JOHANNESBURG (miningweekly.com) – Dual-listed Jubilee Platinum said on Friday that, while it had received some payment from Global Renewal Energy (GRE) in respect of the $14-million acquisition of subsidiary Jubilee Smelting and Refining (JSR), as well as its 70% shareholding in Power Alt, GRE was in default of the second agreed payment.
The parties agreed in May that the transaction may be executed over two tranches, namely a disposal, which included the sale of 65% of the issued share capital of JSR and 40% of the issued share capital of PowerAlt, and an option whereby Jubilee retained an exclusive put option for the remaining share capital held by the company.
The option was secured to allow Jubilee to evaluate its continued exposure to the revenue generated by these noncore assets versus the value of the put option.
Consideration for the disposal comprised a nonrefundable deposit payment of $200 000 and an amount of $8.9-million, which was due to be paid on or before July 31 under an extension granted by Jubilee.
The granted extension for the second payment was also subject to further payments by GRE to JSR, including funding the expansion of the JSR smelter off-gas systems.
Jubilee said that, to date, it had received the $200 000 deposit payment , as well as $560 000 in nonrefundable funding from GRE – in settlement of specified creditors of JSR and PowerAlt and to fund increased production of the smelting complex.
“However, while GRE has made payments under the extension granted, it is in default of the stipulated payment terms for the second payment as, to date, Jubilee has not received the $8.9-million for the disposal from GRE, which was due on July 31,” the company said in a statement.
Jubilee advised that it was currently in discussions with both its advisers and GRE with a view to “concluding the appropriate action”.
Jubilee CEO Leon Coetzer said the company was “ disappointed” that GRE had not honoured the terms of the transaction, but noted that the payment failure would not affect the efficient running of the business as a whole.
“This sale of noncore assets by Jubilee is not fundamentally linked to the Jubilee business strategy and instead is a transaction that offers Jubilee the opportunity to liquidate its shareholding in businesses that do not form part of our platinum mine-to-metals strategy,” he said.
GRE, meanwhile, has reiterated its commitment to the transaction.
Jubilee Platinum on Friday also announced that it had successfully secured a further toll smelting contract on the back of the continued upgrade of the Middelburg smelter complex.
The new contract was expected to start production on August 5, and would further contribute to the revenue base of JSR, which was supported by the continued growth in revenue generated by the sale of private power by PowerAlt to Eskom.
Unaudited revenue generated by JSR and PowerAlt for the six months ended June 30 increased by 48% to R34.6-million, from the R23.6-million reported for the prior year’s period.