Jubilee Metals Group plc (LON:JLP), the AIM and Altx traded metals processing company, has announced its unaudited operational results for the six month period ended 31 December 2020.
Highlights
· Jubilee’s PGM3 and Chrome operational earnings1 for H2 2020 increased by a record 123% to GBP 28.4 million (126% increase to ZAR 603.3 million2) from H1 2020
· Jubilee’s attributable PGM and Chrome revenue1 for H2 2020 increased by 64% to GBP 48.2 million (66% increase to ZAR 1 billion) from H1 2020
· 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, achieving attributable operational earnings of GBP 1.8 million (ZAR 39 million)
· Both the chrome and PGM operations deliver record operational performance
· The implementation of Jubilee’s copper strategy to achieve 25 000 tonnes of copper units per annum gains momentum with the commencement of the construction of Project Roan’s copper concentrator with phase 1 expected to come on line during Q1
· Jubilee secures in excess of 288 million tonnes of copper tailings with the further addition of an approximate 18 million tonnes of tailings in December 2020
· During the period H2 2020 Jubilee successfully completed the addition of its new 35 000 tonne per month Windsor 8 chrome operation where production commenced in October 2020 and commenced the construction of the new 80 000 tonne per month chrome operation adjacent to its Inyoni PGM operation
· Jubilee approved the further expansion of its PGM Inyoni operation which will commence in February 2021 and is targeted for completion in April 2021
1- Combined revenue and earnings exclude revenue and earnings attributable to joint venture partners
2- All amounts in this announcement are converted at average conversion rates for the period for income statement purposes and at the period end spot rate for balance sheet purposes
3- PGM – 6 Element Platinum Group Metals including platinum, palladium, rhodium, ruthenium, osmium and gold
PGM Operations
· PGM project operational earnings4 up 119% to GBP 27.4 million (122% increase to ZAR 581 million) from H1 2020
· PGM attributable project revenue4 up 74% to GBP 36.6 million (77% increase to ZAR 776 million) from H1 2020
· PGM concentrate4 delivered reached 28 187 PGM ounces up 49% from H1 2020
· Increased PGM production, including record production at Inyoni during December, achieved despite planned December operational stoppage by the operation’s JV PGM partner
4- All numbers reflect only production attributable to Jubilee and excludes that portion of production attributable to its JV partner
Chrome Operations
· Chrome project earnings increase sharply to GBP 1 million (ZAR 22 million) from H1 2020
· Chrome project revenue up 37% to GBP 11.6 million (39% to ZAR 244.4 million) from H1 2020
· Chrome concentrate produced up 67% to 319 834 tonnes for H2 2020
· The increase in chrome earnings are supported by the implementation of the new fixed margin chrome processing contracts
· New Windsor 8 operations commenced production in October 2020
· Jubilee has commenced with the construction of a new 80 000 tonne per month chrome operation adjacent to its Inyoni PGM operation
Copper Operations
· 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, achieving attributable operational earnings of GBP 1.8 million (ZAR 39 million)
· Jubilee’s copper strategy gains momentum with the commencement of the construction of the new copper concentrator as part of its Project Roan
· Jubilee’s Sable Refinery has completed the ore processing facility and is fully operational ready to accept the increased feed from Project Roan
· Project Roan will be commissioned over three phases with the first phase targeted to commence delivery of first copper units to Sable Refinery by end February 2021
Leon Coetzer, Chief Executive Officer, commented: “Jubilee has delivered an exceptional operational performance during a time that has seen tremendous challenges overshadowed by the onslaught of the COVID-19 pandemic.
“The past six months has seen both Jubilee’s PGM and chrome operations maturing as well as its copper strategy gaining significant momentum with the commencement of the construction of the first of a targeted three, copper concentrators in Zambia in line with our goal to take a leading role in the processing of surface tailings in the country.
“The Jubilee team has demonstrated its resilience and innovation during this time with the significant progress made with the roll-out of our copper strategy while growing our PGM and chrome business by delivering an exceptional operational performance.
“During the period key milestones were achieved with the transformation of our chrome operations to secure a more sustainable earnings margin while significantly growing the business; achieving record PGM operational results and driving forward the implementation of our copper and cobalt strategy in Zambia.
“The expected significant ramp-up of our copper production in Zambia has the clear potential to continue to grow Jubilee’s earnings on the back of the commissioning of both of our copper and cobalt refining circuits and the expected ramp-up of our copper production, particularly with the recent rebound, and market expectations, of strong copper prices.
“As previously stated we have set ourselves a target to achieve the production of 25 000 tonnes of copper per annum within the next 4 years after securing nearly 300 million tonnes of copper and cobalt tailings. Our Project Roan is the first of three copper concentrators that we target to implement to achieve this goal. Jubilee is perfectly poised to play a commanding role in the processing of copper as we also look to further implement our strategy more widely.”
Combined Operational and Financial update
Jubilee’s operational growth during H2 2020 exceeded expectations despite the challenges of the COVID-19 pandemic. During H2 2020, the Company outperformed the strong growth trajectory in H1 2020, delivering a 123% increase in its PGM and chrome earnings for the period from H1 2020.
Beyond growth in revenue and earnings in its PGM and chrome operations, Jubilee has continued to strengthen its asset base with the addition of its copper and cobalt resources in Zambia, which is in line with the Company’s strategy to target other geographical areas and metals.
The role-out of Jubilee’s copper and cobalt strategy offers the potential of significant continued earnings growth in addition to the achievements of its PGM and chrome operations. To date, Jubilee has secured in excess of 288 million tonnes of copper and cobalt containing tailings located around three main areas in Zambia. Jubilee targets to implement a processing facility at each of these locations with Project Roan being the first to commence with construction. The combined production potential of the three targeted facilities is well in excess of Jubilee’s Sable Refinery capacity of 14 000 tonnes of copper cathode per annum. It is Jubilee’s objective to expand its overall capacity to 25 000 tonnes of copper per annum over the next 4 years.
The table below presents the combined operational revenue and earnings performance for H2 2020:
| COMBINEDPGM AND CHROME | Project revenue1 (GBP’000) | Project revenue (ZAR’000)1 | Jubilee attributable earnings1 (GBP’000) | Jubilee attributable earnings (ZAR’000) |
| H1 2019 | 14.361 | 263.873 | 5.6412 | 103.713 |
| H2 2019 | 24.966 | 461.669 | 8.299 | 153.501 |
| H1 2020 | 29.441 | 615.028 | 12.760 | 266.554 |
| H2 2020 | 48.158 | 1 020.467 | 28.418 | 603.343 |
1- Combined revenue and earnings exclude revenue and earnings attributable to joint venture partners
Chrome Operations update – South Africa
Jubilee’s chrome operations include DCM Chrome, Windsor Chrome and Inyoni Chrome following the acquisition by Inyoni of the chrome rights in November 2019. Chrome earnings increased sharply to GBP1 million (ZAR 22 million) and chrome revenue increased by 37% to GBP 11.6 million (39% to ZAR 244.4 million) from H1 2020. This sharp increase was mainly driven by efficiency improvements and adjusting third party ore supply agreements to better reflect the fluctuations in the chrome price and was achieved despite chrome prices being down 18% in aggregate the period.
The table below presents the combined operational revenue and earnings performance for chrome for H2 2020:
| CHROME | Chromite concentrate producedTonnes | Project revenue (GBP’000) | Project revenue (ZAR’000) | Jubilee attributable earnings (GBP’000) | Jubilee attributable earnings (ZAR’000) |
| H1 2019 | 164 936 | 6.599 | 121.188 | 1.576 | 28.907 |
| H2 2019 | 186 249 | 8.881 | 164.138 | 169 | 3.134 |
| H1 2020 | 191 995 | 8.422 | 175.938 | 223 | 4.660 |
| H2 2020 | 319 834 | 11.565 | 244.435 | 1.005 | 21.985 |
Chrome prices continued to remain volatile due to the disruptions in the supply chain over the sixth month period, and these price fluctuations are expected to continue over the next six months as the world emerges from the Covid-19 pandemic and supply and demand fundamentals are better matched.
Platinum Group Metals (“PGM”) Operations update – South Africa
Jubilee’s PGM operations consist of the Inyoni and Windsor JV PGM operations. PGM project revenue is up 74% to GBP 36.6 million (ZAR 776 million) from H1 2020. PGM project operational earnings is up 119% to GBP 27.4 million (122% to ZAR 581 million) from H1 2020. Jubilee’s Inyoni operations continued to operate through-out the December period with only the Windsor JV operations shutting, as planned, for part of the December period. Jubilee’s Inyoni operations continue to achieve exceptional efficiencies achieving an all-time record production in excess of 3 000 PGM ounces for the month of December.
The table below presents the combined operational revenue and earnings performance for PGMs for H2 2020:
| PGM | Tailings processed tonnes | PGM ounces delivered | Project revenue (GBP’000) | Project revenue (ZAR’000) | Jubilee attributable earnings (GBP’000) | Jubilee attributable earnings (ZAR’000) | Unit cost / PGM oz (USD) |
| H1 2019 | 237 035 | 11 559 | 7.762 | 142.686 | 4.065 | 74.806 | 412 |
| H2 2019 | 553 672 | 21 082 | 16.085 | 297.530 | 8.129 | 150.368 | 544 |
| H1 2020 | 481 353 | 19 682 | 21.019 | 439.091 | 12.537 | 261.894 | 537 |
| H2 2020 | 595 664 | 28 187 | 36.593 | 776.032 | 27.413 | 581.358 | 524 |
The PGM basket price remained buoyant during the period, being 22% higher in aggregate, with demand continuing to outweigh supply and the PGM basket price is expected to remain well supported.
Integrated Kabwe Operations, Zambia – copper, cobalt, zinc, lead and vanadium update
The Company’s Kabwe Project combined with its multi-metal Sable Refinery establishes Jubilee’s fully integrated multi-metal recovery and refining operational footprint in Zambia. The Sable Refinery, which acts as a central processing facility for third party material in the region, gives access to a current resource comprising of an estimated 6.4 million tonnes of surface waste assets containing zinc, lead and vanadium pentoxide in addition to the approximate 288 million tonnes of copper and cobalt tailings secured in 2020.
The acquisition of the Kabwe Project served as an entry point for Jubilee into Zambia presenting the Company with a very well placed platform from which to pursue the various base metal opportunities presented by the country and to begin actively engaging with third party suppliers to develop strategic partnerships as part of the expansion of the Integrated Kabwe Operations.
During 2020, Jubilee entered into joint venture agreements to secure rights to process approximately 288 million tonnes of copper and cobalt containing tailings, with the various mining rights holders. The copper and cobalt tailings are located in three central locations dubbed Project Roan, Project Elephant and Project Elephant 2. Jubilee targets to construct a processing facility at each of the three locations. The extent of the processing facilities are determined by the refining capacity at its Sable Refinery currently limited to 14 000 tonnes per annum. Jubilee has set a target to expand its access to refining capacity to achieve 25 000 tonnes of copper units per annum. The first of the processing facilities has entered its construction phase at Project Roan which targets an annual production rate of 10 000 tonnes of equivalent copper units. The processing facility will be commissioned over three phases to accelerate the delivery of copper units for further refining to Jubilee’s Sable Refinery. Phase 1 is expected to commence delivery of the first copper units to Sable Refinery by end February 2021 which results in the first significant increase in production at the Sable Refinery targeting to achieve 400 tonnes per month. Sable Refinery is fully operational and ready to commence refining of Project Roan’s material and has already achieved earnings of GBP 1. 8 million (ZAR 39 million) from production during this phase.
Copper prices have been volatile in recent years, but the price recovered strongly in 2020 touching on a 5 year high and market forecasts suggest that it will remain strong. At current prices and current operating margins maintained at the Sable Refinery for the production of copper cathode and cobalt concentrate, combined with the performance of Jubilee’s large scale piloting test programme on copper tailings, the project holds the potential to more than double Jubilee’s current earnings profile.
Copper Strategy
Having demonstrated Jubilee’s ability to deliver significant returns in Zambia, this momentum is expected to be maintained going forward as we look to focus our efforts on implementing the copper strategy on a global scale, using strong cash flows from our operating activities.
The recent rebound in the copper price saw it reach a seven year high at the beginning of December 2020, with analysts predicting further significant growth over the next 12-24 months driven by several long-term trends. An increased environmental agenda globally and electrification are at the centre of this with the proliferation of electric vehicles, the increased use of renewable energy sources, energy efficiency and increased consumption of electronics.
Jubilee Metals Group has positioned itself to ensure that it is well placed to take advantage of this growing market. The success in Zambia to date is a clear demonstration of the team’s technical know-how and IP when it comes to processing copper tailings and the Company will continue to assess opportunities to implement the copper strategy on a global scale, replicating this success in new jurisdictions.
COVID 19 update
The COVID-19 crisis continues across the world and we continue to enforce very strict safety measure at all of our operations towards safe guarding our employees. Whilst these measures have been effective to date we continue to monitor the situation and act where appropriately taking advice from both the industry bodies and the authorities. The recently update regulations as announced by the South African President affecting the closure of the South African borders has not had a direct impacted on our operations as yet but we continue to monitor the situation.
