Jubilee Metals Group plc (LON:JLP), the AIM and Altx traded metals processing company has today announced its audited results for the year ended 30 June 2021.
o Total revenue for the year increased by a strong 143% to £ 133 million (ZAR 2.8 billion)1 (2020: £ 54.8 million (ZAR 1.1 billion))
o Attributable operational earnings2 growth of 183% to £ 71 million (ZAR 1.5 billion) (2020: £ 25 million (ZAR 494.5 million)) and a return on equity of 35.4%, compared with 21.2% in the previous year
o Adjusted3 profit before tax up 324% to £ 52 million (ZAR 1.1 billion) (2020: £ 12.3 million (ZAR: 242 million))
o Profit after tax adjusted for non-cash expenses including impairments, gain on bargain purchase and share based payments up 194% to £ 49 million (ZAR 1 billion) (2020: £ 17 million (ZAR: 331 million))
o Adjusted earnings per share up 163% to 2.25 pence (ZAR 46.66 cents) (2020: 0.86 pence (ZAR 16.9 cents))
o Revenue and earnings growth was achieved during a period of substantial infrastructure investment, integration and planned operational downtime and has provided a tremendous platform for further future growth
o Jubilee delivered strong cash flows from operating activities of £ 23.8 million (ZAR 108 million) (2020: positive cash flow of £ 19.4 million (ZAR 415.4 million))
o During the year under review, a total of £ 19.8 million (ZAR 391.9 million) was invested in acquisitions and purchases of property, plant and equipment compared with the previous year’s total investment of £ 26.1 million (ZAR 558 million) while a further £ 1.8 million (ZAR 35.5 million) (2020: £ 4.2 million (ZAR 89 million)) of external debt obligations were repaid
o Earnings per share up 93%, to 1.81 pence (ZAR 37.50 cents) (2020: 0.94 pence (ZAR 18.47 cents))
o The Group boosted its operating profit by a strong 189%, to £ 45.9 million (ZAR 949 million) (2020: profit of £ 15.9 million (ZAR 313.2 million)), with an operating margin of 35% (2020: 29%)
o The Group’s balance sheet strengthened substantially, with total assets increasing by 49 %, to £ 195 million (ZAR 3.9 billion) (2020: £ 130.6 million (ZAR 2.8 billion))
o Total equity increased to £ 136.5 million (ZAR 2.7 billion), from £ 94.2 million (ZAR 2 billion) the year earlier, maintaining a strong equity ratio of 70% (2020: 72%)
o The Group’s gearing remains low, with the net cash position and current assets4 covering 147% (2020: 92.7%) of total liabilities
1. For income statement purposes conversions are at the average £:ZAR rates for the period under review and for balance sheet purposes at the spot rate as at year end. All other conversions are at rates at the time announced
2. Attributable operational earnings represent Jubilee’s net share of operational earnings after distributions to JV partners and before development costs
3. Adjusted for non-cash expenses including impairments, gain on bargain purchase and share based payments
4. Current assets include inventory, trade and other receivables and cash and cash equivalents
o Achieved stated target of 50 162 PGM5 ounces for FY2021 (up 23% compared with 40 743 ounces for FY2020); this was achieved during a period which included the construction and commissioning of two new chrome beneficiation facilities and the commencement of the construction of the expanded and refocused Inyoni PGM operation
o Chrome Operations delivered 751 223 tonnes of chrome concentrate (2020: 377 883 tonnes), generating chrome revenue of £ 34.5 million (ZAR 714 million) (2020: £ 17.2 million (ZAR 339.1 million)) on the back of increased operational capacities; this is set to increase further with the commencement of commissioning of the new Chrome Beneficiation circuit completed during Q2 CY2021
o Secured the rights to a further approximately 150 million tonnes of copper containing surface tailings, targeted to be upgraded at site before refining at Jubilee’s targeted Northern Refinery in Zambia. This will be done through a joint operation with the mining rights’ holder. Project Elephant alone holds the potential to produce copper concentrates in excess of the total Sable Refinery capacity of 14 000 tonnes per annum of copper cathode
o Copper production reached 2 026 tonnes since commissioning as part of enabling operational readiness to accept first copper concentrate production from Project Roan. Project Roan’s integrated copper concentrator is on track for commissioning by January 2022
o Sable Refinery achieved positive earnings as part of its operational readiness activities with attributable operating earnings of £ 3.7 million for FY2021 compared with £ 1.2 million for FY2020
5. 6 Element Platinum Group Metals (platinum, palladium, rhodium, ruthenium, iridium + gold)
Operational Highlights Post the Period Under Review
o On 24 August 2021, Jubilee executed a binding Memorandum of Understanding with Mopani Copper Mines Plc, a subsidiary of ZCCM Investment Holdings Plc in Zambia, (“Mopani”, “ZCCM” and collectively the “Parties”) for the implementation of additional copper and cobalt refining capacity as part of the implementation of Jubilee’s Northern Copper and Cobalt Refining Strategy (the “Agreement”)
o The Northern Refining Strategy targets to establish an initial 17 000 tonnes of copper refining capacity in addition to the Sable Refinery’s 14 000 tonnes per annum. In addition, a cobalt refining capacity is being targeted as part of the Northern Refining Strategy
o The Northern Refining Strategy targets the processing of the Kitwe and Luanshya copper and cobalt tailings project to fast track the implementation of the Project which has access to more than 275 million tonnes of tailings
o The Northern Refining Strategy offers the opportunity for accelerated investment into the region
o Jubilee is committed to prioritising local employment for the accelerated Project implementation
o Project Roan successfully navigated the challenges posed by Covid-19 restrictions and is set to commence commissioning targeting to reach commercial production by Q1 CY2022
o The expansion project of Inyoni PGM operations including an extended recovery circuit to target a variety of feed materials, was completed during October 2021
o On 15 September 2021, Jubilee successfully concluded the buy-out of the JV partner in Project Roan while also increasing its JV position at Project Elephant.
Key financial and operational indicators
|Unit||12 months to30 June2021||12 months to30 June2020|
|Revenue||£’000||132 845||54 775|
|Attributable earnings1||£’000||71 112||25 088|
|Attributable earnings margin||%||54||46|
|EBITDA||£’000||50 335||22 210|
|Adjusted EBITDA2||£’000||52 153||22 643|
|Adjusted EBITDA margin||%||39||41|
|PGM revenue||£’000||88 754||34 590|
|PGM revenue||$’000||112 779||43 594|
|Attributable PGM earnings||£’000||62 847||21 486|
|Attributable PGM earnings||$’000||84 632||27 079|
|Attributable PGM earnings margin||%||75||62|
|Attributable PGM ounces produced||oz||50 162||40 743|
|PGM revenue per ounce||$/oz||2 248||1 070|
|PGM attributable earnings per ounce||$/oz||1 687||665|
|Adjusted PGM production unit cost3||$/oz||537||541|
|Chrome revenue||£’000||34 506||17 158|
|Chrome revenue4||$’000||47 004||21 624|
|Attributable chrome earnings||£’000||3 082||803|
|Attributable chrome earnings||$’000||4 150||1 013|
|Attributable chrome earnings margin||%||9||5|
|Attributable chrome tonnes produced||tonnes||751 223||377 883|
|Chrome revenue per tonne||$/t||63||57|
|Chrome attributable earnings per tonne||$/t||6||3|
1. Attributable earnings refer to earnings allocated to the group based on the group’s contractual rights in each project and excludes Group overheads and non-cash expenses including impairments, gain on bargain purchase, share based payments and foreign exchange differences.
2. Adjusted EBITDA refers to EBITDA adjusted for non-cash expenses including impairments, gain on bargain purchase, share based payments and foreign exchange differences on transactions.
3. The adjusted PGM production unit cost includes all direct and indirect costs attributable to the project including allocated corporate charges. The costs for the period under review includes all the operating costs for the Windsor PGM JV allocated to the Jubilee attributable PGM ounces.
4. The chrome revenue is recognised on an ex-works basis after costs of export logistics including freight, shipping and marketing.
Chief Executive Officer’s Review
The Jubilee team delivered an exceptional performance during this financial year, achieving growth in all of our core business units; PGMs and Chrome and also generating maiden earnings from our new Zambian Copper portfolio. During this period, Jubilee in addition executed a number of targeted transactions and investments valuing £ 20 million, to not only underpin our growth but which also offer the opportunity for further growth. A brief summary of the transactions and investments included:
Chrome and PGM
o On 13 August 2020, Jubilee entered into a third party Run-Of-Mine (“ROM”) chrome ore offtake agreement that fully commits its 70 000 tonnes per month Windsor chrome beneficiation plant for the next three years, with an option for this to be extended further;
o On 24 August 2020, Jubilee executed a processing agreement whereby it was appointed as operator to design, operate and capitalise the expansion of a ROM chrome beneficiation plant to reach 80 000 tonnes per month for a minimum period of 3 years;
o During February 2021, Jubilee commenced with the capitalisation and expansion of the 50 000 tonnes per month Inyoni PGM plant to a 75 000 tonnes per month processing facility. This formed part of the refocusing of the Inyoni Operation to a third-party processing facility for a variety of clients;
o On 3 June 2021, Jubilee has entered into a further long-term, 10+ years of mine life, PGM feed supply agreement, with a chrome mining customer, offering Jubilee the opportunity to expand its PGM Operations into the Eastern Limb of the PGM-rich Bushveld Complex. In addition, Jubilee has acquired the rights to the processing of 255 000 tonnes of PGM containing chrome tailings in the Eastern Limb, further increasing Jubilee’s existing surface PGM tailings;
o On 4 June 2021, Jubilee announced that it had in addition secured the right to process a further 944 000 tonnes of PGM containing tailings in the Eastern Limb of the PGM-rich Bushveld Complex
Copper and Cobalt
o On 6 August 2020, Jubilee established Project Roan by signing a joint venture agreement with a private Zambian company, to secure the rights to process 2 million tonnes of copper ROM material containing in excess of 2% copper, with the potential to increase the ROM material to 4 million tonnes in addition to a further approximate 6 million tonnes of copper tailings. The construction of the new copper concentrator is underway targeting to commence commissioning activities by January 2022;
o On 5 November 2020, Jubilee established Project Elephant by concluding a further JV copper tailings transaction to secure the rights to an additional approximately 115 million tonnes of copper and cobalt containing surface tailings in Zambia. This transaction combined with the 150 million tonnes secured at Luanshya established the Northern Copper and Cobalt Refinery strategy;
o Jubilee completed the capitalisation of the ROM ore processing circuit to enhance the Sable Refinery’s processing capabilities.
Post the period under review
o On 24 August 2021, Jubilee executed a binding Memorandum of Understanding with Mopani Copper Mines Plc as part of its Northern Copper and Cobalt Refining Strategy;
o On 15 September 2021, Jubilee successfully concluded the buy-out of the JV partner in Project Roan while also increasing its JV position at Project Elephant.
While all of this work understandably has put significant pressure on day-to-day operations, I am thrilled to still be reporting further production and earnings progress. Crucially, the investment, time and effort spent in building and integrating these facilities has set a platform for tremendous potential growth opportunities. The significant upgrade undertaken at the Inyoni PGM Operations which was completed post the period under review in October 2021, has enabled Inyoni to pursue a variety of PGM feed materials ensuring a long-term sustainable operation. The disruption to production caused by this significant upgrade during the current H2 CY2021 period is expected to be recovered during H1 CY2022.
We have seen further growth in South Africa during the period under review, with a number of new, long term PGM supply agreements, each of significant strategic value given their locations on the Eastern Limb of the mineral-rich Bushveld Complex. As well as demonstrating our ability to win and form partnerships with key chrome mining clients, these new supply agreements provide us with the opportunity to replicate the success of our Inyoni Operation in the Western Limb region, which is of significant value to us in supplying a continued and sustained chrome and PGM feed.
With the support of our long-term stakeholders, along with some very welcome blue-chip institutional investors to the share register during the period, our maturing Company continues on a very exciting growth trajectory, both operationally and financially, as our strategy continues to be implemented.
Operationally, the Company has achieved its stated target of 50 000 PGM ounces for FY 2021 at 50 162 ounces (an increase of 23% compared with 40 743 ounces for FY2020). This target was achieved during a period which included the construction and commissioning of two new chrome beneficiation facilities and the commencement of the construction of the expanded Inyoni PGM operation which is expected to be completed during Q4 of CY2021. The expansion and upgrade of the Inyoni operations is in-line with the re-focusing of the Inyoni operations from previously only processing historical tails stockpiled and generated by Hernic Ferrochrome Proprietary Limited, prior to it being placed in Business Rescue and the assets ultimately being sold to Samancor, to focusing Inyoni on the processing of feed material supplied by a variety of clients secured under medium- and long-term feed supply agreements. During the period under review, the Company also expanded its operational footprint in the Eastern Limb of the Bushveld Complex in South Africa – a strategic development which demonstrates Jubilee’s ability to continue to grow its business by re-investing its earnings into high growth projects.
Chrome operations achieved 751 223 chrome concentrate tonnes for FY2021 (377 883 tonnes during FY2020) on the back of increased operational capacities. This is set to increase further with the commissioning of the new Chrome Beneficiation circuit, which was completed at the end of Q2 CY2021.
In Zambia, early earnings from copper production were achieved. Copper production increased to 1 387 tonnes of copper for FY2021 as part of the process of securing operational readiness to accept first copper concentrate production from Project Roan. Project Roan’s integrated copper concentrator is set for commissioning and targeting to commence commercial operations during Q1 CY2022, which will result in the first significant increase in copper production by the Sable Refinery targeting 10 000 tonnes of copper units annually. The fully operational Sable Refinery achieved positive earnings as part of its operational readiness activities with attributable operational earnings of £ 3.7 million for FY2021 compared to £ 1.2 million for FY2020.
Achieving first delivery, on time, of partially upgraded copper concentrate from Project Roan to the fully operational Sable Refinery was the first major step in Jubilee’s commitment to achieving its targeted production of 25 000 tonnes per annum of copper within the next four years. The commissioning of the integrated copper concentrator is on track and scheduled to reach commercial production in Q1 CY2022, while Jubilee’s second copper project, located in the Luanshya area, has completed the development programme and is concluding the detail design phase to commence the implementation programme in the next few months.
On 24 August 2021, Jubilee executed a binding Memorandum of Understanding with Mopani Copper Mines Plc, a subsidiary of ZCCM Investment Holdings Plc in Zambia, (“Mopani”, “ZCCM” and “Parties”) for the implementation of additional copper and cobalt refining capacity through the re-capitalisation of existing refining capacity placed under care and maintenance by Mopani (the “Agreement”). The Agreement forms a key part of Jubilee’s Northern Refining strategy which offers the potential to establish an accelerated refining presence at both its Sable Refinery in the South as well as at Kitwe in the North to better serve all of its secured copper and cobalt tailings projects – offering the potential of a combined refining capacity of 31 000 tonnes of copper units per annum. Jubilee is now able to accelerate the implementation of its Zambian copper strategy at significantly reduced capital and project risk.
As we have done over recent years, our company has experienced another year of significant progress across all aspects of the business. Jubilee has delivered a strong financial performance with growth in all aspects of the business, both in South Africa and in Zambia, during a phase of new build, extension to existing facilities and feed and new project acquisitions.
As a rapidly developing company, the Board has exercised considerable attention to ESG matters to ensure that there is no disconnect between operational and financial performance, against our environmental, social and governance obligations. ESG has always been at the heart of what Jubilee does and is captured in The Jubilee Way of doing business. I am pleased to say that the word “obligations”, whilst being a modern requirement, has always been at the forefront of the Board’s mind and as such further formalisation of our protocols has not been unduly onerous. We continue to progress formalisation to ensure that all aspects of our business remain synchronised, with a common mission of responsible, efficient and strongly commercial growth.
The effects and uncertainty of the COVID-19 pandemic remains to be felt by the world. Jubilee continues to navigate these effects with our operations being able to, in the most part, avoid any direct impact. While our construction projects in Zambia were impacted for a time by the disruptions in supply chains and freight logistics, I am pleased that, despite these impacts, we will shortly commence with the commissioning of our new copper concentrator at Project Roan in Zambia with delivery of copper concentrates to our Sable Refinery on track for Q1 CY2022 next year. At the outset of the pandemic, we put in stringent testing and reporting measures to protect our staff. I do thank everyone involved in the Company for the responsible approach to this pandemic, which we remain incredibly vigilant of.
The year under review was about successfully extending and consolidating our chrome and PGM operations in South Africa as we aimed to serve a wider client base to de-risk the business from any one source, especially following the financial collapse of Hernic Ferrochrome, while also establishing and expanding our copper presence in Zambia. We successfully completed a major upgrade programme at Inyoni which has significantly enhanced our processing capabilities with us now able to process a wide variety of third-party materials leaving us in a unique position to further capitalise on the materials in the market.
In terms of our Zambian operations, we announced during the year the acquisition of several tailings projects in Luanshya and Kitwe, which amounted to gaining the rights to some 300 million tonnes of tailings of varying grades of copper, and in some cases cobalt. The period saw the ramping up of production at the Sable Refinery as they prepare for the commissioning of Project Roan which targets an annual 10 000 tonnes of copper, which may increase to 14 000 tonnes per annum.
Post the period under review, we announced a binding MOU for the Mopani Refining Facility and peripheral hardware which will significantly accelerate our production plans for the Luanshya and Kitwe tailings as part of our Northern Copper and Cobalt refining strategy. The acquisition of these redundant facilities and refurbishing, together with localised tailings dams, will greatly reduce our capital requirements and bring forward processing availability timing by at least 2 years. In general, our achievements in the Zambian copper arena are advancing to plan and we fully expect to attain our target of 25 000 tonnes of annualised copper production to be achieved. The copper potential of Zambia remains and as such we maintain an aggressive programme to advance our position and annual production in country.
At the beginning of May 2021, we announced our option with Caerus Mineral Resources Plc to research and test dumps in Cyprus left by many mining operations over many years. The dumps are likely to be copper and gold containing, and a number of cases could be quite sizable. We are currently carrying out test work on a number of samples derived from various sites, with a view to assessing likely processing results. The dumps are thought to be high grade, both in copper and gold. This option represents our first venture out of Africa and commences the role out of our brand, which we call The Jubilee Way, since the way of doing business in the tailings space is unique to our company.
In terms of PGM and chrome production, we increased our financial performance throughout the period despite a planned significant upgrading of our Inyoni Operations, which was disruptive to the current operation and completed post the period under review in October 2021. The new expanded Inyoni Operations are now able to process a variety of feed sources which was previously limited to the treatment of historical material provided by the then Hernic.
Towards year end we announced a substantial acquisition for the rights to 944 000 tonnes of PGM containing tailings in the Eastern Limb, which marks our entry into gaining position in the Eastern Limb of the South African Bushveld Complex. The move to PGM supply agreements in the Eastern Limb was a key strategic decision too, giving access to this area offering a platform to pursue further growth opportunities.
During the year we have seen with the pandemic biting into everyone’s lives in various ways, showing no respite and reproducing itself in new forms and the uncertainty of pandemic management still exists. Against this uncertain environment stock markets have advanced to all-time highs and commodity prices have seen unprecedented growth. Any and all metals which will be required for future clean energy generation or storage have seen significant price increases. The outlook for copper in particular remains buoyant, with many predictions that the year CY2030 will see a doubling in demand for copper. I for one, see the supply side being severely challenged, with Chile as a major contributor to the copper supply, being challenged technically and socially. The large copper systems that are now in favour are few and far between and have a gestation period of some twelve years. The lack of big projects being developed will, to me, facilitate smaller copper production from both surface and underground mines. The reason being simply that the period to bring into production is much less. The inability of supply to keep up the demand should keep the price of copper above US$ 8 500 per tonne. We do, however, anticipate that prices may exceed US$ 11 000 per tonne during CY2023 and beyond. The possession of copper secondaries, mined and on surface, gives Jubilee a very good position in tomorrow’s copper production and promises superior returns to its shareholders.
Likewise, in the PGM space, we see the emergence of the fuel cell, particularly in China, which will underpin the PGM price and increase the price as demand for fuel cell energy increases over the coming years. Your company is well positioned in the new energy space and has a style of doing business which is both unique and transferable, The Jubilee Way.
We look forward to continuing to deliver to our shareholders with our further growth and development in the exciting space of waste retreatment. We most definitely have a first mover advantage.
Finally, I would like to thank everyone in our team for the tireless efforts in producing splendid results in challenging times. Upwards and onwards, and long may it continue.
2 December 2021