Pallinghurst Resources Limited – 2012 Results Announcement (Excerpt)

HAMILTON, Bermuda – 21 March 2013 – Pallinghurst Resources Limited (the “Company”; Ticker: PALLRES.BH) has released the Company's results for the financial year ended 31 December, 2012. A Company release stated, in part:

HIGHLIGHTS

NAV increased by ZAR700 million to ZAR3.7 billion.

Key milestones achieved:

•               Consolidation of Pallinghurst’s PGM interests.

•               Landmark investment of ZAR3.24 billion by the Industrial Development Corporation.

•               Building of Tshipi Borwa mine and first manganese ore shipped.

•               Merger of Fabergé and Gemfields.

•               Ruby mining activities commenced.

•               Jupiter completed successful capital raising.

•               The Company successfully raised ZAR640 million in rights offer.

CHAIRMAN’S STATEMENT

The turbulence created by the Global Financial Crisis in 2008 is still impacting the markets. Whilst we have recently seen the Dow and FTSE indices reach new highs, there remains a sentiment of pessimism about global growth and in particular the lack of growth from the developed economies. In the mining industry such uncertainty affects access to funding and delays the commitment to new projects. Added to this, the increase in legislation and regulatory restrictions is making the development of projects far more costly and time consuming.

Such an environment does however create opportunities and we continue to explore transactions in our existing investments and in new areas. The Company’s balance sheet remains strong; we have no debt and have funded all our investments with equity capital. This investment philosophy has made us financially independent and provided the robustness needed in times of financial uncertainty.

The management teams of each of our Investment Platforms have made significant progress during 2012 and each is advancing towards the desired strategic outcome. I remain confident that all of the platforms will realise their inherent value potential, for the benefit of all shareholders.

Particular highlights of 2012 were the consolidation of all the Company’s PGM properties and the landmark investment by the IDC; the building of the Tshipi Borwa mine and its first successful shipment of manganese ore; and the merger of Fabergé and Gemfields, which will radically change the coloured gemstone industry, realising our vision of a “De Beers for Coloured Gemstones”.

It brings me pleasure to welcome Dr Christo Wiese to the Board. As one of Africa’s most successful businessmen, he brings unique insights from which we will all benefit greatly. Following Dr Wiese’s appointment, Ms Patricia White has stepped down from the Board. My thanks go to her for her substantial contribution over the past years in her roles as both a Director and an Alternate Director.

Finally, I extend my thanks for the hard work and substantial contributions of my fellow Directors and of the management teams of our portfolio companies.

Brian Gilbertson

Chairman

CHIEF EXECUTIVE’S STATEMENT

In my Chief Executive’s Statement last year, I predicted that our current investments would soon enter their “harvesting season”. That prediction was accurate and I am delighted to report that for the past 12 months the ripening has been significant for all our platforms, both due to the operational milestones achieved and as a consequence of significant consolidation activities.

Platinum Group Metals: We achieved the successful consolidation of all our PGM investments, creating “Sedibelo Platinum Mines”, a PGM producer with a unique growth profile and a substantial, shallow and contiguous resource base. With production levels now at almost 150,000 4E PGM ounces on an annualised basis, the harvesting will commence and the unlocking of value looks promising. Another milestone achieved was the successful completion of the IDC’s ZAR3.24 billion investment for a 16.2% equity stake, giving Sedibelo Platinum Mines one of the strongest balance sheets in the industry and securing the funding needed to develop its attractive portfolio of assets.  With its shallow resource base of approximately 70 million 4E PGM ounces and an aggressive growth plan, Sedibelo Platinum Mines is well-positioned to maximise value in an IPO which is expected to take place within the next 12 months.

Steel Making Materials: For the past year, Tshipi has been a hive of activity with 70 metres of overburden being removed to expose the manganese ore. Much of the processing and other necessary infrastructure has been installed, in particular a 7.9 kilometre rail siding. In the last quarter of 2012, the Tshipi mine shipped its first manganese ore. We have taken this investment from “Greenfield-to-Producer” and are confident that the mine will provide benefits for decades to come. The ramp up of production as well as potential M&A growth makes Tshipi a truly exciting investment, which is set to provide significant value for all stakeholders. In our Australian iron ore initiatives, the Mount Ida feasibility study identified a major reserve base with almost two billion tonnes of iron ore. However, the decision was made to hold further development on Mount Ida until there is more clarity regarding the logistics of the project as well as a firmer iron ore price. Mount Ida remains one of the largest magnetite resources known in the Yilgarn region of Western Australia. Optimisation work continues on Mount Mason and if port access can be secured, it has the potential to rapidly generate significant free cash flows.

Gemstones & Luxury: Our emerald operation now consistently produces significant quantities of quality stones and Gemfields has successfully positioned itself as the world’s largest and most prominent producer of emeralds. Gemfields has now commenced mining activities at the new ruby mine in Mozambique, and I expect to see the first auction of ruby production in the coming months. Given the long-life nature of our operations, we expect profitable harvests for years to come. Lastly, Fabergé has progressed in its planned build-up and the synergies of the combination of Gemfields and Fabergé will accelerate the development of the world’s preeminent coloured gemstone producer, with access to the significant parts of the value-chain from mine-to-market.

In spite of very challenging market conditions, the Company successfully completed one of the largest rights offers on the JSE in 2012, raising some ZAR640 million at ZAR2.24 per share. The funds were needed for our existing Investment Platforms while providing the ability to make new investments. The management of the Company is grateful for this vote of confidence from shareholders, and we believe that the funds will successfully contribute to the value growth of the Company.

Besides a continued focus on realising the inherent value potential of Pallinghust’s investment portfolio, the key challenge of 2013 will be to get the Company’s NAV more adequately reflected in the share price. The current share price performance is unsatisfactory and will have to be addressed in the year ahead. However, I have been consistent in saying that when we deliver the first harvest, the share price should respond as the market sees the significant value embedded in our Investment Portfolio being realised.

Arne H. Frandsen

Chief Executive          

The complete text of this announcement along with financial data can be accessed via the Company's web-site at http://www.pallinghurst.com

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