Jubilee Metals Group plc (LON:JLP), the AIM and Altx traded metals processing company, has announced its unaudited interim results of the Group for the six months ended 31 December 2020, a period that has seen exceptional operational and financial growth. These results are compared with the period for the six months ended 31 December 2019 as the comparative period unless stated otherwise.
HIGHLIGHTS
Financial highlights
Six-month period under review
· Jubilee attributable earnings (i) for the six-month period increased sharply by 212 %, to a record £ 30.9 million (ZAR 656 million) (ii) (2019: £ 9.9 million (ZAR 170.4 million)), driven mainly by increased operational output with PGM production surging by 34 % and increased metal prices over the period (iii)
· Adjusted EBITDA (iv) for the six-month period increased by 237 % to £ 29.3 million (ZAR 622 million) (2019: £ 8.7 million (ZAR 150 million))
· Basic earnings per share for the six-month period increased by 160 % to 0.91 pence (ZAR 19.21 cents) (2019: 0.35 pence (ZAR 6.09 cents))
· Revenue increased 110 % to £ 53.4 million (ZAR 1.1 billion) (2019: £ 25.4 million (ZAR 439.4 million))
· Operating profit increased sharply by 355 % to £ 25.5 million (ZAR 541 million) (2019: £ 5.6 million (ZAR 97.7 million))
· Cash generated from operations before movements in working capital increased by 265 % to £ 28.8 million (ZAR 611.4 million) (2019: £ 7.9 million (ZAR 136.3 million)) (v)
· The Group balance sheet strengthened further on the back of the strong operational performance, with total assets at £ 152.9 million (ZAR 3.1 billion), up from £ 131 million (ZAR 2.8 billion) at the end of June 2020, total equity increasing by 21.3 % to £ 114 million (ZAR 2.3 billion), for the same period, maintaining a high 75 % equity ratio (30 June 2020: 72 %)
· Cash and cash equivalents stood at £ 9.8 million (ZAR 195 million), with short term assets covering a healthy 301 % of short-term liabilities compared to 235 % at 30 June 2020
Post the period under review
· Jubilee through its South African subsidiary Windsor SA, executed a scalable working capital credit facility with ABSA Bank, which signals Jubilee’s ability to attract bank and structured funding to support its growth objectives, on the back of its repeated quality earnings
(i) Attributable earnings refer to earnings attributable to the group based on its contractual rights in each project
(ii) Conversion rates used for revenue and earnings are at the average conversion rate for the period and for balance sheet at the spot rate at period end. Conversion rates used for capital expenditure and acquisitions are at current spot rates
(iii) The average Platinum price increased 11% from US$501/oz to US$557/oz, Palladium increased 19% from US$347/oz to US$413/oz and Rhodium increased 245% from US$373/oz to U$1 286/oz from 31 December 2019 to 31 December 2020
(iv) Adjusted EBITDA refers to EBITDA adjusted for non-cash expenses including impairments, gain on bargain purchase and foreign exchange differences
(v) Refer to the table on Group Cash below
Operational highlights
PGM
Six-month period under review
· PGM (vi) production for the six-month period up 34 % to 28 187 ounces (2019: 21 082 ounces)
· PGM revenue up 125 % to £ 36.6 million (ZAR 776 million) (2019: £ 16.3 million (ZAR 281.6 million))
· PGM attributable earnings (vii) up 172 % to £ 26.4 million (ZAR 560 million) (2019: £ 9.7 million (ZAR 167.7 million))
· Increased PGM production was achieved, including record production during December, despite the planned scale down of operations at Jubilee’s Eland Platinum JV PGM partner
Post the period under review
· Inyoni expansion currently underway targeting to further improve PGM production rates and targeted PGM recoveries, expansion expected to conclude during Q2 2021
(vi) Platinum Group Metals (6E platinum, palladium, rhodium, iridium, osmium, and gold).
(vii) All numbers reflect only production attributable to Jubilee and excludes that portion of production attributable to its JV partner.
CHROME
Six-month period under review
· Chrome production for the six-month period up 72 % to 319 834 tonnes of saleable chromite concentrate (2019: 186 249 tonnes)
· Chrome revenue up 27 % to £ 11.6 million (ZAR 245.3 million) (2019: £ 9.12 million (ZAR 157.8 million))
· Attributable chrome earnings are up 333 % to £ 1.3 million (ZAR 28 million) (2019: £ 0.3 million (ZAR 4.7 million))
· The increase in chrome earnings was supported by the implementation of the new fixed margin chrome processing contracts
· The new 35 000 tonnes per month chrome beneficiation facility named, Windsor 8, commenced operations in October 2020
· Jubilee commenced with the construction of an additional new 80 000 tonne per month chrome beneficiation operation near its Inyoni PGM Operations. The facility will consist of four integrated chrome recovery circuits to maximise chrome efficiencies and is expected to be fully commissioned within Q2 2021
Post the period under review
· Jubilee commenced with the commissioning of the first of the four integrated chrome recovery circuits combined forming the new 80 000 tonnes per month chrome beneficiation facility, with the second and third process scheduled to commence commissioning immediately
COPPER
Period under review
· Jubilee’s Sable Refinery achieves early earnings from its copper and cobalt production as part of securing operational readiness to accept first production from Project Roan, producing a total of 1 447 tonnes of plated copper cathode to date
· The construction of the first processing facility, named Project Roan, has commenced and will be commissioned in three phases to allow the early production of partially upgraded copper concentrates for refining at the Sable Refinery
· A capital budget of US$ 17 million has been allocated to Project Roan which is funded from Jubilee’s own cash-flow
· Jubilee secured the rights to in excess of 300 million tonnes of copper and cobalt containing material at surface, which combined will be the primary feed source to the three copper and cobalt processing facilities being targeted for construction
Post the period under review
· Phase one of Project Roan reaching completion and targeting to commence delivery of intermediate copper concentrate to Sable Refinery during April 2021 despite severe disruptions caused by heavy rains in the region
Leon Coetzer, CEO of Jubilee Metals, commented: “The acquisition of the rights to almost 300 million tonnes of copper and cobalt tailings with the completion of five major transactions in Zambia; the maturity of operations and continued delivery of record PGM and Chrome earnings in South Africa; and a 110 % increase in Group Revenue to £ 53.4 million resulting in attributable earnings of £ 30.9 million, are just a few of the milestones met by the Jubilee team during the six-month period under review. Despite the unprecedented challenges posed by the ongoing pandemic, H2 2020 was a period of significant growth for the Company.
“Central to achieving the above milestones is our commitment to ‘The Jubilee Way’, and I am extremely grateful to the Jubilee team which has continuously demonstrated its resilience and commitment to this, always striving to translate leading in-house processing and metals recovery excellency into industry leading operational efficiencies.
“On the back of new third party and ore supply agreements as well as improved efficiencies across our chrome and PGM operations, we have delivered both record production and financial performance at our South African operations. Importantly, thanks to this sustained earnings growth, we have been able to fund the capitalisation of our Sable Refinery and Project Roan currently under construction in Zambia which has been the focus of much of our efforts over the six-month period.
“We are now ramping up production with the first copper concentrator currently under construction at Project Roan and set to commence delivery of the first intermediate copper concentrate to Sable Refinery within the next three weeks. We are fully committed to achieving our target of producing 25 000 tonnes of copper per annum within the next four years.
“Our success in South Africa and progress in Zambia is a clear demonstration of our technical know-how and IP when it comes to surface material into value and we are now perfectly poised to play a commanding role in the sector including in Zambia.”
Chairperson’s Statement
Jubilee Metals Group has delivered an exceptional performance for the six-month reporting period with significant gains achieved at both an operational and financial level.
Despite the challenges faced due to the continued Covid-19 pandemic the Company was able to largely buffer the impact on the operations by adjusting to more regulated working conditions and maintaining a robust protocol for the management of Covid-19 which was in line with government guidelines and in some cases beyond. Consistent with our operational philosophy, the entire Jubilee team demonstrated support and commitment whilst dealing with the potential negative effects of the pandemic and we thank everyone for their hard work and support in this regard.
Our PGM and chrome operational earnings increased sharply to £ 27.7 million representing an increase of 178 % over the previous reporting period. This increase was supported by strong operational gains in throughput, operational efficiencies and buoyant PGM prices.
PGM operational earnings increased significantly achieving an overall 172 % increase delivering 28 187 PGM ounces and the Windsor chrome operation contributed to the improved earnings with the new Windsor 8 chrome operation commencing production during October 2020. We continue to aggressively grow our chrome beneficiation capacity which also produced, as a by-product, a PGM rich discard stream as further feed to our PGM operations. In November 2020, in line with this chrome strategy, Jubilee commenced with the construction of an additional 80 000 tonnes per month chrome beneficiation facility targeting the processing of chrome Run-Of-Mine ore. On completion of this new facility Jubilee will hold a total chrome feed processing capacity of 250 000 tonnes per month of both chrome ore and tailings.
This dual metal approach has served us well during recent periods with the low chrome metal prices cycle being offset by PGMs providing a robust upside as the PGM basket price demonstrated value increase. We, as a company, are able to react to changing metal prices on a short-term basis assuring that we maximise contribution from our various ore sources. Jubilee has achieved success in the chrome and PGM industry by combining experience and innovation with business acumen taking us to our current strong industry position.
We now welcome the challenge of growing our Zambian copper and cobalt operation. The acquisition of the Sable Refinery in Kabwe was a pivotal component in the implementation of the Company’s copper strategy recognising the ability to reach operational readiness of the Sable Refinery in the short term. We can produce, without any expansion, up to 16 000 tonnes of copper cathodes and that is our immediate target. We have capitalised the Sable Refinery achieving full operational readiness to accept the first intermediate copper concentrate from Project Roan and have achieved some early earnings during the interim period. The first of three targeted processing facilities is under construction, which will enhance copper earnings progressively during the first half of this year. At full capacity, Project Roan is targeted to produce 10 000 tonnes per annum of equivalent copper units.
During the period, we announced the acquisitions from various sources of some 300 million tonnes of copper/cobalt tailings as feed for the mid-term future. We intend to construct three new processing plants to process and recover the copper and cobalt in these resources targeting the production of 25 000 tonnes of copper once completed. The first of these processing facilities is dubbed Project Roan.
We are excited about the potential for our copper operations to deliver significant earnings and believe that current prices can not only be maintained but also be increased upon. We are mindful of a world that has not yet beaten or fully managed the Covid-19 pandemic and therefore anticipate global stop start economics. Having said that we are in no doubt that the sheer weight of money directed at infrastructure will maintain demand and that the EV vehicle rollout will be accelerated. Like many in our industry, we expect that these factors will continue to drive strong demand for copper supply and upward pressure on prices over the medium term.
Zambia has vast amounts of waste material produced by past mining and there is huge potential for new mining of copper in the country, providing Zambia with the opportunity to show growth consistent with other major producing nations. Jubilee intends to be part of that growth and as such we will continue to be proactive and offering assistance in realising that growth.
We were fortunate that during the period we have widened our shareholder profile and we now have an enviable balance of retail, institutional and family office shareholders with the larger funds also taking interest in the Company either by investment or regular review. Like all rapidly growing companies we are aware that growth, whilst bringing new opportunities, is not without its challenges and the Board is constantly reviewing its focus and approach to ensure that it is flexible in a rapidly changing world.
We expect the year 2021 to be another transformational year for the Company with South Africa maturing and Zambia evolving, and we are confident that we can grow our earnings consistent with our internal forecast. At the same time, we recognise that resources companies are seldom faced with such broad ranging opportunities that we now see. It is our intention to maintain and accelerate our growth in challenging but exciting times.
Colin Bird
Non-Executive Chairman
