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Jubilee Platinum says progress reflects two years of hard work

Jubilee Platinum’s progress reflects two years of “very hard work”, said chairman Colin Bird. He confirmed the Middelburg smelting operation in South Africa has maintained a profitable level of production during August and September, matching July’s 905 tonnes. Output is on target to hit 1,200 tonnes of ferroalloy this month. 
Jubilee Platinum says progress reflects two years of hard work

Jubilee Platinum’s (LON:JLP) progress reflects two years of “very hard work”, said chairman Colin Bird.

He confirmed the Middelburg smelting operation in South Africa has maintained a profitable level of production during August and September, matching July’s 905 tonnes.

Output is on target to hit 1,200 tonnes of ferroalloy this month. 

Its Power Alt subsidiary, meanwhile, has a contract to supply 5.1 mega watts to South Africa’s national generator that will also contribute to profits.

“The last two years of very hard work have manifested themselves into earnings and we are looking for pretty significant growth in earnings in the next months and years,” Bird told Proactive Investors during a post results tour of the City.

“Exponential growth” in earnings could be achieved very rapidly if the company is able to acquire concentrator capacity to process platinum tailings.

It is something Jubilee is investigating, Bird confirmed.

The alternative is building its own facility at a cost of around £5 million, which would take another 14 months.

Analysts estimate the business in its current form has the capacity to generate £2.5 million post-tax income. The figure would more than double with the addition of platinum to the mix.

The company is structured almost on a divisional basis. It has the Thos Begbie smelting operations in Middelburg, the power plant, the Tjate platinum project, in the Limpopo province of South Africa, and recovery rights for platinum bearing chrome tailings.

The company, via its 2009 acquisition of Braemore Resources, owns the revolutionary ConRoast technology that allows Jubilee to process previously uneconomic platinum group elements from tailings.

It is far more robust and stable than the existing method of smelting as well as being safer, more efficient and cleaner.

The beauty of ConRoast is it is just as effective in treating ferroalloys as it is platinum. 

The platinum story is starting to improve in the aftermath of the bloody struggle at Lonmin’s mine in South Africa.

The fundamentals driving demand and supply are starting to move in the right direction as is the price.

Unlike gold, which is stockpiled merely as a store of value, there is a keen industrial market for platinum led by the car manufacturers.

Here the de-stocking phase is almost over, while on the supply side there’s a dearth of new mines being developed, the Jubilee chairman pointed out. 

“We don’t see the majors currently investing in new mines,” Bird added. 

“So our particular model of dumps, which are easy to access and cheap to run (we don’t go buying mining equipment we have contractors to do thus for us), works in the current environment.

“We see this model sustainable for at least the next five to six years. It takes at least that time to sink a deep mine and get it into production.

“So the window of opportunity is something driven by short term angst. It is a real thing that has a six to eight-year life.”

Jubilee started life with the Tjate platinum project in South Africa. 

It was (indeed still is) a massive property in one of the best addresses for the precious metal in the world.

It backs onto Angloplats’ Twickenham property and is a near neighbour of Implats’ Marula operation.

The company was close to concluding the feasibility when the recession hit.

Many who survived the crunch put their projects on care and maintenance and essentially hibernated.

While Jubilee recognised the timing for Tjate was all wrong, it certainly didn’t go to ground.

Instead, it bought Braemore and with it the ConRoast technology.

The year after, it acquired the Thos Begbie smelting operations for US$10 million, which were fully permitted, giving it a ready-made base for its ConRoast furnaces.  

Crucially there was also an independent source of power nearby, and in fact the company also acquired a 51 per cent stake in the plant to secure supply (it has the option to go to 74 per cent). 

Anyone remotely familiar with South Africa will know that regular brown-outs are a major impediment to growth.  

With these building blocks in place, the ramp-up of ferronickel production began last year, while Jubilee produced its first platinum-containing alloy for export in March.

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