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Copper Production

Jubilee Metals Group Q&A: Strategy enables dramatic increase in company earnings (LON:JLP)

Jubilee Metals Group plc (LON:JLP) Chief Executive Officer Leon Coetzer caught up with DirectorsTalk for an exclusive interview to discuss the impacts of COVID-19, their big leap into base metals and what investors should be looking out for going forward.

Q1: We’re a few months into the COVID-19 situation, how has Jubilee Metals Group been affected by the current lockdown regulations? Has there been any impact?

A1: It’s been a challenging time for most companies I suppose during this time but as Jubilee, we are fortunate in the fact that we are a pure surface processor where all our operations are at surface. We were able to enforce quite strict distancing rules and we were fortunate that the South African authorities allowed us to commence operations again during April and slowly ramp up to where we are today in June where we are running at full operational capacities.

We were very fortunate, as a Group, to maintain positive earnings during this time and grow our cash in the company so yes, we are affected but equally very fortunate to have maintained positive earnings, our cash position has grown and we remain healthy as a Group.

Q2: You’ve announced this morning what seems like a very big leap into copper, could you explain the rational of the transaction and how this fits within the company strategy?

A2: Yes, we are very excited with this morning’s news, it’s something we had planned very carefully. We informed our shareholders and investor base that we are diversifying from just chrome and platinum group metals in South Africa into base metals, targeting Zambia on the back of acquiring the refinery from Glencore last year.

On the back of the knowledge and the development we had in South Africa in processing of waste at surface and extracting the metal from that waste, we were very keen to demonstrate that we can scale up that operation and that philosophy dramatically.

We are very excited by being able to secure what is a 150 million tonnes of surface material with copper at surface and an operating refinery available in Zambia. We’ve specifically pursued this transaction to show scale and sustainability leveraging of our knowhow we’ve created by extracting value from tailings.

So, particularly excited given that the sheer scale of this project dwarfs what we’re doing in South Africa, the ability to extract that copper, the amount of copper we’re targeting. We announced the aspirational target of 25,000 tonnes of copper per annum, now you multiply that by the value of copper which at today’s price is sitting around $5,800 a tonne, you can see the ability that this strategy holds to dramatically increase the company’s earnings and over a sustained period, offers tremendous value to the company and its investors.

Q3: Just looking forward then, what can investors look out for from Jubilee Metals Group?

A3: I think we’ve now signalled to the world that what we’ve done in South Africa with platinum, palladium, rhodium, and chrome, we can replicate and we can replicate it at much larger scale.

So, what we are pursuing, and actively pursuing, and definitely our shareholders and investors can look forward, is to now expand that project portfolio in the base metals space. Yes, we are looking at organically growing our South African base in PGM and chrome as we were showing last year when we acquired more assets to give longevity to our projects but equally what we now aggressively pursuing is to do more of this scale of transactions.

We have identified our targets which are of similar size and we are pursuing these types of magnitude projects and at the same, of course, we recognise that diversification has really played strongly in the company’s hands, not only across metal groups but also across jurisdictions. What we‘re doing in Zambia can be replicated in other base metal-rich jurisdictions such as Namibia would be a classic example, Chile would be another example.

So, we’re looking at leveraging off this success of our Zambian strategy to now replicate that at even larger scale going forward. We’re also in a very fortunate position that during this time we have settled debt in the group, our balance sheet is highly unleveraged, our cash flow has increased, our earnings have increased. So, we’re able also to drive this growth going forward far stronger off our own balance sheet which I think is very exciting for us and our investors.

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