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Jubilee Platinum gets profits boost as Hernic in South Africa ramps up

Hernic’s unit cost per PGM ounce produced almost halved to US$476 from US$901 in the previous quarter
picture of platinum ore
Platinum ounces recovered more than trebled

Jubilee Platinum PLC (LON:JLP) saw its shares rise today after it said it has seen a big increase in revenues and profits as platinum production from its tailings operation at the Hernic mine ramped up.

In afternoon trading, the AIM-listed stock was up 4.7% at 4.48p.

The AIM-listed firm said output from Hernic, in South Africa, rose to 2,874 ounces of platinum (PGM) in the three months to September compared to 808oz in the previous quarter.

Hernic’s unit cost per PGM ounce produced almost halved to US$476 from US$901 in the previous quarter.

READ: Jubilee Platinum enters lead and zinc recovery venture in Zambia

Further improvement is expected over the remainder of the year with October’s performance already ahead of September said Leon Coetzer, chief executive.

Jubilee has partnerships at Hernic and also at Dilokong (DCM), another South African mine, through which it processes chromite tailings ore to recover  chrome and the platinum group elements separately.

Revenues in the third quarter rose 48% to £2.67mln (46.1mln rand) compared to the second quarter’s £1.81mln (30.3mln rand).

Operating earnings overall rose 193% to £0.85mln (14.7mln rand) with Hernic’s contribution rising five-fold to £0.5mln. Dilokong’s earnings eased slightly to £360,000 (£400,000). 

Leon Coetzer said the results demonstrated the benefits of increased operations stability and throughput. 

READ: Jubilee Platinum assures shareholders its "business as usual" at Hernic operations in South Africa despite operator issues

“At Hernic our focus is now on circuit optimisation following the completion of the commissioning phase and improved operational stability. 

At Dilokong, third party ore processing has commenced and this ramp-up will show through in the fourth quarter numbers, he added.

Earlier this month, Jubilee entered a joint venture with BMR Group PLC (LON:BMR) for the  recovery of lead, zinc and vanadium at the Kabwe project in Zambia.

Jubilee also has a copper tailings project at the Leigh mine in Australia.

In a note to clients, analysts at Beaufort Securities said: “Steady production at Dilokong and a larger contribution from Hernic have delivered an excellent result, as expected.

“Hernic is still being optimised and the new third party ore business at Dilokong should result in an even stronger quarter in 4Q. “

They added: “We look forward to improving revenues and earnings plus progress on Jubilee’s three development projects, Kabwe lead zinc, high grade PlatCro, and the platinum recovery at Dilokong.

“We view Jubilee as a good quality business which continues to deliver technically, operationally and strategically - through both acquisition and negotiation. We maintain our Speculative Buy recommendation.”

 

 -- Adds share price, analysts comment --

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