Jubilee Metals Group plc (LON:JLP), the AIM and Altx traded metals processing company, has announced that it has secured the rights to approximately 150 million tonnes of copper containing surface tailings targeted to be upgraded at site and refined at its Sable Refinery in Zambia.
Jubilee has secured the rights to the material through its subsidiary Braemore Holdings (Mauritius) Proprietary Limited, by entering into a Joint Venture agreement with the mining rights holder Star Tanganika Limited to process the approximately 150 million tonnes of copper containing tailings. The project will target the production of copper concentrate through a dedicated new copper concentrating facility. This Project alone holds the potential to produce copper concentrates in excess of the total Sable Refinery capacity of 14 000 tonnes per annum of copper cathode. It is the Company’s objective to increase the capacity to in excess of 25 000 tonnes of copper per annum over time based on feed sources and projects currently under review.
Highlights
· Agreement executed to secure the rights to approximately 150 million tonnes of copper containing tailings
· The magnitude of the secured copper tailings resources and related project offers a long term sustainable earnings profile to Jubilee’s Zambian business
· Based on current operating margins maintained at the Sable Refinery for the production of copper cathode, combined with the performance of Jubilee’s large scale piloting test program on copper tailings, the Project holds the potential to more than double Jubilee’s current earnings profile
· The Project is the first of what Jubilee hopes will be a series of targeted copper tailings resources, making a substantial contribution towards the Company’s strategy to achieve in excess of 25 000 tonnes per annum of copper production to deliver sustainable quality earnings
· The Sable Refinery has already successfully completed the commissioning of its copper refinery circuit producing A-grade copper cathode from tailings commanding a premium in the market
· Current production has confirmed the Sable Refinery’s ability to produce A-grade copper cathode from tails with an operating margin in excess of 35% at current prices
· The Sable Refinery is operationally ready and able to significantly enhance its capacity alongside the expected production build up without incurring any significant new capital
· Jubilee’s surface PGM and chrome operations have returned to full capacity following scaled down operations during April and May 2020 in line with South Africa’s lock down regulations
· Jubilee has maintained a strong cash position currently at GBP 9.2 million (ZAR2 198.1 million)
· This cash position is after Jubilee settled both the final payment for the additional PGM and chrome rights acquired in November 2019 as well as settling historical debt of GBP 2.03 million (ZAR 43.71 million)
1. PGM – 6 Element Platinum Group Metals including platinum, palladium, rhodium, ruthenium, osmium and gold
2. At current conversion rates
Leon Coetzer, CEO of Jubilee, commented: “Our presence in Zambia over the past year since the acquisition of the Sable Refinery has re-asserted our belief that many opportunities exist to expand our business model into all aspects of copper in the country.
“This agreement with Tanganika is in line with our strategy to take a leading role in the processing of surface tailings in Zambia by applying our proven technical know-how and IP. Zambia contains vast quantities of copper tailings requiring Jubilee’s skills to unlock these opportunities and having worked alongside leading institutions to review these, Jubilee is now perfectly poised to play a commanding role in this area.
“We plan to construct a copper concentrator at the tailings resource which can supply both concentrate to the Sable Refinery while selling excess concentrate into the market. We are well positioned to take advantage of the expected increasing need for copper as the world’s demand for cleaner energy such as electric vehicle rapidly expands.
“I am excited at the prospects of this new acquisition and rapidly building our copper production profile in the same manner as we delivered our chrome and PGM profiles. I am looking forward to updating our shareholders on our zinc project as soon as we have better clarity on our ability to restart the construction of this project under current restrictions.
“I am also delighted that despite the challenges posed by the COVID-19 lockdown we continue to produce and increase our earnings which reassures the robustness of our business model. As always, the safety of our team remains a priority and we are maintaining strict health and security measures on site to ensure we continue to comply with the requirements and best practises as subscribed by the authorities.”
Strategy in Zambia
Vital to Jubilee Metals’ strategy is its commitment to ensuring that there is a significant reduction in environmental hazard and waste left behind from centuries of mining activity, and Zambia is a focal point of concern relating to this mine waste exposure. Using Jubilee’s proprietary knowledge and expertise in physical and chemical processing this clean-up can be incentivised by extracting the metals contained at attractive cash margins, before re-depositing the tailings in an environmentally secure tailings facility, minimising the future impact.
Jubilee first established its fully integrated multi-metal recovery and refining operational footprint in Zambia with the acquisition of the multi-metal Sable Refinery, adjacent to the Company’s Kabwe tailings resource, in August 2019, marking a significant milestone in the Company’s international roll-out strategy as well as widening its commodity exposure. The acquisition 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.
The Board and Management see huge opportunity to expand operations in the country, particularly in copper where there is a huge supply of on-surface waste material. Jubilee’s implementation of its copper strategy is centred around its in-house proven ability to pre-concentrate and extract value from tailings resources. The systematic implementation of the strategy includes; the commissioning of the copper refinery circuit; processing tails owned by Sable Refinery to produce copper cathode; entering into 3rd party ore supply offtake agreements; securing exclusive access to vast surface copper tailings resources. Jubilee is working with the Zambian authorities to review copper tailings in the Country which the Company expects will create a number of opportunities for further expansion of operations in Zambia.
The Company’s highly experienced technical and operational teams plan to construct a copper concentrator at the tailings resource to produce two separate concentrates for both the acid soluble copper oxides and sulphide associated copper. This facility enables the Project to process copper tailings previously regarded as uneconomical.
Key Terms of the Agreement
Jubilee, through its subsidiary Braemore, has secured the rights to approximately 150 million tonnes of copper containing tailings through the Agreement with Tanganika. Under the Agreement the parties target to process the tailings to recover copper concentrates for on sale into the market. Under the Agreement the parties have formed a Joint Venture with Braemore appointed as operator on behalf of the JV tasked with the financial, operational and administrative management of all aspects of the Project. Jubilee’s Sable Refinery may acquire the copper concentrate at agreed offtake terms for the production of copper metal while excess concentrates will be sold in the market. Such concentrates are in high demand within the Zambian copper industry.
Braemore has agreed to advance the equivalent of US$ 5.0 million funding to Tanganika’s owners Horizon Corporation Limited which investment will be applied in part for the continued project development of a second copper tailings dam of similar size, held by Horizon. Under the Agreement US$ 5.0 million will be settled by cash of approximately US$ 0.6 million and new Jubilee shares of approximately US$ 4.4 million, further details of which are set out below.
Under the Agreement, Braemore will provide all of the operational and capital funding required for the Project and will hold a right to 75% of all earnings generated by the Project until such time as 1.5 times of all capital invested by Braemore (being the aggregate of the Initial Investment and any further funding provided to the JV) has been returned by the JV where after Braemore’s right to earnings will remain at 60% for the life of the Project. Such 1.5 times of capital invested by Braemore will be interest bearing.
Jubilee expects to implement the Project in a phased approach by producing an initial lower grade copper concentrate which can potentially be processed at the Sable Refinery well in advance of completing the full concentrating facility. The Agreement calls for a maximum period of 12 months to complete the feasibility study with a further expected 15 months to construct the copper concentrating facility. Jubilee expects to fund the JV including the construction of the copper concentrate facility through a combination of its own cash and leveraging off its own balance sheet to raise the required debt funding.
Based on current operating margins maintained at the Sable Refinery for the production of copper cathode, combined with the performance of Jubilee’s large scale piloting test program on copper tailings, the Project holds the potential to more than double Jubilee’s current earnings profile.
Issue of equity towards the Initial Investment
Jubilee has agreed to part fund the Initial Investment, on behalf of Braemore, through the issue of 95 000 000 new Jubilee ordinary shares of 1p each to Horizon, the parent company of Tanganika, representing 4.5% of the Jubilee’s issued share capital as enlarged by the Shares. The Shares will be issued at a price of 3.73 pence (ZAR 80.34 cents) per share, being the average share price for the week leading up to the execution of the Agreement. The Shares are subject to orderly market provisions through Jubilee’s appointed broker and only with Jubilee’s consent. The Shares will be issued as fully paid and rank pari passu in all respects with the existing ordinary shares, including the right to receive all dividends and other distributions declared on or after the date on which they are issued. Application will be made for the Shares to be admitted to trading on AIM and to be listed on the Altx of the JSE Limited, which is expected to take place on or about 24 June 2020.
The Company’s total issued capital after Admission will be 2 112 509 573 ordinary shares. As the Company does not hold any shares in Treasury, this figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company following Admission.
