JOHANNESBURG (miningweekly.com) – JSE-listed platinum junior Jubilee on Friday announced its firm intention to make an offer for Braemore Resources.

Jubilee said it would acquire all Braemore shares through an all-equity transaction, which would see the issue of one new Jubilee share for every 15,818 Braemore shares. This would result in Braemore shareholders effectively holding a 30% pre-capital raising interest in the enlarged entity.

Braemore’s share price plunged in Johannesburg on Friday, dropping by as much as 36% to 40c a share, while Jubilee’s stock fell by 13,9% to R5,25 a share. By 16:00, Jubilee’s shares were trading at R5,94 a share.

Jubilee said in a statement that the merger with Braemore, which owns the global right to the ConRoast smelting and refining technology, would create an emerging South African platinum producer with an exposure to the whole spectrum of activities within the platinum group metals (PGM) industry. The merged entity would have the capability to handle all aspects pertaining to exploration, mining, dump retreatment, processing and metal sales.

The PGM processing capability with its patented technology was bolstered by the unrealised nickel potential of Braemore in Australia.

Braemore believed the merger with Jubilee would accelerate its commercialisation strategy and deliver real value to its shareholders through their access to a 30% precapital raising participation in the enlarged entity, which is totally enabled in terms of structure, financing and underlying primary assets.

The merger of the two companies would provide the Jubilee’s flagship Tjate project, in South Africa, with add-on smelting and refining capability, the company said, explaining that it would target the production of a high-quality refined PGM product with considerable increase in value, thereby further enhancing the net present value of the project.           

In a joint statement, the companies said that the enlarged entity would consist of “highly complementary” businesses, which in addition to the Tjate project, would combine access to Jubilee’s development assets in the Bushveld Igneous Complex of South Africa, which included projects and treatment rights that were focused on recovering PGMs and chrome from surface dumps and tailings streams, with Braemore’s rights to the proprietary ConRoast technology for the smelting and intermediate hydrometallurgical refining of PGMs and base metals.

Such further value add to any tailings retreatment, either owned by the enlarged entity or by third parties, would result in the company gaining access to early cashflow generation to support the general activities of the group.

AGREEMENT TERMS

As part of the scheme, the existing 305-million performance shares of 0,1p each in the capital of Braemore would be cancelled if the scheme became effective, but such cancellation would be for zero consideration and Jubilee would not issue any shares in respect of such cancellation.         

If the scheme did not become effective, Jubilee retained the right to effect the offer by way of a takeover offer.

Jubilee stated that the companies have now agreed to cooperate with each other to implement the scheme, and have given certain undertakings regarding the conduct of their businesses, on the terms set out in the implementation agreement.              

In addition, Jubilee has undertaken to fund the operating costs of Braemore while the scheme is being implemented, up to R7-million on a drawdown basis, and to settle some of Braemore’s current liabilities, up to a cumulative maximum of R25-million on a drawdown basis.

However, the company also recognised that Braemore had an outstanding commitment of about R18-million payable to South African mineral-research body Mintek by September 30, which would be paid by Jubilee on behalf of Braemore, subject to certain conditions.

These amounts would be repayable by Braemore if the offer does not proceed.