Processing Agreements Update



 

Jubilee Takes Major Step in Implementing its Mine-to-Metals Strategy

HIGHLIGHTS

  • Jubilee expects to start processing material from Dilokong Chrome Mine tailings and the tailings from current operations (collectively “Material”) in the short term at Phokathaba’s Smokey Hills Concentrator (owned by Platinum Australia).
  • In acquiring access to this facility, Jubilee has advanced the project by some 18 months and eliminated the requirement for significant new capital.
  • The PGE concentrate produced at the Smokey Hills Concentrator (the “Concentrator”) will be Jubilee’s first own PGE concentrate feed for processing using its unique ConRoast process.
  • Jubilee finalises agreement with Corridor Mining Resources (Pty) Ltd (“CMR”) to purchase the PGEs in the Material for the recovery of PGE’s to concentrate, for its own account.
  • The purchase price payable for the Material will be based on a platinum-price-related percentage of the revenue that Jubilee receives from the sale of the PGE concentrate recovered.
  • Jubilee will be targeting a Material processing rate of up to 50,000 tonnes per month to produce a projected steady state 1686 oz. PGEs per month.
  • The previously announced memorandum of understanding (“MOU”) for toll processing of Material to recover PGE concentrates is now unconditional.

Leon Coetzer, CEO of Jubilee Platinum, commented:  “This is a major milestone for Jubilee. We will be the only junior platinum company that can process tailings to produce a concentrate, which we can smelt using our unique ConRoast process. We are delighted to have entered into this MOU with Platinum Australia regarding the use of their concentrator and that Macquarie Bank has given its support for the transaction.  The MOU allows Jubilee to commence processing the Material without requiring significant capital to establish a dedicated processing plant.

“This initiative will be the first PGE asset that we bring into production and we expect to follow up other pending and new acquisitions in the new year for concentrate production.”

 

Toll Processing of Material

Jubilee has entered into binding and exclusive MOU between that Jubilee’s subsidiary Pollux Investment Holdings (Pty) Ltd (“Pollux”) and Phokathaba (Pty) Ltd (“Phokathaba”) (together the “Parties”) -announced 9 October 2012 – to utilise the Concentrator for the toll processing of the Material to recover PGE concentrates. The MOU is now unconditional having received approval from Phokathaba’s senior debt provider – Macquarie Bank Limited.

 

Key terms of the MOU:

  • Phokathaba will commit the full capacity of the Concentrator to Pollux for the processing of Material for a minimum period of 8 months (“Exclusivity Period”), the Exclusivity Period will commence 30 (thirty) days after the Effective Date of this MOU – being 08 November 2012, during which period the Parties will conclude the Phokathaba Agreement and due diligence.
  • In the event that Phokathaba is able to continue operating exclusively on the Material supplied by Pollux post the Exclusivity Period, the Parties may jointly agree to extend the Exclusivity Period and conditions.
  • Pollux will be responsible for delivering the Material to the Phokathaba Concentrator.
  • Phokathaba will be responsible for the processing of the Material.
  • Phokathaba will deliver both a filtered PGE concentrate to Pollux as well as any recovered Chromite concentrate.

The Parties have commenced formalising a toll processing agreement in this regard.

 

Purchase of PGEs from the Dilokong Chrome Mine tailings

Jubilee is also pleased to report Pollux and CMR have executed a treatment of tailings agreement (the “Agreement”) formalising the previous memorandum of understanding -announced on 13 June 2012. This gives Pollux the right to purchase from CMR the PGE’s (platinum group elements) contained in the tailings dump (“Dump”) of Dilokong Chromite Mine (“Dilokong”) and its current tailings  (collectively “Material”) and to process the Material to recover the PGEs for its own account.

 

The terms of the Agreement

The conditions precedent of the CMR Agreement include inter alia

  • Pollux obtaining and/or keeping in place such environmental approvals as may be necessary or required in respect of the processing of the Dump and the construction and operation of the Concentrator, if appropriate, which environmental approvals shall include undertaking any and all environmental impact studies, submitting environmental management reports and/or any other requirements of the Department of Mineral Resources or any other governmental authority;
  • Pollux negotiating, finalising and entering into an appropriate access and ancillary rights agreement with Dilokong to, inter alia, allow Pollux access to the mine and the Dump;
  • Pollux undertaking and completing a feasibility study in respect of the mineral content of the Dump;
  • Pollux undertaking and completing, entirely to its satisfaction, the due diligence investigation, which must be finalised within a period of 60 days with effect from the Signature Date – being 16 November 2012;
  • Pollux negotiating, finalising and entering into an appropriate framework and treatment of tailings agreement with Dilokong, on terms and conditions acceptable to Pollux and CMR, in respect of the extraction and processing of chrome ores from the Dump;  and
  • CMR and/or Dilokong obtaining to the extent necessary a certificate of exemption in terms of the relevant  regulatory authority in respect of the area on which a  Concentrator, if appropriate, is built.

 

Summary of purchase price and payments

Upfront Payment

Pollux will pay to CMR an Initial Fee of ZAR10 million (approximately £714,300) which at Pollux’s election, will be paid either in cash or in Jubilee shares (the “Initial Fee”).

The Initial Fee is deductible from or offset against any future revenue payments due by Pollux to CMR in terms of the Price (as defined below), in such tranches as Pollux may determine provided that Pollux will not be entitled to offset the entire Initial Fee in a period less than one Year from the date of payment of the Initial Fee.

 

Price

The price payable by Pollux to CMR for the Material removed from the Dump will be calculated, based on the platinum price, on the basis that CMR shall be entitled to a percentage of revenue received by Pollux for the sale of the PGE Concentrate recovered from the Material (the “Price”).

 

—Ends—

 

Contacts

Jubilee Platinum plc

Colin Bird/Leon Coetzer

Tel +44 (0) 20 7584 2155 / 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 7600 1658

 

Shore Capital Stockbrokers Limited (Joint Broker)

Jerry Keen/Edward Mansfield

Tel: +44 (0) 20 7 408 4090

 

Sasfin Capital

Leonard Eiser/Sharon Owens

Tel +27 (0) 11 809 7500

 

Bishopsgate Communications Ltd

Nick Rome/Anna Michniewicz/Ivana Petkova

Tel +44 (0) 20 7562 3350