Shares in Jubilee Platinum (LON:JLP) surged as it announced the sale of its Middelburg smelter and power operations in South Africa for around £5.8mln to fund investment into its platinum surface operations.
Last year, Jubilee secured a contract to process material at a tailings dam at ASA Metal’s Dilokong chrome mine and also has a deal with the fourth largest ferrochrome producer in the world - Hernic.
The proceeds could fully fund the capital required for the construction and commissioning of the Dilokong project, it told investors.
The buyer is a special purpose vehicle from Siyanda Resources Proprietary Ltd, a South African mining and beneficiation specialist company.
If shareholders approve, it will buy 100% of the Jubilee subsidiary that owns the Middelburg complex for around £3.8mln and 70% of the shares in Power Alt, which owns the power plant, for around £2mln.
Collectively, these are known as the Middelburg Operations.
Jubilee will retain the right to a 5MW platinum furnace at Middelburg with secured power as well as all intellectual property relating to the development of the Platinum in Waste processing strategy, which is valued at around £5.2mln.
Jubilee's chief executive Leon Coetzer told investors: "The disposal is in keeping with our stated mission of processing own PGM production. Jubilee retains the right to a 5MW ConRoast smelting facility at Middelburg and receives significant cash to assist in the financing of its future surface platinum processing operations.
"Terms for further funding, required to simultaneously execute both platinum surface processing projects, have been offered by a number of financial institutions. I am delighted with the outcome of the disposal and remain committed to further growth of all of our platinum activities."
Both surface projects are targeting a throughput of around 80,000 tonnes a month, while Jubilee targets them to be in operation during 2016.
Shares added 16.88% to 2.25p in afternoon trade.