industrial Development Corporation (“IDC”) to complete its investment of ZAR3.24 billion for a 16.2% interest in Sedibelo Platinum Mines on 3 December 2012.

 Brian Gilbertson, Pallinghurst Chairman, commented: “Sedibelo Platinum Mines holds a unique position amongst PGM producers with significant shallow resources, allowing safe open-cast and shallow underground mining for decades to come, and one of the industry’s strongest balance sheets. The long-term commitment of three sovereign investors on the shareholder register will support the unlocking of the full potential of the company with associated job creation and community benefits”.

2.   Key features of the Consolidation and the IDC Investment

The consolidation of the three contiguous properties of Pilanesberg Platinum Mines (“PPM”), Sedibelo and Magazynskraal, in the North West Province of South Africa (the “Consolidation”) was identified at the outset of Pallinghurst’s investment into PGMs as the key to unlocking significant value by creating a safe, low cost and long life PGM producer of industry significance.

With the consolidation completed, the final condition precedent for the previously announced investment by the IDC has been satisfied and the IDC has injected ZAR3.24 billion (US$420 million) into Sedibelo Platinum Mines.

The benefits to Sedibelo Platinum Mines from the completion of the Consolidation and the IDC Investment include:

• The creation of a large and contiguous ore-body which will allow for the development of a safe and shallow mining complex, with a long life;
• Creates an unhedged and debt-free producer, with a strong balance sheet; 
• Unlocking synergies and benefitting from anticipated rapid organic growth with associated job creation;
• Reinforces the strong partnership with the Bakgatla community which is also the Sedibelo Platinum Mines BEE partner; and
• Opportunity to partner with the IDC to form a joint venture to explore and develop opportunities for energy efficient PGM beneficiation.

Pallinghurst, as a shareholder in Sedibelo Platinum Mines, will share in these benefits.

3.   Pro forma financial effects of the Consolidation and the IDC Investment on the Company

The impact of the completion of the Consolidation and the IDC Investment on certain key elements of Pallinghurst’s financial information is illustrated below.

1 Loss per share and NAV per share include the impact of the merger of Gemfields and Fabergé as described in the Company’s SENS announcement dated 21 November 2012 (available on www.pallinghurst.com). For simplicity, the numbers including this impact have not been adjusted between 21 November 2012 and the date of this announcement, although certain variables have changed in the intervening period (particularly the listed price of Gemfields shares and foreign exchange rates). If the anticipated impact of the completion of the Gemfields Fabergé transaction materially changes, the Directors would release revised information.

2 The Company’s attributable interest in Sedibelo Platinum Mines is approximately 200 million shares, or 7% of the three billion shares in issue, with an implied value of US$186 million. The completion of the Consolidation and the IDC Investment result in a valuation increase across the Company’s PGM investments for accounting purposes of approximately US$63 million.

3 The Company’s Interim Report for the period to 30 June 2012 (the “Interim Report”) included a loss of (US$0.03) per share. Including the impact of the Gemfields/Fabergé transaction the Loss was (US$0.11) per share. The impact of the Consolidation and IDC investment is to reverse this loss, resulting in positive earnings per share of US$0.02.  Therefore the percentage decrease in loss per share as a result has not been presented.

4 This information, which has not been audited, is the responsibility of Pallinghurst’s Directors.

5 NAV per share assumes completion of the Company's Rights Offer at 30 June 2012. See Interim Report for explanation.

Arne H. Frandsen, Pallinghurst Chief Executive, commented: “Today’s announcement is the culmination of six years of focused work; the creation of Sedibelo Platinum Mines is a first step in unlocking significant value for Pallinghurst shareholders. Within the past month, the Pallinghurst management team has announced the first delivery of manganese ore from the Tshipi mine, the proposed merger of Gemfields and Fabergé and now today the emergence of “Sedibelo Platinum Mines”. As I predicted in my Chief Executive’s Statement in the most recent annual report, 2012 has been a year of transformation and Pallinghurst is very well-positioned for sustainable value creation”.

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Mr. Alex Conyers

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