PREDATOR, NOT PREY
Another platinum merger - Jubilee bids for Braemore
Platinum developer, Jubilee Platinum, has made an apparently friendly all-share offer for platinum metallurgical specialist Braemore Resources.
Author: Proactive Investors
Posted: Friday , 03 Jul 2009
LONDON -
Speculation amongst investors and commentators alike for the past few days suggested that Jubilee Platinum (AIM: JLP) was about to announce that it would be acquired by a bigger player. Rumours of an impending bid were further stoked after fellow platinum junior Sylvania Resources (AIM & ASX: SLV) announced that it would be acquired by Finland's Ruukki for €268 million.
In fact, Jubilee Platinum is the predator, not the prey. This morning it announced an all-share offer for fellow AIM and JSE listed platinum company, Braemore Resources (AIM: BRR).
Jubilee is offering one new share for every 15.818 shares in Braemore Resources. The combined group would have a varied range of projects in Southern African and Australia, including Jubilee's Tjate Project which sits on the Eastern Limb of South Africa's famous Bushveld Complex. Jubilee has already defined a SAMREC compliant resource of 25 million ounces 6 PGE (Platinum Group Elements) + Gold and has targeted a resource of 70 million ounces.
Braemore Resources' jewel is an exclusive right to the Conroast Technology - a unique smelting technique that can process PGM's and base metals that contains high levels of chrome, which is a major issue for most smelters in South Africa who apply a penalty to concentrates containing it.
"The merger of the two companies will provide the Tjate Project with add-on smelting and refining capability by now targeting the production of a high quality refined PGM product with considerable increase in value, thereby further enhancing the NPV of the project," Jubilee stated. "The merger of Braemore and Jubilee will create an enlarged entity that will be an emerging platinum producer in South Africa with an exposure to the whole spectrum of activities within the PGM-industry and therefore demonstrate total capability to handle all aspects pertaining to exploration, mining, dump re-treatment, processing and metal sales."
Braemore shareholders will hold approximately 30% of the combined company.
Jubilee Platinum has also agreed to fund the operating costs of Braemore whilst the acquisition is completed and to settle ‘some' of its liabilities.
Jubilee's house broker Finncap said: "The offer values Braemore at 3.29 pence per share or approximately £26 million, which is a discount of 32 per cent to last night's close. But we believe this is fair value as it reflects the significant project execution risk in building a 10MW ConRoast smelter to commercial scale, costing in the region of $100m."
Braemore and Jubilee have agreed to co-operate with each other to implement the merger scheme.
