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Jubilee Platinum lights up after power deal extension

Jubilee Platinum lights up after power deal extension

Jubilee Platinum’s Power Alt subsidiary has been keeping the home fires burning in South Africa, with increased sales to the national electricity grid.

The group said its 51% owned subsidiary has achieved targeted sales of 5.1 megawatts (MW) of generated power into the South African national electricity grid under the power purchase agreement (PPA) announced on August 8 of last year.

Jubilee (LON:JLP) revealed an addendum to the PPA has extended the term of the agreement by 12 months. 

As a result, the PPA contract value has been increased to ZAR 50.1mln, roughly equivalent to £4mln, per year from ZAR 12.1mln (£870,000) during the initial trial period.

An option has been granted to Power Alt to increase the contracted power capacity to 10MW from 5.1MW, which equates to an increase in the projected contracted power value to more than ZAR 98mln (£7mln) a year.

The increase would make Jubilee a net seller of electricity in South Africa, more than offsetting power used in its smelting operations.

Leon Coetzer, chief executive officer of Jubilee, said: "The increased value of the PPA and the addendum continue to build on the company's earnings capability.

“The agreement will, at full value, ensure that Jubilee is a net seller of power based on the total power allocation of 16MW at the Middelburg operation.

“The agreement acts as a profitable offset to the continually increasing power costs in South Africa, which is a major cost component to the company's smelting operations.”

Partly as a result of the need to expand the Power Alt electrical grid, £1.3mln has been drawn down under the standby equity distribution agreement (SEDA) Jubilee announced way back in March 2011.

The SEDA shares are being issued at a subscription price of 8.25p each.

As well as using the money to beef up the Power Alt electrical grid, Jubilee will also use it on Platinum Australia’s Phokothaba processing plant.

Jubilee hopes to have Phokothaba up and running in the first half of this year so it can begin to recover platinum from its acquired Dilokong Chrome Mine tailings. 

Shareholders were crying “lovely Jubilee” after the announcement, with the shares shooting up 4.6% to 8.625p in late morning trading.

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