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Jubilee Metals Group Plc

Jubilee Metals Further milestone in ongoing strategy to grow and diversify earnings base

Jubilee Metals Group (LON:JLP), the AIM and Altx traded metals processing company hasannounced that K2018239983 (SOUTH AFRICA) (PTY) LTD (NewCo), a subsidiary of South Africa’s largest and one of the world’s largest ferrochrome producers, has exercised its rights in terms of an exclusive agreement, previously entered into between Jubilee and NewCo, to sell all further chrome rights to the chrome contained in all of the historical tailings at Inyoni to Jubilee.

Highlights

  • Jubilee extends it rights at its Inyoni Operations to now also include all chrome contained in the historical tailings at its Inyoni Operations
  • Historical tailings available to Jubilee now increases by 1 700 000 tonnes of historical tailings at the Inyoni Operations, 630 000 tonnes of previously processed tailings and a further c.1 000 000 tonnes of PGM rich material acquired by Jubilee
  • This acquisition has the potential to significantly enhance earnings from Inyoni Operations which previously free issued the currently produced saleable chrome concentrate to Hernic
  • Jubilee accelerates the implementation of its very successful fine chrome technology at its Inyoni Operations to further increase chrome concentrate production
  • The acquisition provides Jubilee with the optionality to respond to market conditions throughout the metal mix optimising project earnings

Leon Coetzer, Chief Executive Officer, says: “The addition of the chrome rights significantly expands, and further transforms the economic value of our Inyoni Operations. We are already recovering the chrome concentrate at Inyoni, which was previously returned to Hernic, and now will be sold to the market solely for Jubilee’s benefit. This addition has the potential to add a further 8 000 to 10 000 tonnes per month of chrome concentrate to our existing chrome operations with no additional risk to Jubilee and the majority of operating costs already being absorbed by the PGM operation.

“As owners of the chrome in the vast amount of surface tailings at Inyoni, we will accelerate the implementation of our leading fine chrome plant to further increase the chrome concentrate production. I look forward to building and expanding our relationship with our renowned ferrochrome partner at Inyoni.

“We continue to make exceptional progress across the portfolio and this Exclusive Agreement is a further milestone in our on-going strategy to grow and diversify our earnings base.”

Further information

As announced on 24 October 2019, Jubilee entered into a framework and tailings purchase agreement (“Tailings Agreement”) with NewCo, to acquire 100% of the rights to PGM earnings from the current and future tailings produced at Jubilee’s Hernic Project (“Hernic”) located in the Bushveld Complex, South Africa. In addition to the current unprocessed 1 700 000 tonnes of historical tailings at the Inyoni Operations and the 630 000 tonnes of previously processed tailings, Jubilee has acquired the rights to a further c. 1 000 000 tonnes of PGM rich material.

Jubilee owns and operates a chrome and PGM processing facility at Inyoni with a processing capacity of 55 000 tonnes per month. The facility currently produces up to 9 000 tonnes of saleable chrome concentrate and 2 250 ounces of PGMs per month.

Previously, Jubilee had a Co-Operation Agreement (“Hernic Agreement”) with Hernic Ferrochrome (Pty) Ltd (“Hernic Ferrochrome”), whereby Jubilee had the rights to all PGM earnings from the tailings at Hernic Ferrochrome until it secured a 30% return on investment, where after Hernic Ferrochrome secured the majority of earnings. Under the Hernic Agreement, all of the chrome concentrate produced is returned to Hernic Ferrochrome for its own use or sale to the market. The operations and assets of Hernic Ferrochrome are being acquired by NewCo and following entering into the Tailings Agreement with NewCo, the Hernic Agreement is terminated with immediate effect.

Under the Tailings Agreement, Jubilee:

a)    has acquired 100% of all rights to the PGM earnings from current tailings produced at Inyoni;

b)    will acquire 100% of all rights to the PGM earnings from future tailings produced at Inyoni;

c)  has acquired all rights to a further c.1 000 000 tonnes of PGM rich material located close to the Company’s Windsor Chrome Operations and previously held by Hernic Ferrochrome; and

Under the Exclusive Agreement, Jubilee:

a)  has acquired 100% of all further chrome rights to the chrome contained in all of the historical tailings at Inyoni.

b)  The total consideration for all the chrome contained in the historical tailings is approximately US$16.39 million (at current conversion rates), which will be majority funded from Jubilee’s existing cash and operating cash flows, together with project funding as necessary. The total consideration will be settled in three tranches, each 30 business days apart. As previously announced, operations at Hernic are now known as Inyoni Operations.

In addition, Jubilee Metals has increased the scope of its Inyoni Operations to take control of the re-mining of tailings to control the feed supply of its Inyoni Operations, targeting to increase feed rate to 50 000 tonnes per month.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.