Jubilee Metals Group plc (LON:JLP) Chief Executive Officer Leon Coetzer caught up with DirectorsTalk for an exclusive interview to discuss the new joint venture agreement, how they will fund the new processing facility and more copper acquisitions going forward.
Q1: Leon, you announced earlier that you’ve signed a joint venture agreement with a Zambian private company securing the rights to process 2 million tonnes of copper run-of-mine material and that’s in line with your strategy to expand operations in Zambia. Can you just talk us through what this new copper project entails?
A1: I think maybe just as a quick step back to explain this transaction in the context of our larger company Zambian strategy.
So, we acquired our copper refinery from Glencore August last year and we brought that refinery into operation during December and January of this year and that was our first step into Zambia.
Our next key deliverable was to secure copper assets so that we could ensure that we feed this refinery at full capacity over a sustained long term period. We announced about 2 weeks the acquisition of what we call the Project Elephant which is a very large copper tailings asset where we’re going to build a concentrating facility where we concentrate up the material and then transport it to our Sable refinery where we refine and make copper cathode.
This transaction is a vital component to that strategy where we have now secured a further feed stock material, we’ve also been able to secure access to a brownfield’s operational site where we will be constructing another concentrating facility. We will take this material, upgrade the material targeting in the order of 10-12% copper content, at that point the material is transferred to our refinery to make copper cathode.
How we implement this transaction is by forming joint ventures with the owners of these resources, that enables us to very rapidly roll out a strategy where we have these decentralised, concentrated facilities all feeding to capacity our Sable refinery. Of course, our Sable refinery now with this amount of material and coper units coming to the refinery allow us to run the refinery at a very competitive unit cost to produce a tonne of copper cathode making it a very profitable project for the company.
Q2: How will we secure the funding for the construction of the new processing facility, is issuing shares an option?
A2: That’s a question that’s very key to most of our shareholders. We’re fortunate in that Jubilee Metals Group has finally broken through to that level where, through our sustained earnings our growing cash in the bank that we have, we’re finally at that point we can start driving our growth off our own balance sheet and not having to lean on our shareholders to dilute or raise capital through share issuance to drive our growth.
So, we’re very confident through the term sheet that has been offered to us to fund this project, we’ll be funding our Zambian growth strategy off our balance sheet. Also, we’ve designed our projects in a way that we are able to implement these concentrating facilities in two phases to ensure that we are actually commence production of copper units very early on in the process. That, of course, drives your cash flow even stronger and makes the project even more fundable through debt and cash flow from our group.
So, share issuance is very much not on the cards for this project.
Q3: So, does this transaction complete the acquisitions of copper in Zambia for Jubilee Metals Group?
A3: If we look at what we’ve got right now, we have a beautiful high-quality set of surface assets in Zambia able to feed our refinery at full capacity but we certainly, as a company, are not going to stop looking at other complimentary surface assets.
We have identified upfront when we entered Zambia which would be our targeted surface assets, we ranked them and we are certainly looking at one or two further such transactions to ensure that the company has the luxury of not only filling up the refinery to capacity but also being able to potentially expand our refinery to absorb the various copper units we can secure at surface.
We find ourselves in a position where we’ve entered into this space, we’ve taken a lead in the market in being able to take copper tailings and produce copper cathode and we want to ensure that we capitalise on that position to secure quality assets before anyone can really enter this space alongside JLP.