| Tue 4 May 2010, 8:14 | | JBL - Jubilee Platinum PLC Jubilee acquires site with power and environmental |
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JBL
JUJLP
JBL - Jubilee Platinum PLC Jubilee acquires site with power and environmental
permits for commercial conroast facility and withdrawal of cautionary
Jubilee Platinum PLC
AIM: JLP
JSE: JBL
Registration number: 4459850
ISIN GB0031852162
("Jubilee" or the "Company")
JUBILEE ACQUIRES SITE WITH POWER AND ENVIRONMENTAL PERMITS FOR COMMERCIAL
CONROAST FACILITY AND WITHDRAWAL OF CAUTIONARY
(This announcement is related to the cautionary announcements of 2 March and 19
April 2010).
Highlights
- Jubilee acquires active Brownfield smelting site for first ConRoast Furnace
build programme.
- Purchase price is $10 million for 70% interest and $4 million shares or cash
on call option for the other 30%.
- Site has self 10MW gas (Sasol supply)-powered generator facility and separate
6 MW municipal (Eskom) supply.
- Environmental and precious metal permits in place.
- Significant usable infrastructure in place reducing capital expenditure.
- Short-term opportunity from current site smelting operation.
Jubilee is pleased to announce that it has entered into a Sale Agreement
("Agreement") with Thos Begbie Limited (TBL) and various Trusts ("Trusts") to
purchase respectively TBL`s 70% shareholding and a call option on the Trust`s
30% shareholding in Thos Begbie Holdings (Pty) Ltd (TBH), which owns the assets
of a ferro-alloy smelting facility in Middelburg, South Africa ("the
acquisition"). This acquisition is a key step towards the Company`s committed
objective to fast track the commercialization of its ConRoast process.
Colin Bird, Jubilee`s CEO, said "This acquisition is a keystone of the Company`s
mission for its ConRoast process and underlines the Company`s aggressive
commitment to develop and commercialize the process. This acquisition will lead
to short-term cash flow and will significantly reposition Jubilee in the
Platinum arena. We are convinced that the industry now acknowledges the
necessary role ConRoast will have in smelting primary and secondary high-chrome
platinum concentrates."
The Company regards the acquisition of this smelting facility of strategic
importance. It provides the Company with a ready site with significant usable
infrastructure, power and skilled labour to realise installation of its first
5MW ConRoast DC arc furnace, thereby reducing capital expenditure. The site is
fully permitted environmentally and for precious metals. Permit applications
have been submitted to increase the plant`s smelting capacity.
The Company is evaluating tenders for the engineering, construction, procurement
and management for installation of a 5MW ConRoast facility complete with
downstream refining.
The Middelburg site currently has two 2.5MVA arc furnaces. TBH management are in
the process of completing the construction of a 5MVA arc furnace with plans for
a third 2.5MVA furnace for its ferro-alloy smelting operation. The total capital
cost is anticipated at ZAR14 million, of which ZAR5 million has been incurred to
date. The Company expects to benefit from short-term opportunity from the
current smelting operations on site.
Terms of the Agreement
The salient terms of the agreement include:
Conditions Precedent
The acquisition is subject to the following conditions precedent:
- that by 31 May 2010, the approval is obtained, insofar as it may be necessary
in law and/or required by any stock exchange on which the shares of Jubilee are
listed, to enable the terms and conditions of the agreement to be carried into
effect
- that by 15 May 2010, the approval is obtained for the acquisition by the
board of directors of Jubilee;
- that by 15 May 2010, the approval is obtained, to the extent necessary, of the
acquisition by all regulatory authorities including but not limited to the
competition authorities of South Africa, the Securities Regulations Panel and
the South African Reserve Bank;
- that by 31 May 2010, approval is obtained in so far as it may be necessary or
required by any environmental and or other regulatory authority for all
consents, permits and licences not already covered by those in warranties for
the company as restructured to carry out its business of smelting and refining
of precious and associated base metal bearing oxide/sulphide concentrates;
- that by 15 May 2010, a written agreement is concluded between TBH (the
"company") and its subsidiary, Thos Begbie and Co (Proprietary) Limited, in
terms of which the company will be placed in control of the supply of Municipal
Electricity and self generated electricity between the parties to the above
agreement and which agreement will further regulate how the electricity is to be
divided between the company and Thos Begbie and Co (Proprietary) Limited; and
- that by 15 May 2010, a shareholders agreement is concluded and becomes
unconditional in accordance with its terms save in respect of any condition
wherein reference is made to the Agreement becoming unconditional.
Thos Begbie and Co (Pty) Ltd is specifically excluded from the acquisition.
Consideration
The purchase price payable for TBL`s 70% shareholding is US$10 million (ZAR74.5
million) payable in two tranches of US$8 million (ZAR59.6 million in April 2010
and US$2 million (ZAR14.9 million) payable on 1 June 2010.
On the Agreement becoming effective, Jubilee will make a further payment of up
to ZAR9 million towards the cost of the two additional AC arc furnaces on the
site.
Option
The Trusts have granted Jubilee a call option in terms of which Jubilee shall,
if the call option is exercised, acquire their 30% shareholding in TBH. The call
option shall be subject to the following terms and provisions:
- The call option may be exercised by Jubilee at any time prior to 31 December
2010 by Jubilee giving written notice to the Trusts of the exercise of the call
option. The option is in respect of all of the option shares and not part
thereof.
- The consideration payable by Jubilee to the Trusts for the option shares shall
be the Rand equivalent of US$4,000,000 as at the date of exercise of the option.
- The exercise price for the option shall be paid to the Trusts at Jubilee`s
election, either in cash or by Jubilee procuring the issue to the Trusts of such
number of Jubilee shares equal in value to the Rand equivalent of US$4,000,000
based on the 30-day volume weighted average price at which Jubilee shares trade
on the JSE during the 30 trading days immediately preceding the issue of such
Jubilee shares.
Note on the Financial Effects of the Transaction
Pro forma Financial effects of the acquisition
The table below reflects the unaudited pro forma financial effects of the
acquisition. These have been prepared in terms of the Listings Requirements of
the JSE Limited, are for illustrative purposes only and due to their nature, may
not truly reflect Jubilee`s financial position or results of operations. It has
been assumed for purposes of the pro forma financial effects that the
acquisition took place with effect from 1 July 2009 for income statement
purposes and 31 December 2009 for balance sheet purposes. The directors of
Jubilee are responsible for the preparation of the unaudited pro forma financial
effects.
Effects per Jubilee share Before 1 After the Percentage
acquisition of a change
70% interest in
TBH 2
(Loss)/ earnings per share -1.43 -1.42 0.70%
(pence)
Headline (loss)/ earnings -1.1 -1.1 -
per share (pence)
Net asset value per share 32.69 32.69 -
(pence)
Tangible net asset value 6.41 4.48 -30.10%
per share (pence)
Weighted average shares in 157 278 157 278 -
issue (`000)
Shares in issue (`000) 229 551 229 551 -
Effects per Jubilee share After the exercise of the Percentage
option and settlement of the change
option consideration in
Jubilee shares 3
(Loss)/ earnings per share -1.35 5.60%
(pence)
Headline (loss)/ earnings -1.05 4.50%
per share (pence)
Net asset value per share 32.89 0.60%
(pence)
Tangible net asset value 4.75 -25.90%
per share (pence)
Weighted average shares in 163 816 4.20%
issue (`000)
Shares in issue (`000) 236 088 2.80%
Effects per Jubilee share After the exercise of the Percentage
option and settlement of the change
option consideration in cash
4
(Loss)/ earnings per share -1.42 0.70%
(pence)
Headline (loss)/ earnings -1.1 -
per share (pence)
Net asset value per share 32.69 -
(pence)
Tangible net asset value 3.74 -41.70%
per share (pence)
Weighted average shares in 157 278 -
issue (`000)
Shares in issue (`000) 229 551 -
Notes:
The financial effects are indicative only and have been based on the assumptions
set out below. The acquisition has been accounted for in terms of the revised
IFRS 3: Business Combinations, as the expected effective date is after 1 July
2009, being the effective date of the revised statement.
1. The "Before" financial information is based on Jubilee`s published unaudited
interim results for the six months ended 31 December 2009.
2. The "After the acquisition of a 70% interest in TBH" assumes:
- TBH`s income statement for the year ended 30 September 2009 (adjusted for a
six month period) has been aggregated with the income statement of Jubilee for
the six months ended 31 December 2009. The TBH income statement has been
converted at GBP1 - ZAR12.5651, being the average rate for the six months ended
31 December 2009;
- TBH`s balance sheet is based on the annual financial statements of TBH for the
year ended 30 September 2009 converted at GBP1 - ZAR11.8144, being the closing
rate at 31 December 2009;
- Payment of the consideration of US$10 million in cash, converted at GBP1 -
US$1.5256, being the closing rate at 30 April 2010;
- Total transaction costs of GBP10,000 in respect of the acquisition;
- For the purpose of determining the loss per share and headline loss per share
only, interest foregone on the cash component is calculated based on the
assumption that the cash would have invested at a return of 0.75 per cent. per
annum (being the average investment rate for the period); and
- The tax effects of the above.
3. The "After the exercise of the option and settlement of the option
consideration in Jubilee shares" assumes (in addition to the assumption in note
2 above):
- Payment of the option consideration of US$4 million via the issue of 6,537,410
new Jubilee shares at the 30-day volume average weighted price to 30 April 2010
(equating to R4.52 per share, converted at US$1 - ZAR7.3910, being the closing
rate at 30 April 2010);
4. The "After the exercise of the option and settlement of the option
consideration in cash" assumes (in addition to the assumption in note 2 above):
- Payment of the option consideration of US$4 million in cash, converted at GBP1
- US$1.5256, being the closing rate at 30 April 2010.
Withdrawal of cautionary
Shareholders are referred to the cautionary announcements published on 2 March
and 19 April 2010 respectively and are advised that as a full terms announcement
together with financial effects has now been published, caution is no longer
required to be exercised by shareholders when dealing in their shares
Additional information
The ConRoast technology, developed and patented by Mintek (South Africa`s
national mineral research organization), has been licensed (to year 2020)
exclusively to Braemore Platinum Smelters SA (Pty) Ltd (a wholly owned
subsidiary of Jubilee). ConRoast is a robust, clean and safe DC-arc smelting
process, for treating especially difficult high chrome-bearing platinum
concentrates from UG2 reef ore. ConRoast offers increased metal recovery, low
SO2 emissions and improved furnace reliability for chromite-bearing platinum
concentrates; all being significant improvements over the matte smelting process
currently employed in the Platinum mining industry
For further information please contact:
Colin Bird
Jubilee Platinum plc
Tel +27 (0) 11 253 3280
Tel +44 (0) 20 7584 2155
Matthew Robinson/Ed Frisby
FinnCap
Tel +44 (0) 20 7600 1658
Andrew Sarosi
Jubilee Platinum plc
Tel +44 (0) 1752 221937
Leonard Eiser/Sharon Owens
Sasfin Capital
Tel +27 (0) 11 809 7500
Leon Coetzer
Braemore Platinum (Pty) Ltd
Tel +27 (0)83 455 7749
Michael Kinirons/Giang Nguyen
Bishopsgate Communications Ltd
Tel +44 (0) 20 7562 3350
4 May 2010
Date: 04/05/2010 08:14:01 Produced by the JSE SENS Department.
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