26 Mar Unaudited interim results for the six months ended 31 December 2013
(“Registration number 4459850”)
Altx share code: JBL
AIM share code: JLP
Not for release, publication or distribution in whole or in part in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction.
26 March 2014
Jubilee Platinum Plc
(“Jubilee” or “the Company”)
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
The Directors of Altx-listed and AIM-quoted Jubilee, the Mine-to-Metals specialist, are pleased to announce the unaudited interim results of the Group for the six months ended 31 December 2013.
The results achieved over the period under review support Jubilee’s stated focus of establishing a fully integrated platinum mining company as it continues to make progress in bringing its platinum projects to fruition. In the interim period the Company focused on utilising its smelter processing infrastructure to drive short term revenues and earnings through the processing of Ferro Alloy material. Jubilee also continued to provide power to the national energy grid of South Africa through its private power plant in Middelburg.
• Revenue increased by 6.5% to £2.3 million (2012: £2.1 million). In ZAR terms revenue increased by 25.87% to ZAR 36.11 million (2012:28.69 million)
• Gross profit increased by 29.6% to £0.97 million (2012: £0.75 million) – reflecting the increased Smelter throughput achieved at the operations during the period under review. In ZAR terms gross profit increased by 53% to ZAR 15.5 million (2012: ZAR 10.13 million)
• Operating costs reduced by 45% to £2.6 million (2012: £4.7 million)
• Loss per share for the period reduced by 66% to a loss of 0.46 pence per share (2012: loss of 1.40). In ZAR terms losses reduced by 61% to a loss of 7.41 cents per share (2012: loss of 18.96)
Mining Right Application of subsidiary Tjate Platinum Corporation (“Tjate”) for the targeted 70 million ounce platinum group metals (“PGM”) project, accepted by the Department of Mineral Resources (“DMR”). Tjate has post the period under review, formally engaged environmental consultants for the conclusion of a Scoping Report, undertake an Environmental Impact Assessment (“EIA”) and prepare an Environmental Management Program (“EMP”). The Scoping Report is due for submission to the DMR on 14 April 2014.
The DMR acknowledged the executed sale agreement of the non-core Quartzhill property, which lies outside of the targeted Tjate mining area for a cash consideration of £4.2 million (ZAR 75 million). Implementation of the sale agreement is linked by the DMR to the award of a mining right to Tjate.
The Company’s subsidiary Pollux Investment( Pty) Ltd (“Pollux”), agreed final terms with the holder of the PGM rights to the estimated 800,000 tonnes of Dilokong Chrome Mine (“DCM”) surface tailings to allow Jubilee to proceed with processing of the DCM tailings.
Jubilee secured a new ferroalloy-smelting contract for ferrosilicon (FeSi) on the back of the successful phase 3 upgrade of the Smelter and FeSi production commenced 5 August 2013. The current smelter infrastructure is being utilised to drive short term revenue and earnings through ferroalloy-smelting while PGM operations are being established. The new FeSi contract has facilitated the commencement of the final phase 4 of the smelter renewal programme being the commissioning of the 3rd ARC furnace.
The increased smelting capacity is further backed by the newly secured ferronickel (“FeNi”) toll smelting contract. This new contract secured an increase in the revenue per tonne of metal produced of 17% at the targeted metal production of 9,600 tonnes of FeNi per annum compared to current production level of 6,240 tonnes of FeNi per annum under the existing FeNi toll contract. The Smelter’s capacity remains fully contracted at a current operational capacity of 10,000 tonnes of metal per annum.
The national energy provider of South Africa has, with effect 20 February 2014, reinstated the Private Power Purchase Agreement (“PPPA”) entered into with the Company’s 70% owned subsidiary Power Alt Pty Ltd (“Power Alt”) in December 2012.
Chief Executive Leon Coetzer commented: “We have an excellent combination of assets and have a strategy in place to ensure that revenues and earnings growth underpin our development plans. We continue to work towards the processing of the DCM tailings and are exploring a number of options which will enable us to exploit the growing surface platinum stocks.
“Furthermore, we are looking forward to the imminent commissioning of the 3rd ARC furnace at Middelburg, which is already fully contracted to smelt Ferro-Alloy material and will further boost our earnings capabilities in the near term. Our long-term focus remains on establishing Jubilee as a fully integrated platinum focused company through the integration of our exploration, and surface projects with our smelting and processing capability. We look forward to continued strong progress towards achieving this goal.”
MINING AND EXPLORATION
The Company’s subsidiary Tjate received a letter of acceptance of Tjate’s Mining Right Application from the DMR for its targeted 70 million PGM ounces project. The Company and Tjate entered into discussions with the DMR on the timing for the Scoping Report, EIA and EMP. Tjate has since engaged environmental consultants and work on the Scoping Report and the EMP have commenced. The Scoping Report is due for submission to the DMR on 14 April 2014.
As previously announced on 5 December 2013, Tjate concluded a sale of rights agreement, pursuant to a £4.2 million (approximately ZAR75 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 only to the approval of the DMR.
In this regard, Tjate engaged with the DMR Director of Legal Services and with the DMR’s Limpopo Regional office (previously announced on 5 December 2013) for guidance on the process to effect the transfer of the rights to the Buyer, and agreed on procedural guidelines, for fast tracking the review of the Quartzhill sale and Tjate’s mining right application.
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.
Pollux secured the processing rights to recover the PGM contained in the estimated 800,000 tonnes (September 2012) of DCM surface tailings. It concluded the PGM processing agreement with PhokaThaba Platinum Pty Ltd (“PhokaThaba” or “Smokey Hills”) a subsidiary of Platinum Australia Limited (“PLA”) for the beneficiation of the PGM and chrome contained in the DCM tailings in November 2012. As announced previously, Jubilee has been frustrated by PLA’s inability to commit to a commencement date for the toll processing of the DCM tailings.
DCM continues to deposit further tailings onto the surface tailings dam at an estimated rate of 8,000 to 12,000 tonnes per month. Jubilee remains focused on the processing of the DCM tailings in the short term and as such, it is actively exploring an alternative strategy to the PLA processing plant and to this end, has engaged in discussions with other parties to provide both plant and infrastructure with a view to commencing processing should the discussions with PLA not be concluded shortly.
The strategy also includes the possibility of processing the DCM tailings in a fit-for-purpose processing plant to be located adjacent to the DCM surface tailings thereby avoiding the significant costs associated with the transport of the material to a toll processor.
Jubilee has secured indicative terms for the provision of power, water and surface infrastructure for such a processing plant and initial investigations have indicated that key processing equipment required for such a plant is readily available within the current market. Jubilee will keep shareholders updated on the outcome of these discussions as we remain committed to bringing the beneficiation of the platinum containing surface material into operation.
MIDDELBURG SMELTING (“SMELTER”)
Sustained increased gross profits together with securing additional toll smelting contracts allowed Jubilee to commence with the final phase 4 of the Smelter renewal programme which includes the commissioning of a 3rd ARC furnace. The increased smelting capacity is backed by both the newly secured FeSi and FeNi toll smelting contracts. The new FeNi contract offered an increase in the revenue per tonne of metal produced of 17% at the targeted metal production of 9,600 tonnes of FeNi per annum compared to current production level of 6,240 tonnes of FeNi per annum under the existing FeNi toll contract.
The targeted time-line for completion and commissioning of the 3rd ARC furnace of March 2014 has been marginally impacted by severe weather conditions experienced in the central and north South African regions resulting in record rainfalls being recorded in the Middelburg area. The Company has largely mitigated the impact of the potential delays by increasing the engineering project crew and extending working hours. At the time of this report the expected delay in commissioning of the 3rd ARC furnace is anticipated to be approximately two weeks.
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%.
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). Key work streams included the installation and commissioning of the new furnace off-gas capturing and cleaning system, the upgrade of both the cranage in the hot metal aisle and the main building support structure as well as the refurbishment and commissioning of the furnace bowl, roof and all auxiliary electrical and control equipment.
The Company expects that at the conclusion of Phase 4 the Smelter operation will have established itself as a premier smelter of waste and ferro alloy material to produce ferrometals based on its patented ConRoast and reductive smelter technologies with the capability of being rapidly migrated onto the processing of platinum containing concentrates.
POWER PLANT OPERATIONS
The national energy provider of South Africa has, with effect 20 February 2014, reinstated the PPPA entered into with Power Alt in December 2012. The Company expects to deliver approximately 5MW of power to the national grid of South Africa which equates to an estimated revenue of GBP 195,000 (ZAR3.5 million) per month. The reinstatement of the contract is driven by the continued pressure on the supply of power to the national grid.
In the period since my last annual report, conditions in global markets have improved marginally with sustained demand for platinum group metals. The South African platinum industry is again dogged by a labour strike affecting all the major producers and putting further pressure on the supply of PGM metals. Two of the major producers have already indicated that meeting supply commitments will be difficult should the strike continue beyond the end of March.
Our Mine-to-Metals strategy continues unabated and we continue to pursue all of our goals against a predicted rise in the price of platinum group metals. During the period under review we continued with our smelter upgrade and modifications to bring a 3rd ARC furnace into operation at Middelburg, progressed the mining right application of Tjate and the sales of Quartzhill and continued selling power into South Africa’s National Grid. The period saw the DCM project structurally consolidated ready for production on completion of a suitable processing arrangement.
GRE’s proposed acquisition of 65% of our Smelter and 70% acquisition of the power plant did not advance with GRE not making certain contractual working cost payments in exchange for a payment time extension. The Board of Jubilee does not expect this transaction to be completed and will seek the necessary remedies during the coming months.
Significant events have occurred during the interim review period which include several financing and refinancing transactions to advance the upgrade of the third ARC furnace, procure electricity sale agreements, complete the third party acquisition of Quartzhill and advance our Mine-to-Metals strategy.
Whilst this mission is intact and active, our ability to source capital, like other small companies in the resource sector demands that we are projects selective, matching financing requirements and revenue generating capability. Increased production as a result of completion of the third ARC furnace is expected to contribute positively to the Smelter’s cash flow to the point of full cost coverage and future projects in the Group will be financed on a project-by-project basis.
The Company moved its listing on the main board of the JSE Limited (“JSE”) listing to the Alternative Exchange (“Altx”) of the JSE, a result of which, the AIM exchange, on which the Company’s shares are quoted, became the primary listing for exchange regulatory purposes and more accurately reflects our shareholder base.
26 March 2014
The full UNAUDITED CONDENSED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2013 are available in the Financial Section of this website.