DEALTALK-Jubilee Platinum's smelting process sparks interest

By Julie Crust

LONDON, March 3 (Reuters) - Jubilee Platinum's ConRoast smelting technology is likely to be behind recent interest in the African-focused exploration company, analysts said on Wednesday.

On Tuesday, the group said it was in talks that may have a material impact on the company's shares, lifting the stock as much as 17 percent on the day.

Jubilee issued a similar statement last June, a few days before it announced an offer to buy platinum and nickel producer Braemore Resources.

'There are about 20 possibilities, most of them centre around the technology,' said RBC Capital Markets analyst Leon Esterhuizen. 'Quite a few players in South Africa would like to have access to that technology.'

The company's ConRoast technology, which removes sulphur at the start of the smelting process, is better able to handle the high-chrome content ores that are increasingly being mined in South Africa's Bushveld Complex, home to most of the world's platinum group metals (PGM) reserves, than traditional smelters.

'The penny has dropped in the industry, all of a sudden people realised that we may well cope with the current smelting technology but we are going to have to do something smarter in the longer term,' said Esterhuizen. 'Fortunately for Jubilee they currently hold the key to what looks like the most promising technology to do that.'

Much of the speculation surrounds Jubilee being bought by a larger group, such as Northam Platinum Ltd or ENRC , analysts said. Market watchers have long been waiting for consolidation among South Africa's smaller PGM producers.

Marion Brower, a spokeswoman for Northam Platinum, said the company was not involved in a Jubilee Platinum deal, while ENRC declined to comment.

'We are waiting for ENRC to do something in the platinum field as a natural extension of the chrome that they already produce,' said another analyst who declined to be named. 'An ENRC approach wouldn't surprise me.'

ENRC holds 60 percent of the Bokia platinum project in Zimbabwe following its recent purchase of miner CAMEC, and has agreed to buy a copper and cobalt processing plant in Zambia as the Kazakh miner continues to expand into Africa.

Ferrochrome producer ENRC was also rumoured to have made an unsuccessful approach to Northam Platinum via its biggest shareholder Mvelaphanda Resources, an unnamed analyst said.

Chrome can be a byproduct of the smelting of platinum, and chrome producers are becoming interested in the extra source of the alloy.

'It's interesting to note the sudden flurry of interest from ferrochrome producers,' said Esterhuizen. 'Chromite is becoming a central driver in corporate activity in the PGM space.'

Lonmin Plc, the world's third-biggest platinum producer, recently signed contracts to construct two chrome recovery plants as part of a wider move by platinum producers to extract chrome from tailings dumps.

The extra value from selling chrome could be significant, said Esterhuizen. 'If you start accounting for the chromite that PGM miners produce and normally throw away then you can get a significant uplift in value in some of the smaller companies, such as Aquarius Platinum and Eastern Platinum', he said.

Any potential buyer would have to be interested in Jubilee's other assets, said Alison Turner, an analyst at Panmure Gordon.

Jubilee's main asset is its 63-percent stake in the Tjate platinum project in South Africa. Turner noted that the mine, while potentially large, is also very deep and would require a large amount of capital expenditure.

A joint venture agreement that would allow another company to use the ConRoast technology is another option, although the last time Jubliee signed such a deal it did not release a announcement similar to the one put out on Tuesday.

Last month, Jubilee and Sylvania Resources said they will form a joint venture to undertake smelting and refining activities using the ConRoast process.

Shares in Jubilee have risen as much as 16 percent in London following the announcement, valuing the company at $129 million.

(Additional reporting by James Macharia; Editing by Ruperrt Winchester) Keywords: JUBILEEPLATINUM/ ([e-mail]; [phone]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.