Jubilee Metals Group plc (LON:JLP), the AIM and Altx traded metals processing company, has announced that in line with its stated strategy to expand operations in Zambia, it has signed a Joint Venture Agreement with a private Zambian company securing the rights to process 2 million tonnes copper Run-Of-Mine material containing in excess of 2% copper (the “ROM Material”). Under the JV Agreement, there is a further potential to increase the supply of copper ore to approximately 4 million tonnes with an additional 2.5 million tonnes of copper containing tailings available for processing. The Project will target the near-term production of copper concentrate through a dedicated newly constructed copper concentrating facility for which Jubilee has completed the design for the construction at a targeted Brownfield site adjacent to the tailings. The Processing Facility will be commissioned in two phases with the first copper concentrate and revenues expected within four months.
Highlights
· Jubilee executes JV Agreement targeting the production of an additional 10 000 tonnes equivalent copper units per annum
· The Project targets to commence production of first copper concentrate within four months
· JV Agreement incorporates 2 million tonnes of in excess of 2% ROM Material with the potential to increase to 4 million tonnes of ROM Material as well as surrounding copper tailings material in excess of 2.5 million tonnes
· Under the JV Agreement, Jubilee will construct a new Processing Facility targeting a processing rate of approximately 600 000 tonnes per annum producing copper concentrate for further refining at its Sable Refinery
· The total Project capital is estimated at USD 15 million, to be invested over a period of twelve months, which Jubilee targets to fund utilising its cash reserves and access to debt funding, leveraging off its existing balance sheet
· The additional copper units supplied to Jubilee’s Sable Refinery holds the potential to significantly enhance the earnings margin, targeting a unit cost of approximately USD 4 000 per tonne of copper cathode, offering a potential payback of the Project capital within one year
· The Processing Facility is strategically located to access the large potential of third-party copper ore in the area
· The Project is targeted to deliver copper units well in advance of Jubilee’s previously announced copper transaction in Zambia (“Project Elephant”) and is significant step towards achieving Jubilee’s stated goal of 25 000 tonnes per annum of copper production
Leon Coetzer, CEO of Jubilee Metals, commented: “This JV Agreement offers tremendous earnings potential for Jubilee. The Project has been a key target for Jubilee to drive the ramp-up in our copper production while we are implementing our previously announced Project Elephant. This transaction complements the already secured large copper resource and will provide us with earnings in the near term. The earnings of this Project is further bolstered when we commence the processing of the 150 million tonnes of tailings secured under Project Elephant, allowing us to expand and fill to capacity, over the long term, our Sable Refinery.
“The combination of easily accessible large surface resources, together with a fully operational copper refinery, offers us the potential to replicate, at a larger scale, the success Jubilee is achieving with its PGM and Chrome operations in South Africa. Our exceptional in-house processing and metals recovery abilities are core to this success.
“For Jubilee to have entered into this JV Agreement so soon after announcing Project Elephant is testament to a period of intensive work by our team and I would like to thank everyone for their efforts.
“We have already completed the designs for our Processing Facility and engaged with key equipment suppliers to accelerate the implementation of Project Roan. I am confident that we are able to fund the capital required for the Project from our own strong cash reserves and our ability to raise project debt.
“Our innovative designs allow us to commence production of the first copper concentrate within four months while we complete the remainder of the Processing Facility to ramp-up to full capacity over the following eight months. The additional copper units this Project brings to our Sable Refinery ensures we are able to maintain a strong margin for our copper cathode.”
Further Details
The Processing Facility, which will have the ability to process 80 tonnes per hour, will be constructed in two phases targeting for its first copper concentrate to be delivered to Jubilee’s Sable Refinery within four months of entering into the JV Agreement where it will be further upgraded to copper cathode. The Processing Facility has been strategically located with existing good infrastructure and facilities to attract the significant potential of further third-party copper material in the area. The copper material consisting of ROM Material and tailings are targeted to be upgraded at the Site with the acid soluble copper concentrate being refined to copper cathode at the Company’s Sable Refinery in Zambia. The increased copper units presented to the Sable Refinery holds the potential to maintain a strong operational margin targeting all in copper unit cost in the order of USD 4 000 per tonne of cathode (all in cost includes the acquisition cost of copper concentrate by Sable Refinery under the JV Agreement with the joint venture partner).
Project Roan is targeting the production of 10 000 tonnes of equivalent copper units per annum of copper concentrate for further refining supporting Jubilee’s rapid copper expansion strategy to increase capacity to in excess of 25 000 tonnes of copper per annum. Project Roan is a strategic addition to Project Elephant, which secured the rights to approximately 150 million tonnes of copper tailings in Zambia. Further information on Project Elephant and Jubilee’s strategy in Zambia can be found in the announcement of 18 June 2020.
Key Terms of the Agreement
Jubilee has secured the rights to approximately 2 million tonnes of ROM Material with the potential of increasing the ROM Material to 4 million tonnes as well as a targeted 2.5 million tonnes of copper containing tailings through the JV Agreement. Under the JV Agreement the parties have agreed to establish a 50/50 joint venture for the purpose of turning the Project to account.
Jubilee will construct, own and operate the Processing Facility while its JV Partner will deliver the ROM Material and Tailings at no cost to the JV. The JV Partner is tasked with producing the copper concentrates, which will be sold on an arms-length basis with Jubilee’s Sable Refinery holding a first right to such concentrate. The participation in the earnings received by Jubilee and the JV Partner is linked to the source of the processed material while Jubilee retains 100% of all earnings generated through the refining of the copper concentrate at its Sable Refinery.
A typical market analysis indicates the targeted copper concentrate produced by the JV attracts in the order of 38% of contained copper value prior to being refined to copper cathode at the Sable Refinery which is sold at London Metal Exchange prices. Jubilee may also under the JV Agreement secure and process its own third-party ROM (“Jubilee ROM”) for processing at the Processing Facility.
Jubilee will implement the Project in phases to accelerate the production of a saleable, intermediate product within four months prior to completion of the full scope of the Processing Facility.
