File image: Reuters

London-listed Jubilee Platinum said was in advanced talks with Platinum Australia (PLA) to create a mining group with the potential to become one of the world's top five platinum producers.

Jubilee earlier on Friday said it had signed an agreement to use PLA's Smokey Hills Mine concentrator to process platinum-bearing tailings from the Dilokong Mine in South Africa.

In a later statement, it said a combined Jubilee and PLA could, dependent on metals prices, restart mining operations at Smokey Hills during the second half of 2013.

The mine would be expected to ramp up to a production level of about 70,000 oz of platinum group metals a year in 2014, Jubilee said in a statement.

Jubilee's prime asset in South Africa is the Tjate platinum project, in which it has a 63 percent interest.

The company, which is also listed in Johannesburg, has a market capitalisation of $39.0 million, whereas PLA has a capitalisation of $35.6 million, according to Thomson Reuters data. - Reuters