20th Jun 2014 10:32
LONDON (Alliance News) - Jubilee Platinum PLC Friday said its recently upgraded Middelburg smelter started earning cash flow for the company in May, while it has also extended its deal to sell electricity to the South African National Energy Provider until the end of March next year at higher sale prices.
The company has been investing in renewing a third ARC furnace at Middelburg in South Africa, the final step in the modernisation of the plant and a crucial step in ensuring the facility becomes sustainable and starts earning cash flow for the company.
It commissioned the third furnace early last month, and said Friday that the plant had hit all its targets for that month. Middelburg made a net profit of ZAR1.3 million, or GBP76,282, in May, resulting in positive cash flow to the company, it said. Overall production at Middelburg rose 45% compared with April.
Additionally, the company said its extended deal to sell electricity to the South African utility includes a 6.4% increase in the sale price.
"The company will continue to review further optimisation opportunities on the back of the success of the renewal programme," Jubilee Chief Executive Leon Coetzer said of the completed smelter revamp. "Key initiatives currently being evaluated include the potential for further automation to counter the continued labour cost pressures as well as further interventions to utilise better the waste heat for re-use within the various processes."
"The initial financial results of the first month's operation following the conclusion of the renewal program at Middelburg, confirms the company's expectations to sustain revenue growth supported by an increase in gross profit margins to a targeted 38%, which is expected to deliver positive smelter earnings targeting a net margin of 12%," he added.
The company's next main target is to bring the Dilokong Chrome Mine surface tailings project into operation. The tailings contain platinum, and earlier this month the company signed a deal with mine owner ASA Metals Proprietary Ltd giving Jubilee the exclusive right to access the tailings and the right to build a dedicated chrome and platinum processing plant to process them.
"Negotiations and development towards obtaining a processing plant to treat the DCM tailings are at an advanced stage, with a number of financing options being considered with a view to maximising shareholder value," the company said in its statement.
Jubilee Platinum shares were down 1.6% at 1.5 pence Friday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
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