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JUBILEE PLATINUM PLC - Disposal of non-core asset Update on proposed acquisition of Platinum Australia Limited Cautionary Announcement

Release Date: 28/05/2013 09:45
Code(s): JBL     PDF:  
Wrap Text
Disposal of non-core asset Update on proposed acquisition of Platinum Australia Limited Cautionary Announcement

JUBILEE PLATINUM PLC
AIM: JLP
JSE: JBL
Registration number: 4459850
ISIN: GB0031852162
("Jubilee" or "the Company")


Disposal of non-core asset
Update on proposed acquisition of Platinum Australia Limited
Cautionary Announcement


HIGHLIGHTS

-   Jubilee reduces its holding in the peripheral non-platinum
    ferroalloy smelter and power plant assets while retaining
    its platinum processing capacity at Middelburg for an
    aggregate cash consideration of USD14 million (“the
    Transaction”)
-   The sale enables Jubilee to liquidate its non-platinum
    ferroalloy smelting operation while retaining its Platinum
    processing ability
-   The Transaction may be executed over two tranches, namely a
    disposal which includes the sale of 65% of the issued share
    capital of JSR and 40% of the issued share capital of
    PowerAlt (“the Disposal”) and an option whereby Jubilee
    retains an exclusive put option for the remaining share
    capital held by the Company (“the Option”)
-   Jubilee retains the utilisation of the new 5MW arc furnace
    at Middelburg for the processing of platinum containing
    materials
-   Jubilee has an irrevocable free option for a period of two
    years from the date of the sale agreement to install an
    additional 5 MW DC arc furnace complete at the Middelburg
    smelter
-   Jubilee has the right to participate in any expansion of the
    power plant over a period of two years
-   The proceeds from the Disposal will expedite bringing the
    Jubilee’s current platinum projects forward thereby
    realising the Jubilee’s platinum Mine-to-Metals strategy.

Update on Platinum Australia Limited (PLA) Transaction

-   The timeline required to meet the condition precedent (“CP”)
    for securing of financing as stated in the Implementation
    Deed entered into between PLA and Jubilee has been moved to
    coincide with the first court hearing for the proposed
    Scheme of Arrangement between the two companies targeted for
    10 June 2013.
-   The extended time-line falls in line with the legal
    proceeding of the proposed Scheme of Arrangement and ensures
    adequate time to evaluate the updated business model for the
    PhokaThaba mine and associated funding proposal.




Jubilee, the AIM-quoted and JSE-listed Mine-to-Metals
specialist, is pleased to announce that the Company has on
Friday, 24 May 2013, concluded a Sale of Shares agreement
(“Agreement”) with Global Renewal Energy Limited (“GRE”), a
company incorporated in the Isle of Man, in terms of which
agreement GRE will acquire from Jubilee, inter alia, the
issued share capital of Jubilee Smelting and Refining (Pty)
Ltd (“JSR”) , a wholly owned subsidiary of Jubilee and the
issued share capital of Power Alt (Pty) Ltd (“PowerAlt”)
(collectively “Sale Shares”), for an aggregate cash
consideration of US$14 million . The Transaction will be
executed over two tranches namely the Disposal and the Option.

The Disposal includes the sale of 65% of the issued share
capital of JSR and 40% of the issued share capital of Power
Alt for a cash consideration of US$9.066 million (“Tranche 1
Disposal”). As part of the Agreement, Jubilee retains the
right to utilise the new 5MW AC arc furnace for the processing
of platinum containing materials as well as the right to
construct a second furnace subject to power availability at
the Middelburg property.

Jubilee furthermore, in terms of the Option, is granted an
irrevocable put option in its favour, and at its election,
over a period of two years to dispose of the remaining
shareholding in JSR and PowerAlt for a cash consideration of
US$4.933 million.




Leon Coetzer, Chief Executive Officer of Jubilee, said:


“Jubilee has been successful in bringing to value its
shareholding in the non-core ferroalloy smelting business and
associated power plant. This enables Jubilee to direct the
proceeds from the Disposal of the non-core ferroalloy smelters
into the continued development of the Company’s platinum Mine-
to-Metals strategy. Our immediate focus is to expedite the
recovery of platinum from the Dilokong Chrome Mine tailings
while we target further such surface material opportunities.
The proceeds from the Disposal enables Jubilee to further
capitalise on platinum opportunities presented to the Company
due to current challenges within the platinum industry.


We are able to dispose of our non-platinum business while
retaining the processing right and platinum smelting capacity
for platinum containing material at the Middelburg facility.
Our platinum Mine-to-Metals strategy remains on course with
the added benefit of an enhanced cash balance in Jubilee.
The extension in the funding Condition Precedent (“CP”) allows
Jubilee to review the updated business model for the
PhokaThaba mine in-line with the proposed toll processing of
3rd party platinum-reef material, as announced on 23 May 2013,
before committing to final funding terms. “




1.   Overview of assets being divested


Jubilee Smelting and Refining
JSR currently operates as a toll smelting operation producing
non platinum ferroalloys for the metal industry.    JSR’s
diverse smelting and processing technologies offers unique
capability to the mining and metals industry in South Africa.
The non-platinum processes are based on RST Special Metals
(Pty) Ltd’s fully patented Reductive Smelting Technology
(“RST”). Jubilee will retain the usage right of the new 5MW
AC arc furnace for the processing of platinum containing
material. This furnace is designed to allow the
implementation of the ConRoast recipe on platinum containing
material.


Power Alt
PowerAlt generates electricity through the internal combustion
of off-gasses produced by a petrochemical refinery. It has a
total generating capacity of approximately 11MW of power.
Currently PowerAlt holds a private power sale agreement with
JSR and the South African National Electricity provider.


Jubilee agreed to disinvest its 70% of Power Alt that owns the
on-site 11MW gas-fired electricity generation plant in
Middelburg, while retaining a right to participate in the
potential expansion of the power plant facility over a two
year period.

2.   Rationale

The Board of Jubilee believes that this divestment enables the
Company to focus on its platinum Mine-to-Metals strategy while
retaining its platinum smelting capacity at the Middelburg
facility. The Middelburg ferroalloy smelting and power
facilities are non-core assets of the Group. The retention of
an irrevocable free option to install a new furnace at the
Middelburg smelter for platinum smelting and alternatively to
participate in any expansion of the Power Plant made this
divestment attractive to Jubilee and its shareholders.
Jubilee is able to utilise the funds from the Disposal to
invest into its platinum projects with an immediate focus on
the commissioning of the DCM tailings project to recover
platinum concentrates for further processing.


3.   Principal terms

With effect from 27 May 2013 (“Effective Date”) Jubilee sells
to GRE the Sale Shares and claims on loan account from Jubilee
in two distinct tranches, namely the Disposal and the Option.


3.1 In respect of the Disposal

Jubilee will sell to GRE 65% of the issued share capital of
JSR, with Jubilee as one indivisible transaction selling
42.25% (65% of 65%) of its claims on loan account against JSR.


Jubilee sells to GRE 40% of the issued share capital of
PowerAlt with the Jubilee as one indivisible transaction
selling 57.14% (40% of 70%) of its claims on loan account
against PowerAlt.
The claims on loan account against JSR and PowerAlt sold to
GRE comprise the Class A loans being Jubilee’s inter-company
loans in existence as at the Effective Date (“Class A Loans”).


3.2 In respect of the Option


Jubilee is granted an irrevocable put option in its favour,
which put option shall be capable of being exercised in
writing at any time, at its election, within a period of two
years from the Effective Date.


Should Jubilee exercise the put option, such put option shall
immediately trigger the Option, in which case GRE acquires 35%
of the issued share capital of JSR and 30% of the issued share
capital of PowerAlt. GRE shall also acquire the balance of any
loan account claims in favour of Jubilee against JSR and RST
which claims on loan account comprise the Class B loans
(“Class B Loans”).


The Class B loans comprise Jubilee’s the inter-company loans
in existence or which may exist at the time the Jubilee
exercises the put option, which Class B loans shall be
subordinated to all other loans or future loans recorded in
the books of account of the RST, JSR and Power Alt (“the
Companies”), and which Class B loans shall only be repaid to
Jubilee out of platinum revenues generated by GRE (via the
Companies) in the event that Jubilee does not exercise the put
option granted to it.


Should Jubilee exercise the put option within one year of the
Effective Date, such transaction may require the approval of
Jubilee shareholders in general meeting, which approval shall
firstly be obtained prior to implementing the Option.

4.       Purchase Price

The agreed purchase price of the Disposal and the Option shall
be as follows:


4.1 In respect of the Disposal

To the Sale Shares in respect of 65% of the share capital of
JSR:               US$6 801 021
To the Sale Shares in respect of 40% of the share capital of
PowerAlt:          US$2 265 475


The purchase price for the Disposal includes the value of the
Class A Loans.


The purchase price shall be paid by GRE to Jubilee as follows:


     -   A non-refundable deposit payment of US$200 000 payable on
         or before 27 May 2013, which payment shall comprise
         rouwkoop (a non-refundable payment) and will be forfeited
         in full should this Agreement not be proceeded with or
         implemented by GRE for whatsoever reason;   and


     -   The balance, comprising US$8 866 496 shall be paid in
         full to Jubilee on or before 14 June 2013 (“Completion
         Date”).


4.2 In respect of the Option


To the Sale Shares in respect of 35% of the share capital of
JSR:               US$1 232 750
To the Sale Shares in respect of 30% of the share capital of
PowerAlt:          US$3 700 754
The purchase price in respect of the Sale Shares in PowerAlt
includes the value of the Class B claims on loan account
against PowerAlt.


The aggregate purchase price of US$4 933 504 for the Option,
shall be paid in full to Jubilee within ten business days from
the date that Jubilee notifies GRE in writing of its intention
to exercise the put option referred to above.


  5. Categorisation

The Disposal is a Category 2 transaction in terms of the JSE
Limited Listings Requirements and accordingly the approval of
Jubilee shareholders is not required.

The Disposal is treated as a substantial transaction under AIM
rule 12. The unaudited net loss attributable to the assets
being disposed of (net to Jubilee) for the 6 months to 31
December 2012 was US$ 2 438 515.


  6. Cautionary Announcement

Shareholders are advised that the pro forma financial effects
of the Disposal are currently being determined and may have a
material effect on the price of the securities of the Company.
Accordingly, shareholders are advised to exercise caution when
dealing in the securities of the Company until the pro forma
financial effects of the Disposal have been announced on SENS.




Contacts

Jubilee Platinum plc
Colin Bird
Tel +44 (0) 20 7584 2155
Leon Coetzer
Tel +27 (0)11 465 1913
Andrew Sarosi
Tel +44 (0) 1752 221937

finnCap Ltd
Matthew Robinson/Ben Thompson– corporate finance
Joanna Weaving – corporate broking
Tel +44 (0) 20 7220 0500

Shore Capital Stockbrokers Limited (Joint Broker)
Jerry Keen/Edward Mansfield
Tel: +44 (0) 20 7 408 4090

Sasfin Capital
Angela Teeling-Smith/Sharon Owens
Tel +27 (0) 11 809 7500

Bishopsgate Communications Ltd
Nick Rome/Anna Michniewicz/Ivana Petkova
Tel +44 (0) 20 7562 3350


28 May 2013
Johannesburg

Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)

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