LONDON (ResourceInvestor.com) -- Jubilee Platinum [JLP.L] is to acquire 35% of South Africa's Tjate Platinum Corporation. The total value of the deal is lb4.32m (R49m) and will see Jubilee purchase 25% of Tjate's issued share capital for lb3.1m (R35m) and Tjate issue new shares to Jubilee for the balance of the deal, which will be settled in cash by Jubilee. Tjate has hitherto been a dormant entity and has never traded.
Tjate owns the base and precious metal prospecting rights to three contiguous farms in the Eastern Bushveld, called Quartzhill 543KS, Fernkloof 539KS and Dsjate 249KT, beneath which lies a resource that several estimates have put at 65moz of PGM and gold.
The auguries are quite good for the prospect, which is close to Anglo American's Twickenham Mine and Impala Platinum's Marula Mine among others, which are some kilometres to the north on strike. A survey by consultants Ddraig Mineral Development has verified the area's geological potential and is in 'little doubt' that Tjate is underlain by the Merensky and UG2 PGM bearing reefs of the Bushveld complex, which holds the world's largest known PGM reserves, and which Jubilee is betting extends underneath its property.
Jubilee chief executive Colin Bird will for the next two years become chief executive of Tjate and play the role of project manager for a bankable feasibility study on the company's properties that is to be undertaken as the company's next step.
The company will hold its stake in Tjate via its South African subsidiary Windsor Platinum Investments, in which the New Africa Mining Fund has an option, which it has said it will exercise, to acquire a 10% stake before the Tjate transaction takes place.
Jubilee had planned to invest a sum of up to R30m to be used for the feasibility study, in Tjate via its 50% shareholder New Platinum Corporation, but Tjate shareholders expressed a preference for the company to invest directly.
The proceeds of the new issue can only be used for a bankable feasibility study and Jubilee will also acquire for the nominal sum of R1 a redeemable preference share in Tjate that may be redeemed for R35m if the company is liquidated, the majority of its assets are sold, or it becomes insolvent. Jubilee also gains the right of first refusal to provide any further funding necessary for the feasibility study.
Jubilee will purchase 15% of the already issued shares from New Platinum and 10% from Matuba holdings trading as Sebata Kgomo. The deal will leave this pair as the remaining shareholders in the enlarged Tjate, with 28.33% and 36.67% respectively.
Sebata will also acquire a preference share subordinate to the Jubilee one, but with otherwise the same rights and a redemption value of R20m.
CEO Colin Bird had this summary comment on the deal: 'This transaction provides Jubilee with a strategic stake in an identified large scale platinum mining opportunity in South Africa. We look forward to working with our new partners to develop the position into a new generation fully Black Empowered operating mine.'
The company made a yearly operating loss to June 2004 of lb539,071, but is progressing on its other projects in South Africa, Madagascar, and Sierra Leone. The Madagascan prospect recently reported another set of high gold values to add to PGM, copper, and nickel strikes on the concession.
In South Africa, which will remain the group's primary focus, Jubilee is well positioned for compliance with black empowerment legislation, an increasingly important part of operating in South Africa, and a deal is in place concerning these properties with the black empowerment group Keys which will inevitably make operating in the country politically easier. Also in South Africa Jubilee was this year granted prospecting permits by the Department of Minerals and Energy for its Dullstroom properties.