Brian Gilbertson's Pallinghurst Resources has reported a $46.4 million loss for 2008 against a $5.4 million profit a year earlier, but this is primarily a result of a write down of its investments to conservative levels, particularly in the coloured gemstones arena.

Gilbertson has an impressive track record in the mining sector having been CEO of South Africa's Gencor, was a driving force behind BHP's merger with Billiton to form the world's largest diversified resource company, and the first CEO of the combined organisation, and then CEO of Russian aluminium giant SUAL up until its merger with RUSAL to form aluminium giant UC RUSAL, with a stint at Vedanta in between..

With Pallinghurst, which is in effect an investment group focused on key sectors in the global minerals industry, Gilbertson reckons he is building a diversified resources company for the future.  There have been pitfalls on the way - notably defeats in expensive takeover battles for Consmin in Australia and more recently for specialist gemstone miner Tanzanite One (although this may yet have further to run).  Meanwhile an opportunistic major investment has given the company control of Platmin, which has just commenced platinum mining and processing of UG2 ore on the western limb of South Africa's Bushveld Complex.

Speaking on Moneyweb/Mineweb radio yesterday, Gilbertson pointed out that the 2008 losses are actually unrealised losses and with projects coming on stream this year the whole revenue pattern will likely change.  The company has been caught in the big stock market downturns which decimated resources stocks from which they are now beginning to recover.

All of our projects are in development mode say Gilbertson. Two of them are coming into production - the first sales will be this year, and indeed the third one will start this year as well, but will only build up in the following year. So what you are seeing there is not the kind of impact on revenue that you are seeing in long-established companies. What you are seeing is that the market prices of development assets have taken a complete pounding. We referred earlier to the volatility in the markets - 6% down yesterday, 3% up today. You know, you don't actually build businesses in my industry with that kind of time horizon. You're looking at a two-year, three-year time period. So that's what we have to get right. I have to say to you, if you went out and tried to buy, for example, Gemfields, which is one of our key investments, at today's price, you don't have a hope in Hades of getting it, or of Platmin, which is in start-up mode at the moment.

While the stock market meltdown has clipped Pallinghurst's wings somewhat, it remains in five key sectors - platinum, coloured gemstones, luxury goods brand Fabergé, manganese and iron ore, and all these sectors would seem to have good potential in the medium and longer term.  There have to be short term doubts over brands like Fabergé in the current belt-tightening period, but this is in effect a brand new business and the branding would seem to have enormous potential.As for Platmin, Gilbertson commented having done calculations on what we thought the company could earn, and the likelihood of coming into production successfully, we decided to put in the funds that were needed to do it. Now happily all that seems to be working out, the mills are turning, we are getting our first concentrate out and so on, but I won't sleep easy for the balance of this year until I actually know. Starting up a mine is a very complicated process. Happily also since we bought it the price has gone back up, above $1100. Notwithstanding all of that the share price is trading at some ridiculous level of around [US] 55¢ or 60¢. But I just told the management don't even look at it, it's actually not important. What you've got to do is start up this mine, and when the cash starts pumping out of it, the market will do what's got to be done. You cannot actually manage a mining business on the basis of a day-to-day share price. It's ridiculous.While perhaps in retrospect some of Pallinghurst's investments were made ahead of the market collapse and that timing could have been better for the company, that in Platmin was at or near the presumed bottom as the pgm price collapse was perhaps overdone.  The key is whether the mine can be profitable at current metals prices as it builds up to full production of 250,000 oz/year (3PGE+Au in concentrate) for the first 11 years.  The platinum to palladium ratio is high as is the pattern with the Bushveld complex (Ratio of Pt:Pd:Rh:Au is 61:28:7:4) with some copper and nickel as well.As noted above, the losses reported by Pallinghurst are unrealised ones and while this may put a dent in possible further acquisitions it has to be realised that the start-up phases of all these are just beginning.  Pallinghurst is in a relatively strong financial position and Gilbertson's reputation is certain to be helpful in future dealings.  While it remains to be seen whether the potential can be turned into major earnings, much will depend, as with the whole resource sector, on the speed of global economic recovery.Pallinghurst has its primary listing on the Johannesburg Stock Exchange (PGL), while Platmin is on the TSX  and AIM (Ticker PPN) and will also likely list in due course on the JSE as well.