· 74% increase in combined H2 2019 revenue to GBP 25 million (ZAR 462 million) from H1 2019
· 47% increase in combined H2 2019 operational earnings to GBP 8 million (ZAR 154 million) from H1 2019
· Jubilee completed the acquisition of the Sable Refinery in Zambia and produced first copper metal in November 2019 while 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 PGMs tails, extending the project life and taking full control of all operational aspects and gaining 100% economic rights
· Inyoni Operations 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
· PGM revenue up 107% to GBP 16 million (ZAR 298 million)
· PGM operational earnings doubled to GBP 8 million (ZAR 150 million)
· PGM ounces delivered up 82% to 21 082 ounces
· Windsor PGM Operations brought on-line end August 2019 and concluding ramp-up to reach full operational capacity in November 2019
· Windsor PGM Operations almost doubles budgeted capacity to reach processing rate of 100 000 tonnes per month
· Combined PGM processing capacity expanded 3 fold to 170 000 tonnes per month targeting 6 000 PGM ounces per month.
· Windsor Chrome Operations successfully replaced the last remaining legacy tolling agreements with 3rd party ore supply agreements resulting in Chrome revenue growth of 35% to GBP 9 million (ZAR 164 million) from H1 2019 despite a 30% drop in the Chrome metal prices
· The Chrome Operations maintained positive earnings and are perfectly positioned to capitalize on a rebound in the chrome markets
· Chrome concentrate produced up 13% to 186 249 tonnes for H2 2019
· Following the acquisition of PGM surface tailings, Inyoni Operations commenced with the production of chrome during November 2019
Integrated Multi Metal Kabwe Operations
· Jubilee completed the commissioning of the copper circuits during November 2019 producing 110 tonnes of export copper plate by end December 2019
· Currently the copper feed is primarily from historical tailings with the processing of 3rd party copper material expected to commence during Q1 2020
· The commissioning of the cobalt circuit to recover cobalt contained in copper material is targeted for early Q2 2020
· The Integrated Kabwe project is progressing well targeting the commissioning of the first zinc production line during Q2 2020
· Jubilee is actively engaging with 3rd party suppliers of both copper and zinc ore to develop strategic partnerships as part of the expansion of the Integrated Kabwe Operations
* PGM – 6 Element Platinum Group Metals including platinum, palladium, rhodium, ruthenium, osmium and gold
Combined Operational and Financial update
Jubilee has maintained its strong growth trajectory in H2 2019, delivering yet another jump in revenue with earnings growing with 47% from the previous period. The growth in both revenue and earnings was supported by the Windsor PGM Operations coming on-line and reaching stable operations well beyond its operational targets in November 2019. It is expected that the earnings contribution of the Windsor PGM Operations will be even more pronounced over the full report period for H1 2020.
Beyond growth in revenue and earnings Jubilee has also strengthened its asset base by significantly increasing its access to chrome and PGM surface material with acquisition of all historical and future PGM tailings and all historical chrome rights at the Inyoni Operations. The acquisition transformed the operation from a co-operation processing agreement to full ownership of the economic rights, without additional risk to the Company.
As announced on 23 August 2019, the Company also successfully completed the acquisition of the Sable Zinc Refinery in Zambia during the period. The acquisition further enhanced the Company’s operational earnings capability, expanding Jubilee’s operations to other geographical areas and metals. Since acquiring the refinery, the Company has commenced with the construction of the zinc refinery circuit and have brought the copper refinery circuit into operation producing its first high grade copper metal in November 2019.
The table below presents the combined operational revenue and earnings performance for H2 2019:
|COMBINED||Project revenue (GBP’000)||Project revenue (ZAR’000)1||Jubilee attributable earnings (GBP’000)||Jubilee attributable earnings (ZAR’000)|
1 = Average conversion rate for the period
2= Excludes capitalised costs for the DCM Fine Chrome Operations in an amount of GBP0.4 million (ZAR7 million)
Chrome Operations update – South Africa
Jubilee’s chrome operations includes the DCM Chrome, Windsor Chrome and Inyoni Chrome following the acquisition by Inyoni of the chrome rights in November 2019.
Jubilee now holds a total chrome ore processing capacity of 145 000 tonnes per month of feed material which delivered 186 249 tonnes of chrome concentrate during H2 2019. This new production record reflects only two months’ worth of chrome production at Inyoni, the impact of which will be better reflected during H1 2020.
Chrome revenue from all operations delivered continued growth, increasing by 35% despite a drop in metal prices by more than 30% over the period. At the Windsor Operations the Company successfully replaced the remaining 3rd party ore tolling agreements with 3rd party ore acquisition agreements which better reflect the changing market conditions. The old tolling agreements were carried over from the acquisition of the operation in January 2019. The success of the new ore agreements is demonstrated in the sharp increase in chrome revenues during a period when the chrome metal prices contracted sharply. Combined Chrome revenue across the operations increased by 35% to GBP 9 million (ZAR 164 million) from H1 2019. Combined chrome tonnes produced reached 186 249 for H2 2019, up 13%.
Since the acquisition of the Windsor Operation, Jubilee has invested into improved processing technology and significantly improved operational efficiencies which strengthened the operations ability to react to weakening metal prices. This is demonstrated by the chrome operations maintaining positive earnings in an industry seeing growing losses being reported. The chrome operations are well positioned to capitalise on the expected recovery in the chrome market while it continues to deliver PGM rich tails to the PGM operations.
Jubilee’s leading DCM Fine Chrome Operations also continue to perform well, successfully recovering fine chrome previously discarded by the industry as unrecoverable. Jubilee plans to implement this solution at both of its Windsor and Inyoni Operations during 2020 which is expected to further significantly enhance the operations’ efficiencies.
As announced on 5 November 2019, Jubilee acquired 100% of all further chrome rights to the chrome contained in all of the historical tailings at Inyoni. In addition, Jubilee has increased the scope of its Inyoni Operations to take control of the re-mining of tailings to control the feed supply, targeting to increase feed rate to 50 000 tonnes per month. At the time of reporting Jubilee had completed the recapitalization of the new feed system for Inyoni. The throughput at Inyoni is expected to reach its design capacity during Q1 2020.
The table below presents the combined operational revenue and earnings performance for chrome for H2 2019:
|CHROME||Chromite concentrate producedTonnes||Project revenue (GBP’000)||Project revenue (ZAR’000)1||Jubilee attributable earnings4 (GBP’000)||Jubilee attributable earnings (ZAR’000)|
|H2 2018||17 011||1.126||20.664||(267)||(4.906)|
|H1 2019||164 936||6.599||121.188||1.576||28.907|
|H2 2019||186 249||8.881||164.138||169||3.134|
1. Average conversion rate for the period
2. Project earnings include project expenditure on plant and equipment as well as negative stock value adjustments for FY2019 applying metal prices as at the end of FY2019. It also includes all incurred operational costs and management services costs
3. Excludes capitalised costs for the DCM Fine Chrome Operations in an amount of GBP0.4 million (ZAR7 million)
4. Jubilee attributable earnings refers to earnings allocated to Jubilee based on Jubilee’s contractual rights in the project
During the period a modest growth in demand for stainless steel (responsible for 75% of chrome consumption) against a short term increase in chrome supplies resulted in declining chrome prices. Prices seem to have stabilised at current levels with cut backs in chrome supplies. Chrome prices traditionally have followed a compressed cycle as supply and demand fundamentals quickly adjust to market conditions. The Company remains bullish on chrome and is well placed to capitalise on the recovery in metal prices as one of the lowest chrome concentrate producers in the industry.
Platinum Group Metals (PGM) Operations update – South Africa
Jubilee’s PGM operations consist of the Inyoni and Windsor PGM operations with a further PGM project awaiting approvals to complete the project at the DCM Fine Chrome plant.
PGM performance exceeded expectations delivering 21 082 ounces of PGM concentrate for H2 2019, up 82% from H1 2019. The Group’s second PGM project, Windsor PGM Operations, came into operation during August 2019 reaching stable production exceeding 5 000 PGM ounces produced for the month of November 2019 alone. The full impact on revenue and earnings from the Windsor PGM Operations will be better reflected during the H1 2020 reporting period. PGM earnings doubled to GBP 8 million (ZAR 150 million) in H2 2019.
The Windsor JV PGM recovery plant was successfully debottlenecked to capitalise on the higher PGM metal prices, increasing the processing capacity to in excess of 100 000 tonnes per month during November 2019. The PGM ounces produced through the Windsor PGM JV incurs a higher cost per PGM ounce produced compared to the Inyoni operation due to the transport and reclamation cost incurred to deliver the material to the Windsor JV PGM recovery plant.
As announced on 24 October 2019, Jubilee acquired 100% of the rights to PGM earnings from the current and future tailings produced at the Inyoni Operations. In addition to the current unprocessed 1.70 million 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 circa one million tonnes of PGM rich material. As reported under Inyoni Chrome, at the time of reporting the Company had completed the recapitalization of the Inyoni feed systems to reach the targeted 50 000 tonnes per month feed rate. The new feed system will be ramped up during Q1 2020.
PGM revenue for H2 2019 increased by 107% to GBP 16 million (ZAR 298 million) compared to H1 2019. The table below presents the combined operational revenue and earnings performance for PGMs for H2 2019:
|PGMs||Tailings processed tonnes||PGM ounces delivered||Project revenue (GBP’000)||Project revenue (ZAR’000)1||Jubilee attributable earnings (GBP’000)||Jubilee attributable earnings (ZAR’000)||Unit cost / PGM oz (USD)|
|H2 2018||267 183||12 288||7.093||130.592||4.093||75.601||319|
|H1 2019||237 035||11 559||7.762||142.686||4.065||74.806||412|
|H2 2019||553 672||21 082||16.085||297.530||8.129||150.368||5442|
1= Average conversion rate for the period
2= The unit cost per PGM ounce produced excludes an inter-company charge for the production of the PGM containing tailings material.
The PGM basket price has appreciated during the period driven by the shortfall in the supply of PGMs to meet industry demand. With no new significant supplies of PGMs targeted in the short term by the industry the positive momentum in the PGM basket price is expected to remain. Jubilee has reacted to the increased metal prices by significantly increasing its production rates.
Integrated Kabwe Operations, Zambia – Copper, zinc, lead and vanadium update
The Company’s Kabwe Project combined with its multi-metal Sable Refinery establishes Jubilee’s fully integrated multi-metal recovery and refining operational footprint in Zambia. The Sable Refinery, which acts as a central processing facility for third party material in the region, gives access to a current resource comprising of an estimated 6,4 million tonnes of surface waste assets containing 356 843 tonnes of zinc, 351 386 tonnes of lead and 1.26% equivalent vanadium pentoxide.
During the period, the copper refinery circuit was brought on-line to process historical copper tailings as well as third party sourced run of mine material. The first high grade copper metal commenced production in December 2019 with the completion of the solvent extraction circuit. The ramp up remains on track targeting to reach 250 tonnes of plated copper cathode per month during Q1 2020, before stepping up to reach 400 tonnes per month from Q2 2020 resulting in early project cash flows during the construction of the zinc and vanadium refining circuits. The accelerated ramp-up of the copper circuit was implemented to position the Company to capitalize on the positive sentiment returning to the copper industry which is expected to reflect in metal prices.
During the period the Company also focussed investment on improving the containment of water runoff and dust suppression of the historical tails which forms part of the Company’s strategy to transform the Integrated Kabwe Operations into a zero effluent operation. Jubilee is working closely alongside various social and business organisations as part of the drive to achieve responsible processing of historical waste materials where rehabilitation and containment of effluents forms a core part of the project.
The construction of the zinc refinery circuit has progressed well and is on track to produce the first zinc concentrate during Q2 2020. Vanadium prices have softened sharply, and the Company is reviewing the implementation schedule for the developed vanadium circuit. The design of the vanadium circuit lends itself to rapidly accelerating construction to link to the market conditions if required. The Company will confirm the implementation schedule for vanadium during Q1 2020.
Leon Coetzer, Jubilee Metals Group Chief Executive Officer, says: “I am delighted to present Jubilee’s Six Monthly Operations Update for the H2 2019 period. It has been an exceptional period which included two transformational transactions while we maintained our growth trajectory delivering another step increase in earnings.
“The benefit of our multi-metal strategy has been clearly demonstrated over the period supported by our leading in-house technical and operational excellence. Our PGM operations delivered record earnings on the back of increased production and metal prices while our chrome operations showed their resolve maintaining positive earnings against much softer chrome prices delivering increased output and higher efficiencies.
“In August 2019 the Company completed the acquisition of the Sable Refinery in Zambia. The acquisition further enhanced the Company’s operational earnings capability, expanding Jubilee’s operations to other geographical areas and metals. Since the acquisition the team has commenced with the construction of the zinc refinery circuit and have brought the copper refinery circuit into operation producing its first high grade copper metal in November 2019.
“In October and November 2019 the transactions at our Inyoni Operations which involved the acquisition of all rights to an approximate 3.33 million tonnes of historical surface material and the obtainment of full control of the feed rate at the facility, transformed Inyoni into an owner operated facility with the acquisition of all rights to the historical surface material and taking full control of the feed rate at the facility. The Inyoni team delivered an exceptional performance, completing the recapitalisation of the feed systems over the December period to allow the operation to ramp-up the feed targeting 50 000 tonnes per month.
“The oversubscribed placing of £6.49 million in the period, proceeds of which were used to assist with the acquisitions, as well as general expansion plans, demonstrates the continued support we are receiving from our investors for which we are thankful.
“We are consistently delivering on our strategy of diversifying earnings across multiple commodities and jurisdictions and I look forward to updating shareholders as we head into a new year and continue to advance our rapid growth strategy.”