Jubilee Metals Group plc (LON:JLP) CEO Leon Coetzer joins DirectorsTalk Interviews to discuss another very large copper tailing transaction today where they have secured an additional 115 million tonnes of copper and cobalt tailings. Leon explains how the company is able to secure these assets ahead of competitors, how this new transaction fits into the overall Copper Strategy and what else shareholders look forward to.
The company announced that it has successfully concluded further copper tailings transactions to secure the rights to an additional approximately 115 million tonnes of copper and cobalt containing surface tailings in Zambia. These transactions are in line with its stated strategy to expand operations in the country and are in addition to the already approximately 155 million tonnes secured, as announced previously, significantly contributing to future sustained earnings.
The company has secured the exclusive processing rights to the material through its subsidiary Braemore Platinum Limited by entering into tailings supply and process development agreements with a number of privately held entities who collectively hold both the mining rights to the tailings and the property title on which the tailings are located. The Agreements include both the formation of a development partnership with a well-established Zambian private entity who has invested in securing various tailings assets, as well as securing the rights to the processing of the Tailings from the resource owners.
The Agreements secure Braemore the exclusive right to process the approximately 115 million tonnes of copper containing tailings through the implementation of a copper and cobalt processing facility. In addition, the Project benefits from detailed resource analyses and vast historical process test programmes performed by the Tailings Partners through the appointment of various independent well established consulting firms. This affords Jubilee the opportunity to interpret these results and incorporate its in-house expertise and IP to significantly accelerate the Project development cycle.
The secured pipeline of copper projects in Zambia to date places the Company on track to deliver its stated objective to expand its copper producing capacity to in excess of the equivalent of 25 000 tonnes of copper units per annum.
· The company nearly doubles access to secured copper and cobalt tailings to reach an approximate 270 million tonnes
· The Agreements secure the rights to an additional approximate 115 million tonnes of copper containing tailings located within a 50 km radius from Jubilee’s Project Elephant and within the Kitwe area
· The additional Tailings offer the potential to double the targeted production profile for Project Elephant estimated at 12 000 tonnes of copper units per annum in addition to Project Roan, currently under construction
· The close proximity of all of the projects offers the potential to integrate components of the processing facilities, which could offer significant capital savings
· The Agreements places the company on track to deliver its objective of reaching 25 000 tonnes of copper units per annum
· This implementation of these Agreements combined with JLP’s existing copper projects, will establish it as a leading copper producer from historical tailings alone
· The Tailings have been previously drilled and sampled to confirm both content and size containing on average 0.3% copper and 0.05% cobalt
· The combined magnitude of the total secured copper tailings resources and related projects, together with its Sable Refinery, offers the potential to deliver long term sustained quality earnings making a significant contribution to existing earnings from its PGM and chrome operations in South Africa
· The Sable Refinery is operationally ready and able to significantly enhance its capacity alongside the expected production build up, without incurring any significant new capital expenditure
Leon Coetzer, CEO of Jubilee Metals Group, commented: “These Agreements, together with the previous rights to material already secured, have resulted in the company having access to an extensive copper and cobalt containing resource, which importantly is at surface and able to generate long term quality earnings. The implementation of our Zambian copper strategy has been carefully designed and aggressively pursued by the team in a very short amount of time. It targets to rapidly replicate at a much larger scale our success achieved in the re-processing of PGM and chrome tails.
“We have, within 14 months of establishing our presence in Zambia, approximately 270 million tonnes of copper tailings and commissioned a fully operational copper refinery with the ability to expand the refinery into multi metal products.
“The formation of the development partnership with the Tailings Partners stems from the recognition of Jubilee as the optimal partner to bring to fruition these copper and cobalt tailings. In addition, the partnership affords the team the opportunity to apply their know-how to the body of information developed from the extensive drilling campaigns and analytical test programmes undertaken over several years.
“These Agreements put us on track to play a commanding role in the processing of surface tailings in Zambia by applying our proven technical know-how and IP. As I have stated before, Zambia contains vast quantities of copper tailings requiring our skills to unlock the opportunities and value. We have been working alongside leading institutions to review these opportunities and are now perfectly poised to play a commanding role in this area. We have demonstrated our ability to combine the rehabilitation of these historical tailings with the commercial extraction of the contained metals, thereby turning liabilities into commercial ventures.”
Re-cap of the Strategy in Zambia
Vital to company strategy is its commitment to ensuring that there is a significant reduction in the environmental hazard and waste left behind from centuries of mining activity, and Zambia is a focal point of concern relating to this mine waste exposure. Using Jubilee’s proprietary knowledge and expertise in physical and chemical processing this clean-up can be incentivised by extracting the metals contained at attractive cash margins, before re-depositing the tailings in an environmentally secure tailings facility, minimising the future impact.
In August 2019, JLP established its first fully integrated multi-metal recovery and refining operational footprint in Zambia with the acquisition of the multi-metal Sable Refinery, adjacent to the Company’s Kabwe tailings resource, marking a significant milestone in the Company’s international roll-out strategy, as well as widening its commodity exposure. The acquisition served as an entry point into Zambia, presenting the Company with a very well-placed platform from which to pursue the various base metal opportunities presented by the country and to begin actively engaging with third party suppliers to develop strategic partnerships as part of the expansion of the Integrated Kabwe Operations.
The Board and management see a significant opportunity to expand operations in the country, particularly in copper, where there is a large supply of on-surface waste material. The implementation of its copper strategy is centred around its in-house proven ability to pre-concentrate and extract value from tailings resources. The systematic implementation of the strategy includes; the commissioning of the copper refinery circuit; processing tails owned by Sable Refinery to produce copper cathode; entering into third party ore supply offtake agreements; securing exclusive access to vast surface copper tailings resources. Jubilee is in addition working with the Zambian authorities, reviewing further copper tailings in the Country which the Company expects will create a number of opportunities for further expansion of operations in Zambia.
The Company’s highly experienced technical and operational teams plan to construct a copper concentrator at the tailings resource to produce two separate concentrates for both the acid soluble copper oxides and the sulphide associated copper. This facility enables the Project to process copper tailings previously regarded as uneconomical.
Key Terms of the Agreements
Jubilee, through its subsidiary Braemore, has secured the exclusive processing rights to approximately 115 million tonnes of copper and cobalt containing tailings, located within a 50 km radius from Project Elephant, through the Agreements with the Tailings Partners. Under the terms of the Agreements, Braemore secures the exclusive right to gain free unrestricted access to the tailings resources and to uplift and process the tailings to recover copper and cobalt for on-sale into the market. Braemore is appointed as the exclusive operator and solution provider to bring to account the Tailings. In recognition of this right afforded to Braemore, the Tailings Partners are entitled to a future earnings share from the processing of their respective tailings by Braemore ranging from 17% to 30%. Such earnings share includes a capital charge allocated to each Tailings Partner by Braemore in respect of the capital expended by Braemore for the implementation and commissioning of the processing facility for the respective Tailings.
An extensive drilling and sampling programme has been concluded over the Tailings, as well as several detailed process testing programmes over the past years, with various internationally recognised engineering firms. The drill program has been independently verified and confirms an indicated resource of 100 million tonnes containing 0.3% copper and 0.05% cobalt, with a further 14 million tonnes classed as an inferred resource. This body of information offers a tremendous opportunity to fast track the development of the Project under JLP’s guidance by applying its in-house IP and technical expertise to complete an appropriate project design and implementation strategy.
The partnership with the Tailings Partners affords Braemore immediate access to the information derived from numerous sampling and test campaigns undertaken by the Tailings Partners, as well as their continued support in the implementation of the Project. In part recognition of the investment undertaken by the Tailings Partners, Braemore has in addition agreed to a milestone based investment in relation to the development of the Project. The Agreements combine a proven track record of implementing and operating projects through its in-house expertise, with established and locally respected presence in Zambia of the Tailings Partners.
The Project is strategically located close to our existing 150 million tonnes of tailings (Project Elephant), offering the further potential to optimise the Project, by in part integrating the two projects allowing for significant potential capital savings. We are targeting to complete the project scoping and design phase within six months, during which time our Project Roan is expected to reach full production and Project Elephant will be commencing its construction phase. We have targeted to fund the capitalisation of its Zambian copper projects through a combination of its own cash reserves and accessing non-dilutive project funding from leading institutions by leveraging off our strong balance sheet. Jubilee is well progressed with the discussions to secure the targeted project funding and will provide further updates in this regard in due course.