Jubilee Platinum looking at alternatives to process tailings
Friday, January 31, 2014
Jubilee Platinum’s (LON:JLP) planned merger with Platinum Australia is in danger of becoming “moribund” after protracted delays in its completion, the smelter owner said.
Jubilee said it is trying to find a structure for the deal, but the longer it takes to conclude the more the debt involved increases, making it less advantageous to both sets of shareholders.
The company added it is also now talking to other groups over a short term contract to process tailings from the Dilokong Chrome Mine (DCM) as Platinum Australia had still not supplied it with a definitive schedule for re-commissioning the Smokey Hills mine concentrator.
Processing DCM’s tailings could significantly enhance its short-term earnings, Jubilee said, and will be aggressively pursued.
Elsewhere, the third arc furnace at the Middelburg smelter is due to be commissioned by March, which will boost its capacity to 13,800 tonnes a year and gross margins to 38%.
The commissioning process will mean lower revenues in the current quarter, Jubilee said, and also have an impact on gross margins, though it expects this to be short-lived.
Jubilee’s revenues rose by 48% to R17.7mln (£1.1mln) in the fourth quarter of 2014, with gross profits of R5.81mln (£353,000).
Leon Coetzer, Jubilee’s chief executive, said the company had switched to ferro-alloy metals due to the downturn in platinum prices.
“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.
"We can change our smelter onto platinum material in a very short time frame - and with the ferroalloy contracts focused on the quantity processed rather than a specific time frame we are well placed to quickly take advantage of platinum-bearing opportunities."
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