Jubilee Metals AIM:JLP the AIM-listed, waste-to-metal company, producing chrome, platinum group metals (PGM), copper and cobalt from mine tailings in South Africa and Zambia published its audited results for the year-end June 2022 today (25th October).
The company is focused on recovering metals from mine tailings, waste, slag, slurry and other secondary materials generated from mining operations.
On first look, the results were disappointing, as earnings (EBITDA) fell by 25% from GBP52m in FY21 to GBP37m in FY22. This led to a 40% fall in profits from GBP43m in FY21 to GBP26.5m, despite revenue increasing by 5.4% to GBP140m for the full year.
Shares opened trading at 12.3p, falling to 11.53p by mid-day. The company has offered a -28.9% year-to-date return and a one-year return of -34.4%. Jubilee’s shares have ranged between 11.2p and 17.9p over 52-weeks giving the company a market capitalisation of GBP328.9m.
However, the base numbers belie the real situation. Over the past five years, Jubilee has experienced exponential growth across several fronts. The waste company commissioned its first metals recovery processing facility near Pretoria in South Africa in 2017.
Fast-forward five years and Jubilee now operates in both Zambia and South Africa and has evolved from a junior partner in a mining venture (with Mitsubishi), concentrated on single-asset PGMs into a multi-asset-owning, commodity-diversified mid-tier producer with an established operational footprint in two of Africa’s premier mining jurisdictions.
Capital expansion
Over the last year-and-a-half Jubilee has been engaged in a GBP58m capital expansion project where it funded the acquisition and refurbishment of processing facilities in South Africa’s PGM and chrome-rich Bushveld Complex and in the copper-rich Southern and Northern copperbelt of Zambia.
The expansion into Zambia said Leon Coetzer, in a call this afternoon, was a game-changer for the firm, as it diversified into copper and cobalt reclamation and is well-on the way to becoming a significant refiner. With Copper and Cobalt – both strategic metals in the energy transition – added to the existing PGM and Chrome operations in South Africa, Jubilee has significantly enhanced the value and potential of the company.
Coetzer was very ambitious: “We decided to grow our platinum footprint in South Africa by 45% and double our chrome operation […] Chrome has been the ‘enabler’ for platinum […] the more chrome we process efficiently, the more PGM feedstock we have left over for extraction […] with PGMs being a more valuable metal [group].”
He continued: “We’re one of the biggest chrome producers in the world – but we don’t own or operate even one mine […] we process waste [reefs] which the industry said no one could extract commercially viable metals from, but after refining our processes and the efficiency of our solutions we have become one of the biggest global players [in this segment] which is testament to the work our team has put in over the last year.”
The company is targeting 44,000 PGM ounces (oz) and 1.2 million tonnes of chrome concentrate per annum from its South African operations. The company reported that total platinum group metals sold during the year, including through third-party joint ventures, declined by 17% to 41,586oz from 50,162oz.
Chipolopolo
The company is very excited about the potential its copper reclamation project has in the whole of Zambia – a traditional copper powerhouse that has been one of the premier destinations for the metal since the start of the 20th Century. Jubilee first established its operational footprint in Zambia with the acquisition of the multi-metal Sable refinery adjacent to the Company’s Kabwe tailings resource, in August 2019 from Glencore. Sable has the capacity to produce 14,000 tonnes per annum of copper cathode and with access to historical copper tailings and third-party run-of-mine material, early earnings from copper and cobalt production have been achieved.
The acquisition served as an entry point for Jubilee into Zambia presenting 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.
Replicating the PGM operation in South Africa, Jubilee concentrated on the on-surface copper mine tailings that have been built up for over 100 years. The company is targeting 25,000 tonnes of copper production a year and has secured 300 million tonnes of tailings, which also contain cobalt. In the last year sales of copper was up 88% to 2,604 tonnes from 1,387 tonnes, which balanced out lower PGM sales.
Our Friends in the North
However, Jubilee has set its targets higher, looking acquisitively from its base in southern Zambia at the much larger Northern copper fields: “What we’ve got in Zambia is impressive,” said Coetzer, “but we see it just as a ‘demo’ as there is 1.9 billion tonnes of waste across Zambia, and if we can replicate in the north what we’ve done in the south it’s a huge opportunity – one that can be developed into its own standalone industry.”
The company totally cleared its debt of GBP5.3m in the last year – leaving Jubilee’s balance sheet leverage free and given the company’s current situation, compared to a few years ago, able to negotiate with banks and development finance lenders from a stronger position to secure better terms and tenors.
“We’ve settled all our debt and unlevered our balance sheet,” said Coetzer, “…we did this as part of our strategy, because if we are going to expand by magnitude into Northern Zambia, we are going to need plenty of capital and having a debt-free balance sheet, and showing what we’ve achieved in the south [of Zambia] we believe this will put us in a much better place when we start those conversations.”
Educate and inform
Coetzer admitted that the recent share price has been “extremely disappointing” but claimed that the investment in the new plant had meant that all the company’s attention was concentrated on delivering the projects. He said: “… we had to close the hatches, focus on the ball, and concentrate on the delivery of two very complex projects that bigger companies than us would never have tried, […] now we’ve delivered we need to inform and educate the market of the potential that this capital can unlock and the potential value we can return to our shareholders.”
The chief executive extended an olive branch to the company’s shareholders. “I can’t wait for the day I inform shareholders that we can declare dividends – it won’t be long now – but we decided that investing our profits back into the business was a better use of capital right now, which over the longer-term will be of benefit to all our shareholders.”
He added: “After the expansion into Northern Zambia, I can’t see any more large-scale capital events on the horizon.”
