Acquisition at Hernic: Transforming Operations
Jubilee Metals Group PLC
("Jubilee" or "the Company")
Registration number (4459850)
AltX share code: JBL
AIM share code: JLP
Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR)
Acquisition at Hernic of 100% PGM Earnings: Transforming Operations
Jubilee Metals Group Plc ("Jubilee" or "the Company"), the AIM and Altx traded metals processing company, is pleased to announce that it has entered into a Framework and Tailings Purchase Agreement ("Tailings Agreement") with K2018239983 (SOUTH AFRICA) (PTY) LTD ("NewCo"), a subsidiary of South Africa's largest and one of the world's largest ferrochrome producers, to acquire 100% of the rights to PGM earnings from the current and future tailings produced at Jubilee's Hernic Project ("Hernic") located in the Bushveld Complex, South Africa. In addition to the current unprocessed 1.70 million tonnes of historical tailings at the Hernic Operations and the 630 000 tonnes of previously processed tailings, Jubilee has acquired the rights to a further c. one million tonnes of PGM rich material. The total consideration for all the PGMs contained in the historical tailings is c. US$5.1 million and will be settled from Jubilee's cash resources. Jubilee has also entered into an exclusive agreement with NewCo whereby NewCo may elect to include the sale of all further chrome rights to the chrome contained in all of the current tailings at Hernic at a predetermined value.
á Agreement with NewCo, the world's largest Ferrochrome producer, to extend Jubilee's rights to 100% of all PGM earnings from current and future tailings at Hernic, gaining full control of the large-scale operations
á Agreement transforms Jubilee's Hernic operations from a contracting joint venture partner to 100% owner of the economic rights without additional risk to the Company
á Acquires all rights to a further circa. one million tonnes of PGM rich material located close to its Windsor chrome operations
á By gaining full control of the operation, has the opportunity to increase throughput, further optimising certain aspects of the operation and enhancing earnings significantly
á Enters into a further exclusive agreement with NewCo whereby under NewCo's election Jubilee may also acquire all chrome rights to the chrome contained in the current tailings at Hernic offering significant further earnings upside to the project
Leon Coetzer, Chief Executive Officer, says: "I am delighted to have secured this transaction with NewCo which essentially transforms Jubilee from processing joint venture partner to owner of the surface tailings and associated chrome and PGM recovery operations. We could not have asked for a better partner for our ongoing operations than a company that forms part of the largest ferrochrome producer in South Africa. Our highly successful Hernic Project is the largest of its kind in the chrome industry and is a fitting partner to such a renowned company.
"The transaction extends our rights to 100% of PGM earnings from current and future tailings at a time when the project is delivering record earnings reaching GBP 1.41 million for the month of September 2019 on the back of improved operational efficiencies and buoyant PGM basket metal prices. Under the previous agreement this would have brought forward the point at which the majority of earnings would be due to Hernic, Jubilee having reached a 30% return on investment.
"The transaction includes significant further PGM rich material at surface to be immediately processed via our Windsor PGM project. The option to add the chrome rights to our project holds the potential to significantly increase the earnings of the project, currently all chrome concentrate produced by our project is returned to Hernic for its own use or sale to the market. If implemented the option could add a further 8 000 to 10 000 tonnes of chrome concentrate to Jubilee's existing chrome production.
"This agreement is yet another significant milestone in our on-going development strategy to grow and diversify our earnings base. We continue to make exceptional progress across the portfolio which I look forward to updating shareholders on in due course."
Jubilee owns and operates a chrome and PGM processing facility at Hernic with a processing capacity of 55,000 tonnes per month. The facility currently produces up to 9,000 tonnes of saleable chrome concentrate and 2,250 ounces of PGMs per month.
Previously, Jubilee had a Co-Operation Agreement ("Hernic Agreement") with Hernic Ferrochrome Pty Ltd ("Hernic Ferrochrome"), whereby Jubilee had the rights to all PGM earnings from the tailings at Hernic until it secured a 30% return on investment, where after Hernic secured the majority of earnings. Under the Hernic Agreement, all of the chrome concentrate produced is returned to Hernic Ferrochrome for its own use or sale to the market. The operations and assets of Hernic Ferrochrome are being acquired by NewCo and following entering into the Tailings Agreement with NewCo, the Hernic Agreement is terminated with immediate effect.
Under the Tailings Agreement, Jubilee:
a) has acquired 100% of all rights to the PGM earnings from current tailings produced at Hernic;
b) will acquire 100% of all rights to the PGM earnings from future tailings produced at Hernic;
c) has acquired all rights to a further c.1 million tonnes of PGM rich material located close to the Company's Windsor chrome operations and previously held by Hernic Ferrochrome; and
d) has further entered into an exclusive arrangement whereby Jubilee may acquire all further chrome rights to the chrome contained in all of the current tailings at Hernic.
In addition, Jubilee has increased the scope of its Hernic operations to take control of the re-mining of tailings to control the feed supply of its Hernic Operations, targeting to increase feed rate to 50,000 tonnes per month.
Going forward, operations at Hernic will be renamed and referred to as Inyoni.
24 October 2019
For further information visit www.jubileemetalsgroup.com, follow Jubilee on Twitter (@Jubilee Metals) or contact:
Jubilee Metals Group PLC
Colin Bird/Leon Coetzer
Tel +44 (0) 20 7584 2155 / Tel +27 (0) 11 465 1913
Nominated Adviser - SPARK Advisory Partners Limited
Andrew Emmott/Vassil Kirtchev
Tel: +44 (0) 20 3368 3555
Broker - Shard Capital Partners LLP
Damon Heath/Erik Woolgar
Tel +44 (0) 20 7186 9900
Joint Broker Ð WHIreland
Harry Ansell/Katy Mitchell
Tel: +44 (0) 20 7220 1670/+44 (0) 113 394 6618
JSE Sponsor - Sasfin Capital (a member of the Sasfin group)
Tel +27 (0) 11 809 7500
PR & IR Adviser - St Brides Partners Limited
Catherine Leftley/Beth Melluish
Tel +44 (0) 20 7236 1177
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