Trading Update, Issue of Equity

RNS Number : 9744V

Jubilee Platinum PLC

03 November 2014

 



AIM: JLP

JSE: JBL

Registration number: 4459850

ISIN GB0031852162                                                                                                            

3 November 2014

Jubilee Platinum PLC

("Jubilee" or the "Company")

Jubilee increases its interest in Pollux Investment Holdings  Proprietary Limited

Significant increase in Jubilee's beneficial interest in the Dilokong Chrome Mine Tailings Project

Issue of equity

Trading update on the Middleburg Operation

Highlights

·     Middelburg Operation continues its growth trajectory breaking through 900 tonnes of metal produced for the month of October 2014 compared to the previous record set in September 2014 of 840 tonnes of metal

·     Middelburg's operational performance affords the Company the opportunity to focus on the recovery of platinum group metals ("PGM's") from the Dilokong Chromite Mine ("DCM") chrome tailings project at ASA Metals ("DCM Platinum Recovery Project")

·     Jubilee to increase its beneficial interest in the DCM Platinum Recovery Project by increasing its interest from 67.5% to 92.5% in its subsidiary Pollux Investment Holdings Proprietary Limited ("Pollux"), Pollux holds the rights to the DCM Platinum Recovery Project.

·     The DCM Platinum Recovery Project  has access to platinum containing surface material estimated to exceed 950,000 tonnes as the DCM continues to deposit further material 

·     Jubilee now expects to be able to take full operational control of the DCM Platinum Recovery Project  to drive the project to production

Jubilee, the AIM and AltX quoted Mine-to-Metals company is pleased to announce that their Middelburg operation has continued to increase production by producing in excess of 950 tonnes of metal for the month of October 2014, an increase of 13% on September's record production further enhancing the Middelburg Operation's earnings.

The Company further announces that it has entered into a Sale of Shares Agreement with Lipsoset Proprietary Limited ("the Seller") to acquire their entire interest in Jubilee's subsidiary Pollux (the "Transaction"). Pollux holds the PGM processing right to the DCM Platinum Recovery Project.  Jubilee currently has a 67.5% shareholding in Pollux and completion of the Transaction would increase Jubilee's shareholding to 92.5% through the acquisition of a 25% interest in Pollux represented by 25 ordinary shares of ZAR1 each in the share capital of Pollux ("Sale Shares"). The total consideration for the Transaction is ZAR 10.7 million (subject to certain potential adjustments outlined below), which is payable in three tranches through the issue of new Jubilee ordinary shares of 1p each ("Jubilee Shares"). The Sale Shares will also be released to Jubilee in three tranches. Further details on the terms of the Transaction are set out below.

The Company has made the same offer to the holder of the remaining 7.5% issued shares of Pollux, which if accepted would give Jubilee 100% ownership of Pollux and proportionate increased interest in the DCM Project.

Leon Coetzer said: "We are very pleased with the operational performance achieved by the Middelburg smelter operations.  The Company has demonstrated its ability to successfully implement a complex smelter renewal and upgrade project within the existing older infrastructure.  The operation has achieved its operational and financial targets which allow us to fully focus on bringing into operation our DCM Platinum Recovery Project at ASA Metals.  The project which focusses on the recovery of PGM's from surface material to produce platinum containing concentrates, is the next step in Jubilee's business model targeting continued growth in earnings on the back of the successful Middelburg Smelter operations.

The Company is pleased to be increasing its shareholding in the DCM Platinum Recovery Project to 92.5%.  The Company believes that the DCM Platinum Recovery Project offers tremendous upside value to Jubilee and it is opportune for the Company to be able to increase its beneficial interest in this project at this early stage of the project.  Jubilee is now able to drive this project to production within the near term.  Jubilee has concluded conceptual layout and three-dimensional design plans for the processing plant for the DCM Platinum Recovery Project. Jubilee is now considering project funding options to fund the construction and commissioning of the processing plant. 

 ASA Metals Proprietary Limited, the owners of the DCM operation, has given their full support to the DCM Platinum Recovery Project and has confirmed the site on their property for the construction of the PGM processing plant.  The allocated site is adjacent to existing water and power infrastructure which is expected to lower the required capital for the processing plant originally estimated at USD 6 million. The Transaction value was negotiated at a significant discount to the expected project value to reflect the pre-construction phase of the PGM processing plant for the DCM Platinum Recovery Project.  The payment of the Transaction consideration of R10.7 million (GBP0.609 million) in Jubilee shares was divided into three tranches to both replicate the targeted time-lines for the execution of the PGM processing plant and expected value accretion to Jubilee as well as reducing the upfront issuance of Jubilee shares. 

We look forward to updating shareholders on the execution of this project as we continue to pursue our goal of developing a fully operational PGM processing and smelting operation."

Salient terms of the Transaction

Jubilee will acquire the Sale Shares for a total consideration of ZAR10.7 million (GBP0.608 million, using current conversion rates of ZAR17. 61 to GBP1.00). The Sale Shares are to be received in three tranches in line with the consideration payable by the Company which is to be satisfied by the issue of ordinary shares of 1 pence each in the Company ("Ordinary Shares") payable in three tranches as follows:

Tranche 1

40% of the Sale Shares are to be received by the Company, comprising 10 Sale Shares following payment of the Tranche 1 consideration to the Seller as follows: Consideration of R5.7 million (GBP0.324 million) to be satisfied by the issue of  24 070 776 new Jubilee Ordinary Shares ("Tranche 1 Consideration Shares") issued at a price calculated as being the greater of 1 pence and the 10 day historic volume weighted average price ("VWAP") on AIM calculated up to 31 October 2014 being 1.3447 pence.

Of these Tranche 1 Consideration Shares, 22 381 599 Ordinary Shares, equivalent to the value of R5.3 million (GBP0.301 million) (the "Tranche 1 Locked-In Shares") shall be the subject of a lock-in for a period of 90 days ("Tranche 1 Lock-In").  Following expiry of the Tranche 1 Lock-In period and in the event that the Seller elects to trade the Tranche 1 Consideration Shares in the market  Jubilee will holds the sole right to facilitate the sale of shares.  If shares  are sold for an amount less or more than R5.3 million (such sale if it were to occur  to be facilitated by the Company's broker in an orderly manner within 90 days of the expiry of the Tranche 1 Lock-In period, (the "First Date")), then the Company shall be obliged to issue further Ordinary Shares to the Seller equivalent to the shortfall, calculated as being the greater of 1 pence and the 10 day historic VWAP ("Tranche 1 Shortfall Shares") or any surplus will be kept for the benefit of the Company.

Tranche 2

Within 30 days of the First Date, 40% of the Sale Shares are to be received by the Company, comprising 10 Sales Shares following payment of the Tranche 2 consideration to the Seller as follows;

Consideration of R4.0 million  (GBP 0.227 million) to be satisfied by the issue of new Jubilee Ordinary Shares ("Tranche 2 Consideration Shares") issued at a price calculated as being the greater of 1 pence and the 10 day historic VWAP on AIM calculated from the First Date together with any Tranche 1 Shortfall Shares to be issued. The issue date is defined as "the Second Date". The Tranche 2 Sale Shares shall be the subject of a lock-in for a period of 90 days from the Second Date ("Tranche 2 Lock-In").  Following expiry of the Tranche 2 Lock-In period and  in the event that the Seller elects to trade the Tranche 2 Consideration Shares in the market Jubilee will holds the sole right to facilitate the sale of shares.  If shares  are sold for an amount less or more than R4.0 million (such sale expected to be facilitated by the Company's broker in an orderly manner within 90 days of the expiry of the Tranche 2 Lock-In period, (the "Third Date")), then the Company shall be obliged to issue further Ordinary Shares to the Seller equivalent to the shortfall, calculated as being the greater of 1 pence and the 10 day historic VWAP ("Tranche 2 Shortfall Shares") or any surplus will be kept for the benefit of the Company. 

Tranche 3

Within 30 days of the Third Date, 20% of the Sale Shares are to be received by the Company, comprising 5 Sale Shares following payment of the Tranche 3 consideration to the Seller as follows; Consideration of R1.0 million (GBP0.057 million) to be satisfied by the issue of new Jubilee Ordinary Shares ("Tranche 3 Consideration Shares") issued at a price calculated as being the greater of 1 pence and the 10 day historic VWAP on AIM calculated from the Third Date together with any Tranche 2 Shortfall Shares. The Tranche 3 Consideration Shares shall be subject to a lock-in period of 90 days from the expiry of the Third Date.

Processing of Tailings Dam Agreement 

As previously announced on 13 June 2012 Jubilee was awarded the rights to beneficiate and recover contained PGMs from approximately 800,000 tonnes (since increased to approximately 950 000 tonnes) of historic Dump Tailings and from approximately 8,000 up to 15,000 tonnes per month of current mine arisings from the DCM operation.

The Company created the special purpose company Pollux, in which Jubilee held an initial 67.5% interest with the option to increase its holding. On 9 June 2014, Jubilee executed an Access Agreement with ASA and DCM for the recovery of PGMs and Chrome from the surface tailings dam estimated at 800,000 tons of material containing an estimate of 74,000 4E PGM ounces (September 2012). The Access Agreement offers Jubilee the option to construct in partnership with ASA a dedicated chrome and PGM processing plant for the treatment of the Tailings on ASA's DCM property ("New Plant").

Jubilee could process a minimum of 180,000 tonnes Surface Stock per year or such other amounts as may be agreed between the Parties, taking into account the capacity of the New Plant. DCM continues to deposit further tailings onto the surface tailings dam at an estimated rate of 8,000 to 12,000 tons per month further increasing the estimated 950,000 tonnes of material available for processing.

The Dump Tailings treatment rate is projected to peak at 20,000 tonnes per month (240,000 tonnes per year) for six years (life of Dump Tailings) and thereafter will depend on the tonnes per month from DCM's current arisings.

The Platinum to Palladium ratio of the contained PGMs is believed by the Company to be around 2.8 to 1, a potentially favourable ratio for the project's economics. The capital cost of the PGE tailings beneficiation plant (including chrome recovery) is estimated at ZAR120 million. The project offers a strong project financing opportunity to minimizing the need for additional equity funding.

The Access Agreement paves the way for the establishment of an independent PGM and Chrome processing facility for the treatment of platinum containing chrome ores along the Eastern Limb of the South African platinum belt. The Company has secured the exclusive right to construct a purpose-built PGM and chromite processing plant adjacent to the surface Tailings and the ASA smelting operation. The targeted area is well served with appropriate infrastructure and is environmentally fully permitted.

Jubilee has furthermore entered into advanced discussions with ASA for the further expansion of the proposed New Plant to target the processing of 3rd party chrome and platinum containing ore in the region. A number of chrome mining opportunities are being explored in the region that requires access to a purpose designed PGM and chrome processing facility which offers a partnership with a FerroChrome producer.

Related Party Transaction

The Transaction constitutes a related party transaction pursuant to AIM Rule 13. This is due to the Seller being a substantial shareholder of a subsidiary of Jubilee. The Directors, who are independent of the Transaction, consider, having consulted with the Company's nominated adviser that the terms of Jubilees further investment in Pollux are fair and reasonable insofar as the Company's shareholders are concerned.

Issue of equity

In addition to the above, Jubilee has also, as part of its continued support for its ongoing subsidiary projects, agreed to issue a further 7 644 258 new Jubilee shares ("New Shares") to settle debt in an amount of ZAR1.750 million (GBP 0.099 million) on behalf of its subsidiaries.  The shares are issued at the current trading price of Jubilee of 1.3 pence per share.

The Tranche 1, 2 and 3 Consideration Shares and the New Shares will be issued as fully paid and rank pari passu in all respects with the existing ordinary shares, including the right to receive all dividends and other distributions declared on or after the date on which they are issued.

Application will be made for the Tranche 1 Consideration Shares and the New Shares to be admitted to trading on AIM ("Admission") and to be listed on the AltX of the JSE Limited, which is expected to take place on or about 7 November 2014. Further announcements will be made in due course regarding the issue of the balance of the Tranche 1, Tranche 2 and Tranche 3 Consideration Shares and any potential Tranche 1 and 2 Shortfall Shares.

 

Total voting rights

The Company's total issued capital after the issue of the New Shares and the Tranche 1 Consideration Shares will be 622 256 875 shares. As the Company does not hold any shares in Treasury, this figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company following Admission.

Contacts

Jubilee Platinum plc                         

Colin Bird/Leon Coetzer                  

Tel [phone] / Tel [phone]

Andrew Sarosi         

Tel [phone]   

NOMAD / BROKER

Daniel Stewart and Company PLC

Emma Earl / David Coffman - Corporate Finance
Colin Rowbury - Corporate Broking
Tel: [phone]

JSE Sponsor

Sasfin Capital, a division of Sasfin Bank Limited Sharon Owens

Tel [phone]

 

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