Jubilee Metals Group PLC (LON:JLP), the AIM and Altx traded metals processing company, has today announced its unaudited interim results of the Group for the six months ended 31 December 2019.
· Group earnings increased 778 % to £ 6.67 million (ZAR 115.2 million) (2018: £ 0.76 million (ZAR 13.2 million))
· Cash generated from operations up 570 % to £ 4.89 million (ZAR 84.7 million) (2018: £ 0.73 million (ZAR 12.5 million))
· Revenue increased 205 % to £ 25.40 million (ZAR 439.4 million) (2018: £ 8.32 million (ZAR 143.9 million))
· Attributable group earnings increased 146 % to £ 9.85 million (ZAR 170.4 million) (2018: £ 4.0 million (ZAR 69.9 million))
· The group balance sheet strengthened further on the back of the strong financial performance and large strategic investments, with total assets standing at £ 118.8 million, up from £ 102 million at the end of June 2019, total equity increasing by 12 % to £ 88 million, for the same period, maintaining a high 74 % equity ratio (30 June, 2019: 77 %)
· The group paid a substantial £ 17.7 million in cash for investments made during the period under review, whilst at the same time reducing external debt by £ 2.2 million, keeping the net gearing ratio at a low 0.3 %
· Backed by a strong £ 4.89 million cash generated from operating activities and proceeds of £ 6.5 million from an oversubscribed capital raise, the cash and cash equivalents stood at £ 10.2 million, with short term assets covering a healthy 166 % of short term liabilities
· Basic earnings per share for the period 0.35 pence (ZAR 6.09 cents(i)) (2018: 0.06 pence (ZAR 99 cents))
(i) Conversion rates used for revenue and earnings are at the average conversion rate for the period and for balance sheet at the spot rate at period end. Conversion rates used for capital expenditure and acquisitions are at current spot rates
Operational and projects highlights
· PGM(ii) production up 72 % to 21 082 ounces (2018: 12 288 ounces)
· PGM revenue up 130 % to £ 16.28 million (ZAR 281.6 million) (2018: £ 7.09 million (ZAR 130.6 million))
· PGM attributable earnings up 137 % to £ 9.70 million (ZAR 167.7 million) (2018: £ 4.09 million (ZAR 75.60 million))
· Chrome revenue up 707 % to £ 9.12 million (ZAR 157.8 million) (2018: £ 1.13 million (ZAR 19.5 million))
· 186 249 tonnes (2018: 17 011 tonnes) of saleable coarse chromite concentrate produced
· Completed the acquisition of the Sable Zinc Refinery in Zambia and produced first high grade copper metal in December 2019 while also commencing with the construction of the zinc refinery circuit
· Inyoni Operations acquired 100 % of current PGM surface tailings (estimated at 3.33 million tonnes) as well as future PGM tails, further extending the project life and taking full control of all operational aspects and gaining 100 % economic rights
· Inyoni Operations also secured rights to all chrome contained in estimated 3.33 million tonnes of surface tailings and produced first chrome concentrate for own sales in November 2019
· Oversubscribed placing of £ 6.5 million to support targeted growth
(ii) Platinum Group Metals (6E platinum, palladium, rhodium, iridium, osmium, and gold)
Leon Coetzer, CEO says: “It is a challenging time to express one’s appreciation and satisfaction to a team for delivering an outstanding performance The Jubilee team has delivered yet another exceptional set of results during the period under review. We call it ‘the Jubilee Way’, which focusses on translating leading in-house technical excellence and innovation into industry leading operational efficiencies.
“We have made some very significant progress, including the completion of two strategic transactions, and the results as a whole, demonstrate the robustness of our business model generating significant cash flow for the Group. Despite volatile metal prices, including in particular the volatility we have seen in chrome prices, our diversity across commodities has meant we have delivered record earnings on the back of increased production.
“We have continued to invest significantly in our business having advanced in excess of £ 17 million into our future growth with the acquisition of the Zambian based Sable Zinc Refinery, which completed in August 2019, and the acquisition in November 2019 of 100 % of the PGM and chrome surface rights at our Inyoni Operations. The Sable Zinc Refinery has further enhanced the Company’s operational earnings capability, expanding Jubilee’s operations to other geographical areas and metals. These strategic investments are quickly translating Group investments into cash generation.
“In addition, and to assist with the financing of these transactions, we were very grateful for the support from investors which raised £ 6.5 million in an oversubscribed placing.
“In what has been an incredibly fast moving and evolving situation, as a group we are not immune to the current global COVID-19 pandemic. The safety of our team and employees is our highest priority at this time and we therefore applaud the pro-active decision taken by the South African government to enforce a 21-day nationwide lockdown. Whilst we are aware that the COVID-19 situation is evolving, we have a robust business model and are confident that the business will be able to withstand this disruption having, in anticipation, already taken proactive measures to minimise costs and maximise production leading up to this guidance. Furthermore, whilst work on the ground has been temporarily halted, we will continue to work remotely where possible, to progress operations and continue to advance our growth strategy.
“We would like to take this opportunity to send our thoughts and best wishes to all at this unprecedented and difficult time.”
|GROUP||Unit||6m toDec-19||6m to Dec-18||12m toJun-19|
|Revenue||£’000||25 403||8 327||23 586|
|Adjusted attributable earnings 1||£’000||9 849||4 040||10 055|
|Adjusted attributable earnings margin||%||39||49||43|
|EBITDA||£’000||10 269||2 419||12 546|
|Adjusted EBITDA 2||£’000||8 679||2 809||8 952|
|Adjusted EBITDA margin||%||34||34||38|
|PGM £ revenue||£’000||16 280||7 093||14 855|
|PGM $ revenue||$’000||20 516||9 290||18 866|
|Attributable PGM £ earnings||£’000||9 695||4 093||8 158|
|Attributable PGM $ earnings||$’000||12 218||5 361||10 361|
|Attributable PGM earnings margin||%||60||58||55|
|Attributable PGM ounces produced||oz||21 082||12 288||23 847|
|PGM $ revenue per ounce||$/oz||973||756||791|
|PGM attributable $ earnings per ounce||$/oz||580||436||434|
|Adjusted PGM production $ unit cost3||$/oz||519||422||470|
|Chrome £ revenue||£’000||9 123||1 126||7 725|
|Chrome $ revenue4||$’000||11 497||1 475||9 811|
|Attributable chrome £ earnings||£’000||271||(267)||1 309|
|Attributable chrome $ earnings||$’000||341||(350)||1 662|
|Attributable chrome earnings margin||%||3||(24)||17|
|Attributable chrome tonnes produced||tonnes||186 249||17 011||181 947|
|Chrome $ revenue per tonne||$/t||62||87||54|
|Chrome attributable $ earnings per tonne||$/t||2||(21)||9|
1= Attributable earnings refers to earnings attributable to the group based on its contractual rights in each project.
2= Adjusted EBITDA refers to EBITDA adjusted for non-cash expenses including impairments, gain on bargain purchase and foreign exchange differences on transactions.
3= The adjusted PGM production unit cost includes all direct and indirect costs attributable to the project including allocated corporate charges. The Dec 19 period includes all operating costs for the Windsor PGM Joint Venture allocated to the Jubilee attributable PGM ounces.
4= The chrome revenue is recognised on an ex-works basis after costs of export logistics including freight, shipping and marketing.
|TRANSACTIONS||6m to Dec-19||6m to Dc-18||12m to Jun-19|
|£ ‘000||£ ‘000||£ ‘000|
|Acquisition of chrome plant (South Africa)|
|Fair value of the assets acquired||8 289|
|Fair value of purchase consideration||(8 289)|
|Acquisition of Sable Zinc Limited (Zambia)|
|Fair value of the assets acquired||12 253|
|Fair value of the purchase consideration||(9 944)|
|Gain on bargain purchase||2 309|
|Purchase consideration outstanding at period end||2 275|
|Acquisition of PGM and chrome rights (Mauritius)|
|Fair value of the assets acquired||14 472|
|Fair value of the purchase consideration||(14 472)|
|Purchase consideration outstanding at period end 1||4 531|
|Total purchase consideration of acquisitions||26 726||–||8 289|
|Funded from external loans||(10 303)||–||–|
|Funded from share placings||(9 209)||–||(1 463)|
|Funded from own cash||(7 214)||–||(6 826)|
|Opening balance||18 865||6 376||6 376|
|Cash from operations||4 895||726||4 757|
|Acquisition of chrome plant (South Africa)||–||–||(6 826)|
|Acquisition of PGM and chrome rights (Mauritius)||(11 129)||–||–|
|Acquisition of Sable Zinc Limited (Zambia)||(5 295)||–||–|
|Purchase of intangible assets||–||(636)||(2 182)|
|Purchase of property plant and equipment||(1 101)||(2 379)||(4 496)|
|Issue of Jubilee ordinary shares||5 902||–||10 672|
|Net proceeds/(repayment) of loan funding||(2 154)||1 595||10 303|
|Closing balance||10 247||5 768||18 865|
1= Post the period under review a further payment of £ 3.3 million was made towards the PGM and chrome rights acquisition as announced on 4 November 2019. The final payment on the transaction was made on 19 March 2020. In terms of the acquisition agreement the final payment was adjusted for certain PGM and chrome variables which, resulted in a downward adjustment to the total purchase consideration of £ 2.2 million. The total foreign exchange conversion difference for the transaction amounted to a gain of £ 0.004 million. At current conversion rates the foreign exchange gain on the transaction would have been £ 0.77 million.
This interim period has, again, produced exceptional results arising from maturing operations, strategic acquisitions, productivity improvements and an austere approach to our business activities. At the time of writing this statement we, like every other company and individual, are facing the challenges of the COVID-19 pandemic. We remain very optimistic for the long-term outlook but are mindful of short-term risk. On 24 March 2020 we provided an update to our shareholders relating to the announcement by the South African government of a 21-day nationwide lockdown and its potential immediate impact on our operations. The measures that have implemented by the Group are focussed on preserving the Company’s liquidity and ensuring that we are able to rapidly restart operations following the enforced stoppage. At the time of writing this statement, our operations in Zambia remain unaffected by the COVID-19 virus. However, the guidance being given in respect of the COVID-19 outbreak is evolving and the Company will continue to monitor the situation closely.
Our longer-term vision for the Company remains and has been clearly demonstrated with the expansion of the business during the period under review, having grown and diversified our earnings base. On 23 August 2019, we announced the completion of the acquisition of the Sable Zinc Refinery in Kabwe (the ‘Refinery’). This acquisition presents Jubilee with a very well-placed platform from which to enjoy the various base metal opportunities presented by Zambia. The Refinery expands our commodity basket to include copper, vanadium, zinc and lead. Having a diversified commodity basket, such as we now have, provides us with considerable resilience in the face of fluctuating metals prices, some of which we have seen of late – both very strong, and much weaker. In addition we have acquired a facility that was brought in part into operation within 4 months of the acquisition therefore reducing our lead time to production. The copper circuits are advanced with a capacity of some 15 000 tonnes of contained copper per annum so we are accelerating our copper endeavours, whilst updating the zinc facility.
In July 2019, our Windsor PGM project in South Africa commenced operations and by the end of August 2019 all circuits were functional with productivity initiatives being implemented, during this interim period to date.
On 4 November 2019, we announced that we had acquired 100 % of the earnings of the Inyoni Operation in South Africa (previously named Hernic). The objective of this acquisition was to transform Jubilee from a contracting joint venture partner to a full owner of 100 % of the economic rights, without additional risk. In acquiring full control, Jubilee has increased its flexibility and now has the opportunity to increase throughput, respond to market conditions and optimise certain aspects of the operation to its ultimate benefit.
To support these acquisitions and to assist in financing targeted expansion plans both in Zambia and South Africa, we completed an oversubscribed placing of some £ 6.5 million in mid-November 2019.
Looking forward, the Board is convinced that the long-term fundamentals for copper are exceptional and as such have put focus on the Kabwe copper project to ensure that maximum production capability is achieved. Our presence in Zambia has demonstrated and re-asserted that many opportunities exist to expand our business model into all aspects of copper production in the country. We are currently exploring and prioritising these opportunities and will continue to advance due diligence on potential acquisition or partnership opportunities with a view to expand future earnings in a sustainable manner.
With our sustainable business model, Jubilee and our brand is now well recognised globally. With the ever increasing requirement across all continents for legacy environmental clean-up and a cleaner planet, we are known as being a company able to deliver on this need. We are unique with in-house technical excellence, high technological capabilities, and vast knowledge in the field of reprocessing mine waste and metals recovery across a broad basket of metals.
With so much opportunity for growth from our current business activities alone, the Company will be focussing on maximising this benefit from current operations in the medium term, where we know the risks and where we believe incremental benefit can be substantial. We will of course, however, continue to assess strategic business and acquisition opportunities for the long-term benefit of Jubilee and all shareholders. Despite the current volatile economic climate globally, we continue developing our business activities, consistent with our mission, and remain positive that our unique position in the industry will be exploited for the benefit of all our shareholders.
Non-Executive Chairman, Jubilee Metals Group