Jubilee in £26m Braemore bid

Platinum explorer makes offer for fellow South African-focused player at 30% discount

03/07/2009 Robert Tyerman

Jubilee Platinum is offering shares to buy fellow AIM counter, smelting and refining specialist Braemore Resources.

If it goes through, the deal, which is agreed by both boards will combine Jubilee’s platinum group metals (PGM) and gold (PGE) prospects at Tjaate in South Africa’s Bushveld and elsewhere with Braemore’s 3.2 megawatt smelter in Johannesburg, its rights exclusive rights to proprietary ‘ConRoast’ smelting and refining technology and strong Black Economic Empowerment links through its chairman, African National Congress veteran Dr Mathews Phosa. Jubilee says Tjaate already holds a formally estimated resource of 25 million oz, with a full target of 70 million oz, while Braemore last year agreed smelter supply deals with major producers Anglo Platinum and Northam Platinum.

Jubilee, steered by the entrepreneurial Colin Bird, is offering one of its own shares, which have fallen from a recent 56p to 43p, for every 15.818 Braemore shares, giving Braemore shareholders 30 per cent of the enlarged company. These terms represent a discount of more than 30 per cent to Braemore’s 3.4p share price and are well below its 2005 float price of 10p.

Arguing a merged group could become a ‘sustainable force’ in South Africa’s platinum industry, ‘well positioned’ to participate in further sector consolidation, company spokesmen argue the terms are reasonable, since Braemore shares have been as low as 1p over the past 12 months. Critics point out the shares have also been as high as 7.35p, while Jubilee’s have been as low as 7.13p over the past year.