Aim- and JSE- listed Jubilee Platinum announced on Thursday that the value of its 58.6%-owned South African subsidiary Power Alt’s power purchase agreement (PPA) with Eskom had been increased from R12.2-million to R50.1-million a year.

The announcement followed Power Alt achieving its targeted sales of 5.1 MW of generated power into the South African national electricity grid under the PPA.

The power supplier had also been granted the option to increase the generated power for sale to 10 MW, which had the potential to increase the contracted power value to R98-million a year.

To achieve this increase in capacity, Power Alt would invest a further R7.7-million on associated cabling and electrical switchgear to upgrade the connection to the national electricity grid.

Funding of £1.3-million had been secured, in part towards the expansion of the Power Alt electrical grid, through a Small Enterprise Development Agency (Seda) advance.

Jubilee noted in a statement that the revenue generated through the sale of electricity at Power Alt would act as an effective offset to the cost of electricity used by its smelting operations.

Jubilee CEO Leon Coetzer said the renewed agreement would, at full value, ensure that Jubilee was a net seller of power based on the total power allocation of 16 MW at its Middelburg operation.  

“This agreement acts as a profitable offset to the continually increasing power costs in South Africa, which is a major cost component to the company's smelting operations. 

“The funding that has been secured ensures that [Jubilee] can capture the full value offered, while simultaneously expediting the Dilokong chrome mine tailings project to recover platinum, which is expected to begin processing within the first half of this year," he added.

The Seda advance would also be used to provide funding towards bringing Platinum Australia's Phokothaba processing plant to operational readiness for the toll treatment of Jubilee's acquired Dilokong chrome mine tailings.

Jubilee is increasing its interest in Power Alt from 51% to 70%, having made the first of three payments.

As such the company's current interest in Power Alt is 58.6%.