REG - Jubilee Metals Group - Investment in Historical Waste Rock Dump in Zambia

Jubilee MetalsAnnouncement

12/12/2023 07:15

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RNS Number : 4677W  Jubilee Metals Group PLC  12 December 2023

Jubilee Metals Group PLC

("Jubilee" or "the Company" or "the Group")

Registration number (4459850)

Altx share code: JBL

AIM share code: JLP

ISIN: GB0031852162

 

 

Strategic Investment in a Historical Waste Rock Dump in Zambia

 

Jubilee, a diversified and leading metals recovery business with a world-class
portfolio of projects in South Africa and Zambia, is pleased to announce that
it has secured one of the largest copper waste rock assets on surface in
Zambia and has formed a strategic partnership with Abu Dhabi based
International Resources Holding RSC Limited ("IRH"). IRH is affiliated to the
Abu Dhabi conglomerate, International Holding Company PJSC ("IHC"), the most
valuable listed holding company in the United Arab Emirates, and the
second-most valuable in the Gulf Cooperation Council region.

 

Highlights

·    Jubilee secures one of the largest copper waste rock assets on
surface in Zambia.

·  Estimated at more than 350 million tonnes of waste rock material on
surface. Early results from preliminary surface sampling indicate zones with
grades higher than 1.5% copper ("Waste Rock Project").

·    Jubilee's technical services team has commenced extensive resource
definition and process technical review with the aim of completing the project
implementation detail and timeline within the next 60 days.

·   Processing by Jubilee's newly developed modular copper units aims to
produce in excess of 20 000 tonnes per annum of copper at a cost of below US$4
000 per tonne of copper from this historical waste rock dump.

·    Overall project costs including mining equipment and project
infrastructure are likely to be around US$50 million.

·   Jubilee has the capability to construct and commission all modular
copper units within a 12-month period and aims to commence within Q1 CY2024.

·   Jubilee executed a binding funding term sheet with IRH to form a
dedicated special purpose vehicle ("SPV") through which both the acquisition
of the copper waste rock asset and implementation of the processing solution
will be funded.

·   Under the funding term sheet IRH undertakes to provide all capital
required by the SPV through a combination of equity in the SPV and shareholder
loans.

·    Jubilee will be appointed by the SPV to design, implement and operate
the mining and processing solution.

Leon Coetzer, CEO says:

"The Transaction marks a significant milestone on our journey in Zambia,
catapulting our copper expansion in the region. The Waste Rock Project,
anchored by this substantial resource, will fast-track the rollout of our
modular copper processing units in the country with the potential to far
exceed our goal of reaching 25, 000 tonnes of copper per annum.

 

"The binding funding term sheet that we have executed, affords Jubilee the
opportunity to aggressively pursue its copper growth strategy in partnership
with a prestigious group such as the IRH.

 

"This partnership combines Jubilee's unique technical and operational
experience with the strategic in country copper focus and financial support of
the IRH. The strategic significance of this partnership is further highlighted
by the recently announced selection of IRH as the preferred strategic equity
partner for Zambia's Mopani Copper Mines asset, which owns the Mufulira Slag
Dump Project recently awarded to Jubilee.

"Jubilee and IRH share similar values in their commitment to sustainable
investment through broad based community involvement and prioritising local
partnerships. I look forward to working with IRH as our partner in bringing
this exciting project to full fruition."

ESG commitment

Jubilee's unwavering commitment to responsible mining, demonstrated by our
copper processing modules that integrate eco-friendly methodologies, efficient
waste rock management, and the rehabilitation of historic waste rock dumps
accumulated over decades of copper mining in Zambia. Furthermore, the Waste
Rock Project will provide employment opportunities and strengthen the local
economy in Zambia.

 

12 December 2023

 

 

For further information please contact:

 

 Jubilee Metals Group PLC                                      Tel: +27 (0) 11 465 1913
 Leon Coetzer (CEO) / Neal Reynolds (CFO)
 PR & IR Adviser - Tavistock                                   Tel: +44 (0) 20 7920 3150
 Jos Simson/ Gareth Tredway
 Nominated Adviser - SPARK Advisory Partners Limited           Tel: +44 (0) 20 3368 3555
 Andrew Emmott/ James Keeshan
 Joint Broker - Berenberg                                      Tel: +44 (0) 20 3207 7800
 Matthew Armitt/ Jennifer Lee/ Detlir Elezi
 Joint Broker - WH Ireland                                     Tel: +44 (0) 20 7220 1670/
 Harry Ansell/ Katy Mitchell                                   +44 (0) 113 394 6618
 JSE Sponsor - Questco Corporate Advisory Proprietary Limited  Tel: +27 (0) 11 011 9207
 Alison McLaren

 

About Jubilee Metals Plc

 

Jubilee Metals Plc is a low-cost, diversified producer, specialising in the
recovery of metal from previously overlooked resources, such as unprocessed
historical waste rock, run-of-mine materials and tailings in South Africa and
Zambia. The Company's low-capex, modular processing facilities are deployed
close to these various types of material, producing high grade concentrates
for sale or further refining to finished metal at the Company's downstream
facilities. Production currently consists of chrome, copper and platinum group
metals (PGMs). The modular processing facilities offer a platform for growth
and the rapid expansion of its operational footprint. Jubilee's success is
derived from operational excellence, a highly experienced management team and
a pioneering Technical Development Centre.

 

Annexure 1

Waste Rock Project Overview

The Waste Rock Project is located in Zambia's Northern Copperbelt and is
estimated to hold in excess of 350 million tonnes of material. Copper results
based on historical exploratory sampling of the material as well as
preliminary surface sampling conducted by Jubilee, indicates the existence of
extensive zones with grades higher than 1.5% copper. The Waste Rock Project
aligns with the targeted roll-out of Jubilee's modular copper processing
units.

Jubilee has furthermore executed a binding funding term sheet as well as a
framework and joint venture agreement with IRH to establish a SPV to fund the
acquisition and implementation of the Waste Rock Project.

This Waste Rock Project is a significant step towards Jubilee's ongoing
commitment to sustainable extraction and value creation in the region. The
Transaction, and the strategic partnership with IRH, marks the culmination of
4 years' of work by the Jubilee team. Jubilee's reputation and relationships
in Zambia, coupled with its proven expertise in metals processing, in
alignment with IRH's strategy to build a portfolio of strategic mineral
assets, has created this unique opportunity to generate value from these
historical waste dumps.

 

Transaction summary

This Waste Rock Project strategically leverages the substantial copper content
within the waste material deposited on surface from historical mining
activity. The project offers a unique long-term production capacity that
supports Jubilee's copper growth targets. It aligns with Jubilee's strategic
goals for regional expansion and resource optimisation in Zambia, effectively
turning what was traditionally considered industry waste into a valuable
asset.

The waste rock resource was formed over 60 years' of mining where the
overburden material and ore regarded as too low grade at the time, was
discarded onto the waste rock dump in favour of processing higher grade copper
ore.

Jubilee's technical services are preparing a preliminary mining plan and have
modelled the initial implementation of four processing modules. Alternatives
of whether the project is developed by sequential construction of copper
processing modules or on an accelerated construction schedule are being
considered.

Below, we outline preliminary operational and financial estimates that provide
an approximate sense of the scale of investment required for the Waste Rock
Project's implementation.

The Transaction secures the sole right to Jubilee (which it expects will be
ceded to the SPV with IRH) to purchase all rights pertaining to the waste rock
material for a total consideration of US$30 million, which includes a
combination of mining rights and other services currently owned by a private
company and its shareholders.

The total value of US$30 million is payable over 18 months from the effective
date of the Agreement. An initial payment of US$1.75 million, followed by
quarterly payments commencing 75 working days ("Initial Period") after the
first payment. Jubilee retains the right to cancel the transaction during the
Initial Period in the event of any material changes being discovered in the
disclosures made.

Jubilee intends to complete an extensive drilling and sampling campaign to
improve the resource definition. Processing development work will also be
continued within the Initial Period. The focus will be to expedite the project
implementation and commencement of copper production.

 

Funding and SPV

Under the terms of the binding term sheet and the framework and joint venture
agreement, the parties commit to the establishment of a new SPV to house the
Waste Rock Project. Subject to due diligence, it is intended that all rights
to the Waste Rock Project will be ceded from Jubilee to the SPV.

The SPV will be managed through a joint executive committee with equal
representation by Jubilee and IRH, with Jubilee appointing the chairman of the
executive committee.

It is expected that the SPV will acquire the Waste Rock Project through
funding provided by IRH and will reimburse Jubilee for all costs incurred
directly related to the development of the Waste Rock Project as well as any
funding provided towards the acquisition of the Waste Rock Project prior to
the implementation of the SPV.

Additionally, IRH will supply the necessary funding to the SPV for the
implementation of the Waste Rock Project, contingent upon the approval of the
executive committee and the implementation schedule prepared by Jubilee. The
funding provided by IRH to the SPV will take the form of a shareholder loan.
Repayment by the SPV of the shareholder loan is contingent upon the SPV first
achieving a threshold cumulative net earnings with the SPV's repayment of the
shareholder loan limited to a maximum percentage of net earnings, ensuring
that the majority of earnings are distributed to the equity holders of the
SPV.

Jubilee will assume responsibility for the day-to-day operations of the SPV
and will provide technical expertise and services at a mutually agreed-upon
fee. Jubilee will be appointed by the SPV to develop, design, implement, and
operate the Waste Rock Project.

Ownership of the SPV will be held jointly, with Jubilee owning a minimum of
30%.

According to the terms outlined in the binding funding term sheet, IRH and
Jubilee commit to completing the implementation of the SPV and associated
appointments before 30 January 2024 with funding provided within five business
days thereafter subject only to IRH completing its due diligence.

 

Preliminary estimates of production and financial metrics

The preliminary Waste Rock Project overview assumes a resource definition
based on the initial surface and historical sampling campaigns. The resource
definition will be better defined following Jubilee's extensive sampling and
process modelling undertaken during the Initial Period.

The figures below serve only as indicative numbers to the potential that the
resource holds based on the assumptions and test work undertaken by Jubilee's
technical services department.

The initial phase of the project involves selective mining to feed four copper
processing modules, each treating 50,000 tonnes per month. Overall project
costs including mining equipment and project infrastructure are likely to be
around US$ 50 million. Preliminary estimates of production and financial
metrics indicate the potential to produce approximately 2000 tonnes of copper
per month from four processing modules at an estimated cost of US$3 800 per
tonne of copper. The production cost per copper tonne assumes that 60% of
copper production is refined to produce copper cathode with the remainder
either toll refined or sold into the market.

An accelerated construction schedule for all four modules could generate
economies of scale and significant cost reductions. The project timeline for
implementing all four modules depends on the sequencing of their installation,
but if pursued simultaneously, they could be completed within a 12-month
period from the commencement of construction.

The processing modules produce a combined copper concentrate for refining to
copper cathode at Jubilee's Sable Refinery in Kabwe or delivery to a partnered
toll refiner.

Phase two of the project aims to incorporate the technological breakthroughs
developed by Jubilee in partnership with its technology suppliers. There will
be a specific focus on the processing of historical tailings and discards from
the waste rock project.

 

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