Jubilee Metals Group plc (LON:JLP) is the topic of conversation when WH Ireland’s Analyst Paul Smith caught up with DirectorsTalk for an exclusive interview.
Q1: Paul, you’ve just published a report on Jubilee Metals Group, how would you describe the company?
A1: The company is a high margin business with a growing production profile in a robust-price environment with further growth projects and an experienced management team – a compelling mix. The company’s model is to treat its own waste materials and to supplement its processes with third party ores and wastes where possible. It operates several chrome-PGM operations in South Africa and is constructing a zinc-lead (vanadium) plant in Zambia after already commissioning its copper circuit there. The benefits of treating waste and tailings are clearly evident – pre-ground ore and a low mining cost. The processing of this material is JLP’s main contribution and its highly skilled technical team are the advantage.
Q2: How has the company coped during COVID-19?
A2: Jubilee has coped very well. Restrictions obviously placed constraints on the business in the early days of COVID – especially in South Africa, but the companies operations are now back to full production. Remember this is not deep underground mining (where there are problems with COVID transmission), but rather surface operations, with plants in the open air all where social distancing measures can work.
Q3: How is the company looking in terms of growth?
A3: The next few years will see growth in all parts of the business as plants are brought to full production in South Africa on its own and third-party materials. Growth in Zambia will come from increased copper production from the Sable Refinery at Kabwe in an aggressive, but scaled, approach as well as the construction of the zinc-lead (vanadium) circuit at its Kabwe site. The recent transaction for copper wastes and tails in Zambia goes some way to securing the feed for the Sable Refinery to make a real contribution to growth and reduce the forecast risk. We see further upsides in South Africa with, in our view, more waste material possibly becoming available and a positive in terms of price recovery (copper, zinc, lead and chrome) and price stabilisation in the PGMs. They will be a very cash-generative business in our view.
Q4: How do you view the company in terms of fair value?
A4: A company with the production and cash generation profile we see for Jubilee Metals Group should see its value increase as the company delivers on its plans and its investment case is more fully appreciated by the market.