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JUBILEE PLATINUM PLC - Operations update

Release Date: 30/01/2014 10:30
Code(s): JBL     PDF:  
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Operations update

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

OPERATIONS UPDATE


Jubilee, the AIM-quoted and Altx quoted Mine-to-Metals specialist, is pleased to announce an
operations update for the fourth quarter (Q4) of 2013. The Company is also updating
shareholders regarding the sale of the Quartzhill property owned by Tjate platinum
Corporation Pty Ltd (“Tjate”).

- Cash flows, revenues and gross profits from the Company’s Middelburg smelter (“Smelter”)
and Power plant operations are continuing to grow,

- Positive gross profits will be underpinned by commissioning of the 3rd ARC furnace, which
is already fully contracted and on target for March 2014.

- The fully contracted smelter capacity of an estimated 13,800 tonnes of metal per annum is
expected to increase gross profit margins to a targeted 38%.

- Jubilee has commenced discussions with an alternative party to conclude a short term
processing strategy for the processing of the DCM tailings to counter the delay in concluding
the commencement date with Platinum Australia Ltd (“PLA”).

- Tjate consulted with the DMR’s Limpopo Regional office with a view of fast tracking the
review of the sale of the Quartzhill property and the mining right application of the Tjate
project.

Leon Coetzer, CEO of Jubilee, said: “As stated in the previous update, Jubilee commissioned
the Smelter operations targeting the production of ferroalloy metals based on the patented
ConRoast process in response to the downturn in the platinum industry.

“We are pleased with the positive results delivered by continued efforts at the Smelter
operation to grow our revenues and attain positive earnings. The growth in the gross profit
margin reflects the growth in output and improved operational efficiencies. The last phase of
the renewal programme at the Smelters is well on its way and is the last hurdle to achieve
positive earnings for the Smelter operations.

“The integration of the various components of the 3rd ARC furnace will result in increased
furnace downtime over the next quarter and we do expect lower revenues for the Q1 2014
which will impact our gross margins. This impact will be short lived as the commissioning of
the 3rd ARC furnace is targeted for March 2014.

“Once commissioning is complete the ferroalloy smelting contracts that we have in place will
underpin the positive earnings capabilities of the Smelter and the power plant. We are
continuing to evaluate a number of opportunities that will provide access to additional
platinum-bearing material at or near surface – so avoiding undue reliance on tolling of
material.

“We can change our Smelter onto platinum material in a very short timeframe – and with the
ferroalloy contracts focussed on the quantity processed rather than a specific time frame we
are well placed to quickly take advantage of platinum-bearing opportunities.”
Smelter
Unaudited revenue in South African Rand (ZAR) terms increased by 48.73% during Q4 2013
compared to Q4 2012 increasing from ZAR 11.9 million in Q4 2012 to ZAR 17.7 million in Q4
2013. The increase is ZAR is partly offset by a strongly weakening ZAR against GBP
equating to a 26.47% increase between the comparative quarters in GBP.
Unaudited gross profit in Rand terms increased by 27.41% during Q4 2013 when compared
to Q4 2012 maintaining the targeted gross profit margin of 33%.

Gross profit maintained the targeted 33% as required for Phase 3 of the smelter renewal
programme, as previously announced, allowing Jubilee to commence with the final phase 4 of
the renewal programme which includes the commissioning of a 3rd ARC furnace. The
increased smelting capacity is backed by the newly secured ferroalloy smelting contracts
(announced on 05 December 2013).

Projected time-lines for completion and commissioning of the 3rd ARC furnace is on target for
March 2014 with work well advanced on the new off-gas system and upgraded hot metal
crane isle to accommodate the increased metal production. Items on the critical path remain
the integration of the new off-gas systems, the electrical transformer for the ARC furnace and
the refractory material required for the lining of the furnace.
With the increased, fully contracted, smelter capacity of an estimated 13,800 tonnes of metal
per annum, the Smelter operation is expected to sustain revenue growth supported by an
increase in gross profit margins to a targeted 38%, which would deliver positive Smelter
earnings targeting a net margin of 12%.
             
Upgrade of 3rd ARC Furnace

Engineering work commenced mid December 2013 on upgrading of Middelburg’s 3rd ARC
furnace as part of the final Phase 4 of the renewable programme (previously announced on 5
December 2013). Major items have been ordered with the outstanding item being the
refurbishment of the transformer for which the quotation is expected shortly.

Key work streams include the installation and commissioning of the new furnace off-gas
capturing and cleaning system, the upgrade of the cranage in the hot metal isle and the
refurbishment and commissioning of the furnace bowl and auxiliary equipment.

The completion of phase 4 is expected to extend the production output of the Smelter to an
estimated 13,800 tonnes of metal per annum. This production increase and infrastructure
renewal should enable the Smelter to achieve sustained positive earnings with the support of
the new toll smelting contracts. The capital expenditure budgeted for the conclusion of Phase
4 is ZAR6.7 million (£0.41 million) and completion is expected to occur during or about March
2014.

The Company expects that at the conclusion of Phase 4 the Smelter operation will have
established itself as a premier smelter of waste material to produce ferrometals based on its
patented ConRoast and reductive smelter technologies.

Power Alt

Jubilee’s private power plant continued to deliver excess power to the national grid while
maintaining power supply to smelter operations. The 12-month contract with the national
energy provider of South Africa to sell electricity expired end December 2013. Renewal of
the contract, which was conditionally agreed, has been delayed due to the national energy
provider having to critically review its energy purchasing agreements with the private sector in
order to address the on-going national energy deficit crisis. The Company expects this
review to be resolved shortly driven by the acute need for additional power.



Revenues and gross profit
Below is a table of unaudited external combined revenues for the Smelter operations, cost of
sales and gross margins achieved for Q4 2013 compared to Q4 2012.




                                                                                                %
                                   Q4                  Q4             Q4             Q4     change
                                 2013                2013           2012           2012       ZAR
                                 ZAR                GBP*            ZAR           GBP*
Total revenue             17 667 049           1 074 157     11 878 681         849 326     48.73%
Total cost of
                          11 854 869             720 776       7 316 756        523 148     62.02%
sales
Gross Profit               5 812 180             353 381       4 561 925        326 178     27.41%


* Average conversion rate is used for the relevant quarter


Update on the proposed acquisition of PLA
As previously reported, the Company has entered into an implementation deed and
supporting transactional documents ("Transaction Agreements") with PLA in relation to the
acquisition of the entire issued capital of PLA by Jubilee ("Proposed Transaction"),
collectively referred to as the Enlarged Group.

While the Jubilee Board acknowledges and strongly believes that the combination of the
assets to form the Enlarged Group offers value to Jubilee shareholders, the increased debt
owed by PLA to its senior creditor against a lower than expected platinum metal price
requires the Jubilee Board to review the financial structure of the transaction in accordance
with the mandate given to the Jubilee Board by its shareholders. While Jubilee continues to
engage with the parties to find a suitable structure to the benefit of the Jubilee shareholders, it
recognises that the longer the proposed transaction takes to conclude, the merger is exposed
to increased debt, the deal becomes less advantageous to both Jubilee and PLA
shareholders and the project is in danger of becoming moribund.

With regard to the processing of Dilokong Chrome Mine tailings (“Tailings”), the Company
continues to request PLA, to provide in terms of the Chrome Tailings Treatment Agreement
its definitive schedule for re-commissioning of PhokaThaba’s Smokey Hills mine concentrator
(“Concentrator”). The Company has commenced engaging with an alternative party to
conclude a short term processing strategy for the processing of the DCM tailings and will
provide further details on this strategy as soon as possible. This remains as a key focus for
the Company. The processing of Tailings has the potential of significantly enhancing
Jubilee’s short-term earnings and to establish Jubilee as a fully operational platinum
producing company and will continue to be aggressively pursued by the company.

Mining and Exploration
As previously announced on 5 December 2013 Tjate concluded a sale of rights agreement,
pursuant to a ZAR75 million approximately (£4.2 million at current exchange rate) cash offer
from Rustenburg Platinum Mines Limited a wholly owned subsidiary of Anglo American
Platinum Limited (“the Buyer”) for its non-core Quartzhill farm portion of the Tjate Platinum
project. The sale is subject to the approval of the Department of Mineral Resources (“DMR”).

Following Tjate’s engagement with the DMR Director of Legal Services (previously
announced on 5 December 2013) for guidance on the process to effect the transfer of the
rights to the Buyer, Tjate consulted with the DMR’s Limpopo Regional office in this regard and
agreed on procedural guidelines, fast tracking the review of the Quartzhill sale and the mining
right application of the Tjate project.

Tjate, the DMR’s office and the Buyer are working jointly to expedite this process. The
Quartzhill farm is considered non-core and has no impact on the Tjate mining plan.

Shareholders should note that the financial information contained in this announcement has
not been reviewed or audited by the Company’s auditors.


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

JSE Sponsor
Sasfin Capital, a division of Sasfin Bank Limited
Sharon Owens
Tel +27 (0) 11 809 7500

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

Bishopsgate Communications Ltd
Nick Rome/Anna Michniewicz
Tel +44 (0) 20 7107 1890

30 January 2014
Johannesburg

Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)

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