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What is Pallinghurst worth

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Not applicable
PGL now has one of the biggest discounts to NAV on the JSE at the moment (44%). The Jupiter share price in Aus has rocketed, but the battle for land at Platmin seems to be weighing down investor confidence. Couple this with the fact that its biggest holding (25%) is Faberge, which is a pretty risky business (untried & untested business models) that is going to need cash next year. Also, since it is not listed, it is very difficult to actually value Faberge.
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16 REPLIES 16
kwagga
Super Contributor
Yes my sentiment exactly. Difficult to determine the NAV on this. It's investments should start bearing fruit in terms of actual profit before a real value can be placed on the share. Currently it's all investment in medium and small miners and faberage. See Sbk's research reports on the company - target 703c in the September report. My feelings are that if you're willing to invest and leave for three years plus you might see some returns. The question is just what the opportunity costs will be for three years. You could make more from common blue chips like Anglo's and Steinhoff over a three year period, so the question is, is the risk worth it.
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barry_1
Super Contributor
I also sold out,how ever i felt i would be exposed to gilbertson's brilliance,so now i'm starting to buy platmin,as he must push this share to profit in a short time as its his only vechicle that can give him income at this stage.
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Not applicable
Ja, see my post on Platmin - I think it should start generating cash very soon - my very basic thumbsuck estimate is that 25000 ounces per quarter should be sufficient for breakeven - which is about 1/3rd of their forecasts (they are forecasting roughly 20000 ounces per month)
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barry_1
Super Contributor
Thanks,glad i'm not alone!
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Blik
Super Contributor
Just read a good book on the history of Faberge, called Faberge's Eggs, which focuses on the history of the Emperial Eggs and the Romanov family. It also explains the post REvolution hunt for the eggs, and how the Faberge name was sold, which is why you get the luxury Faberge jewelry and the pretty common Faberge deo products. An interesting read. Even Pallinghurst gets a one line mention.
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indium
Contributor
Agreed on the three year view, I also like it because it has good leadership under Gilbertson. I also think that the real value will come through if they manage to consolidate a number of small platinum properties and get some economies of scale in Platmin. Regarding the Faberge brand, I agree that it is somewhat risky, but it is cheap for a big player in the luxury market if it was sold. Gilberston has also proved that he can raise capital. I specifically like it because it is small (Market cap less than R2bn). If you are investing your Grandma's money, or have a nervous disposition, stick to the blue chips.
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Not applicable
Barry, you being the residend forum mining guru, at what point in time does opencast mining no longer become viable? The whole of platmin is an opencast operation, there is nothing in the plans that I can see that calls for shaft sinking. So how long can they keep it up?
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barry_1
Super Contributor
HI,Attempting a serious answer,with all my plat books packed in due to our move,i shall just answer what i can remember.First one should look at AngloPlats operations around Potgierersrus(Molokwane).Here are the greatest open pits of platinum mining in the world.Of course they mine the Platreef in this area which is considerably shallow as the slope is minimal when compared to the other reefs namely the Marensky and the deeper UG2.In fact they found that each pit had much more platinum than the original scoping studies revealed.as to the Platmin mine on the eastern rim it will depend on the the angle of slope,which is sharper than the rest.That said ,there should be no need to start an underground operation for at least another six years or so.The mie canbe brought to profit before thattime and who knows there might be ajoining pits that can be opened ,legthening the time worked before going underground OMO
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barry_1
Super Contributor
I have also noticed that have properties in more than one area andthis will also tend toprolong the life of the open cast workings
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THRESHOLD
Super Contributor
BUT PGL hardly owns any PLATMIN. In fact they own x% of x% of x% of most of their assets through comlpex holding structures in mostly unlisted assets. They MUST trade at a deep discount to perceived underlying asset value.
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kwagga
Super Contributor
Yes, that's the point. No one knows exactly how deep that discount is. Time will tell. Something else bothering me is Gilberton's CEO role at Jupiter mines in Oz. Is that not a conflict of interest, and how well can you function as a chairman of an investment company if you have a very challenging role as a CEO in a different part of the world.
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partridge
Super Contributor
Carl Faberge was THE jeweler of the late 19thc - the Easter Eggs being a miniscule portion of his output - his jewelry, enameling and silver were all highly sought after. The name has incredible cachet - up there with ( and beyond) Cartier etc. Its all about simplicity,quality and design.....This is premier division top 2 stuff - not rats and mice bling. Frankly, you could sell a dustbin lid to the would be's and can't be's of this World with the Faberge stamp on it( if you let them in the stores). This is super upmarket stuff- with huge mark-ups...( In fact the challenge is not about how many outlets you have its about scarcity - pushing up demand. ie a small select output.....sold out of perhaps 3 - 4 stores Worldwide.)
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THRESHOLD
Super Contributor
A brand is only as good as the marketing behind it. The much vaunted Faberge brand wound up on second rate BRUTE men's deodorant cans. Presumably UNILEVER could find no better use for it. In fact that is where Gilberton "found" it when he staged his rescue of this marque. Fact is stranger than fiction.
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partridge
Super Contributor
If you knew something about the history of the name , the cachet associated with it and the resultant value of this brand then you would know that it makes no difference who misused it - no potential purchaser of its offers would have even heard of ( let alone bought Brut!) The inter regnum was as meaningless as its owner for this market! Its all rather amusing.
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THRESHOLD
Super Contributor
I know the history quite well. You are missing the point and, by so doing, proving it! Notwithstanding the progeny of the name, it still wound up being unwanted and abused for years. So again: "A brand is only as good as the maketing behind it."
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partridge
Super Contributor
You clearly don't really understand the history and what this name means - all its "marketablity" is based almost exclusively upon what happened pre 1917( hard to believe I know) and you also seem to have overlooked that firstly you don't need or WANT a large number of outlets to market high value, low volume items and it seems secondly that online is not necessarily inappropriate for luxury goods - as you will no doubt be aware of RICHMONT's venture into this method of selling? I will accept that if they do not launch appropriate products they will not get to their target market. THE KEY is not what has happened in the past - its if this owner can convince the target market that his output is WORTHY OF THE NAME... The person who buys this name is not looking for "top six PREMIER Division stuff"( as an illustration - in the watch market you would be talking about Breitling, and similar so-called "hand made" watches). This is top 3 - 5 in the World of its kind.
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