REG - Jubilee Metals Group - Operations Update 6 months to 31 December 2022

Jubilee MetalsAnnouncement

15/02/2023 07:16

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RNS Number : 9871P  Jubilee Metals Group PLC  15 February 2023

Jubilee Metals Group PLC

Registration number (4459850)

Altx share code: JBL

AIM share code: JLP

ISIN: GB0031852162

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

 

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Operations Update for the six months to 31 December 2022 and Refinement of
Zambian Strategy

Jubilee Metals Group PLC, a leader in diversified metals processing, with
operations in Africa (AIM: JLP/Altx: JBL), announces its six-month operations
update for the period ending 31 December 2022 (H1 FY2023) and an update to its
Zambian copper and cobalt strategy. The Company expects to release its interim
results for the six-month period ending 31 December 2022 on or about 20 March
2023. Figures in this announcement are unaudited.

 

The Company is pleased to have delivered operational performance broadly
in-line with management's expected earnings and revenue targets for H1 FY2023,
mainly supported by the performance of its South African PGM and chrome
operations which largely buffered the impact of the power and water
infrastructural challenges faced in Zambia which have since been addressed.

 

Key Highlights

 

South Africa

 

·    The Company's newly expanded Inyoni Facility continued to perform,
delivering 18 208 PGM ounces for the six-months to December 2022 (100% from
own operations) despite increased power outages experienced at the Company's
South African operations.

 

·    Chrome production benefited from the increased capacity delivering
634 111 tonnes of chrome concentrate, with chrome production on track to
exceed full-year guidance of 1.2 million tonnes of chrome concentrate.

 

·    Jubilee's enlarged chrome processing capacity was utilised to
accelerate the production of PGM feed material to increase PGM feed stock by a
further 5 016 PGM ounces to better buffer the Inyoni PGM facility against
increased power outages.

 

·    In November 2022, Jubilee implemented back-up power units at its
Windsor 8 chrome operations. The expansion of the power facility is currently
under review to further protect the chrome operations that supply the feed to
the Inyoni Facility. Since commissioning, the back-up power units have
delivered in excess of 650 hours of back-up power.

 

·    Operational cost net of chrome credits remained tightly under control
at US$ 516 per PGM ounce, which is well below target despite a much lower
credit from chrome production due to a softer chrome metal price.

 

·    PGM and chrome metal prices were softer over the period with chrome
recovering sharply post the reporting period.

 

·    The South African operations experienced additional operational
downtime relating to a safety incident at an engineering service provider that
sadly resulted in a fatality. Following the incident,  Jubilee has
implemented measures to assume a more direct safety management role of its
service providers.

 

·    The combined South African operations have achieved 52 days without a
lost time injury (LTI) with a lost time injury frequency rate (LTIFR) of 1.0.

 

 

Zambia

 

 

·    Copper production was down 10% on the previous six months to 1 149
tonnes with in-process stock from processed material at Roan increasing to
approximately 830 tonnes of contained copper.

 

·    Overall production fell below the targeted 3 000 tonnes of copper for
the period, with the Zambian operations suffering severe disruptions due to
country wide power outages that resulted in prolonged down-times and damage to
plant and equipment which impacted its ability to operate as intended and
effectively.

 

·    Jubilee has taken decisive corrective action to invest a further
approximately US$2.5 million to end January 2023 to address and overcome the
infrastructure challenges which has delivered an upgraded privately owned
water infrastructure, further upgraded power infrastructure with additional
secured power and replacement of damaged equipment.

 

·    The upgraded and expanded water and power infrastructure at Roan now
offers the potential to more than double the capacity of the existing 780 000
tonne per annum processing capacity.

 

·    At Sable, Jubilee successfully completed the first cobalt production
runs from waste. The success of the trials has motivated the further expansion
of the cobalt circuit to increase cobalt production from waste and offers a
buffer to the impact on Group earnings from reduced copper production.

 

Refined Zambian Strategy

 

·    Jubilee has updated the implementation of its copper and cobalt
expansion strategy to better align the targeted increased operational
footprint with the in-country available power infrastructure, resulting in the
potential to accelerate the roll-out of the Northern copper and cobalt
strategy. The refined strategy follows a joint review by the Zambian
authorities and the Jubilee project team.

 

·    The Company's new refined strategy will allow the Zambian operations
to maximise the use of available and renewed infrastructure by expanding
existing operations such as Roan, which offers the potential to bring forward
the delivery of its Northern Refining Strategy through a centralised operation
and reduced capital outlay.

 

·    Sable Refinery holds the ability to pivot production between copper
and cobalt metals which, accommodates the staged expansion of the operations
while at the same time optimising profitability.

 

·    The Sable Refinery will initially maximise cobalt production in the
short-term to facilitate the targeted expansion of the Roan copper operations,
targeting output of 450 tonnes per month of cobalt hydroxide (125 tonnes of
contained cobalt) from recycled waste alone by end May 2023.

 

 

Leon Coetzer, CEO, commented: "It has been a challenging period during which
we have overcome infrastructural related challenges in both of our operating
jurisdictions. Reliable power and water supply are two critical ingredients
for efficient and stable operations.

 

"Our ability to leverage off our multi-commodity production capability has
been vital in being able to deliver the operational performance and resultant
revenues and earnings. We aim to continue to maximise this multi-metal
production flexibility and therefore benefit from the cumulative earnings
potential it provides.

 

"Our South African operations delivered a very solid result in the period
under review, despite the aforementioned challenges. We moved quickly with our
chrome and PGM feed material suppliers to better manage stock levels and
synchronise operational activities, while prioritising the implementation of
back-up power supply units at the hardest hit operational areas.

 

"This has allowed our South African operations to temper the impact of the
ongoing load-shedding, a term used to describe the reduction of power
availability in designated areas by the national power utility of South
Africa. With the measures taken and systems implemented I fully expect the
operations to closely match targeted up-time resulting in improved processing
efficiencies.

 

"At our operations in Zambia, the impact of nationwide power shortages has
been more acute, and we have taken bold steps to not only overcome the
immediate challenges faced by operations, but also to actively update the
implementation strategy of our copper and cobalt expansion. Through a
concerted joint effort between the Jubilee teams and the Zambian authorities,
we have been able to alleviate the immediate impact of power outages on our
operations through the implementation of a new power management plan, while
adapting our copper and cobalt expansion strategy to better align with
available power and water infrastructure.

 

"The updated, expansion implementation plan, offers the potential to
accelerate the increase of copper and cobalt production at an initial lower
capital outlay, by increasing our existing operational footprint in Zambia to
fully utilise the available infrastructure, compared with an initial targeted
Greenfields expansion.

 

"At the Roan concentrator, the large available surface area and upgraded water
and now power infrastructure, now offers the potential to expand operations at
Roan by establishing it as a concentrator hub for projects associated both
with the Northern and Southern copper refining strategy. The expansion of Roan
therefore offers the opportunity to accelerate the roll out of our operational
footprint at the nearby Northern Refining projects.

 

"Based on the initial review of our technical teams, Roan can be expanded in
phases to more than double its current capacity, while avoiding a complete
shutdown of operations to accommodate the full upgrade. The initial phase will
expand and upgrade the material handling and classification circuits, to
accommodate the simultaneous processing of copper tailings and copper
containing ROM material, which immediately facilitates the implementation of
the first Northern linked refining project at Luanshya, and the supply of
further third-party ROM material.

 

"At the Sable Refinery, we have taken the decision to debottleneck and further
expand the cobalt refining circuit to add to our ability to increase revenues
from cobalt especially during the expansion of Roan. The impact, therefore, of
the addition of cobalt production and upgrades to the Roan operations during
February, will impact our production guidance for FY2023 which we will clarify
along with the release of our interim results due in March.

 

"We have suffered short term losses in the production of copper but, the
learnings we have taken from the severe challenges we faced, and the decisive
steps taken, we expect clear long-term benefits from the joint efforts. We are
extremely thankful for the support of the Zambian authorities who helped keep
us on track to achieve our copper and cobalt aspirations."

 

 

Prospects for FY2023

 

Zambia

 

·    Jubilee has refined the implementation of the Northern Strategy
against the backdrop of the upgraded power and water infrastructure at Roan
and the expansion at Sable. The updated implementation strategy targets the
expansion of Roan to double its processing capacity as part of the roll-out of
the expansion strategy.

 

·    The Company looks to complete the debottlenecking and initial
expansion of the cobalt refining circuit during February 2023 to target a
production capacity of 450 tonnes of cobalt hydroxide product from waste
alone, following the further expansion in May 2023.

 

·    The targeted addition of higher margin cobalt production and upgrades
at Roan operations, will displace copper production to some extent in the
short term. Guidance for FY2023 will be updated following the completion of
the initial expansion of the cobalt refining circuit currently underway as
soon as possible but no later than as part of the release of the Company's
interim results expected on or about 20 March 2023.

 

 

South Africa

 

·    The new enlarged PGM and chrome operations have set the platform to
deliver up to 44 000 PGM ounces and 1.2 million tonnes of chrome concentrate
per annum from Jubilee's own capacity.

 

·    Due to the continued uncertainty over stable power supply, and the
expected time-lag to expand the back-up power supply for operations, the
Company feels it prudent to update its full year guidance to 38 000 PGM ounces
from own production for FY2023, with the continued option to add a further 8
000 PGM ounces from third party processing agreements dependent on stock and
power availability.

 

·    Jubilee continues to progress discussions to secure a further PGM
processing footprint in the Eastern Limb of the Bushveld (north-eastern region
of South Africa's chrome and PGM mining region) with final design reviews
underway for the chrome beneficiation facility that will precede the PGM
facility in the Eastern Limb.

 

·    During the period, Jubilee has increased its ownership of existing
tailings resources in support of the expansion target on the Eastern Limb and
is reviewing the option to either secure a decommissioned PGM facility that
will be repurposed by Jubilee, or to construct a new facility in the region.

 

 

OPERATIONAL KEY PERFORMANCE INDICATORS

 

 COMBINED OPERATIONAL PERFORMANCE (UNAUDITED)                      6 months to     6 months to   6 months to   % change       % change       12 months to

                                                           Unit    31 Dec 2022     30 Jun 2022   31 Dec 2021   H1 FY2023 vs   H1 FY2023 vs   30 Jun 2022 FY2022

                                                                    (H1 FY2023)    (H2 FY2022)   (H1 FY2022)   H2 FY2022      H1 FY2022
                                                                   Unaudited       Unaudited     Unaudited                                   Audited
 KEY UNITS OF PRODUCTION
 PGM ounces:
 -           Inyoni Facility                               Oz      18 208          20 166        15 152        (10%)          20%            35 318
 -           Third party joint venture                     Oz      -               1 104         5 164         (100%)         (100%)         6 268
 Total PGM ounces                                          Oz      18 208          21 270        20 316        (14%)          (10%)          41 586
 Chrome tonnes                                             Tonne   634 111         602 552       619 900       5%             2%             1 222 452
 Copper tonnes produced                                    Tonne   1 149           1 279         1 314         (10%)          (13%)          2 593
 Copper tonnes sold                                        Tonne   915             1 388         1 216         (34%)          (25%)          2 604
 Copper tonnes held in stock                               Tonne   280             46            -             -              -              -

 UNIT REVENUE
 -           PGM revenue per ounce                         US$/oz  1 456           1 599         1 632         (9%)           (11%)          1 615
 -           Chrome revenue per PGM ounce                  US$/oz  2 292           2 486         2 042         (8%)           12%            2 269
 Total PGM revenue per ounce                               US$/oz  3 748           4 085         3 675         (8%)           2%             3 884
 Copper revenue per tonne                                  US$/t   7 953           8 932         9 527         (11%)          (17%)          9 210

 UNIT COST
 Net cost per PGM ounce (after chrome by-product credits)  US$/oz  516             283*          540           83%            (4%)           408
 Net cost per copper tonne                                 US$/t   6 468**         5 248         5 873         23%            10%            5 386

 UNIT EARNINGS
 Net earnings per PGM ounce                                US$/oz  939             1 316         1 092         (29%)          (14%)          1 207
 Net earnings per copper tonne                             US$/t   1 485**         3 684         3 654         (60%)          (59%)          3  824

*    Net cost per PGM ounce for the period was lower as a result of
stronger chrome earnings and a once off chrome stock adjustment

** Cost and net earnings per copper tonne includes disproportionate copper
fixed charges at US$300 per copper tonne produced, to secure full power
allocation for Sable at 100% capacity

 

 

South African Operations Review

 

Health and Safety

 

The combined South Africa operations have achieved 52 days without a lost time
injury (LTI) with a lost time injury frequency rate (LTIFR) of 1.0. Over the
period 253 610 tonnes of historical tailings were uplifted, processed, and
placed on a modern tailings facility by the Jubilee tailings operations.

 

Operational Performance

 

The expanded PGM operational processing capacity holds the potential to
produce 44 000 PGM ounces per annum, depending on feed grades received. The
expansion program included the expansion of the chrome processing operations
which holds the potential to produce 1.2 million tonnes of chrome concentrate
per annum. The chrome operations play a key role in Jubilee's PGM operations
by not only acting as a feeder system to the PGM operations, but also having
the potential to subsidise the PGM unit cost through the sales of chrome
concentrate. PGM basket prices and chrome metal prices were under pressure,
retreating by approximately 18% per PGM ounce over the period and 12% per
tonne of chrome concentrate. The notoriously volatile chrome markets have seen
highly fluctuating metal prices over the past period, with a strong recovery
in metals prices post the period under review.

 

Jubilee sold 18 208 PGM ounces for the six-month period. Notably, 100% of the
PGM production stemmed from the new Inyoni Facility. The upgraded facility
benefits from the scale of operations, and the period under review highlighted
the exposure of such a single large facility to unplanned downtime and
introduced circuit instability brought on mainly as a result of interrupted
power supply.

 

The chrome operations, as a by-product of the PGM operations, continued to
perform, delivering 634 111 tonnes of chrome concentrate over the period
against a targeted 600 000 tonnes. The disproportionate increase in chrome
operations over the period offered Jubilee the opportunity to increase PGM
feed stock levels by 5 016 PGM ounces in stock to better buffer the Inyoni PGM
Facility from power outages suffered at the chrome operations.

 

The Company has taken decisive steps to integrate its operations more closely
with its key suppliers of PGM and chrome containing feed material, to better
manage buffer stock capacity. The Company has also implemented its first
back-up power units at its chrome facilities to ensure a more constant feed
supply and performance. The expansion of the back-up power units is currently
under review, with the existing system already delivering 650 hours of backup
power to operations since its installation in November 2022.

 

Operational PGM efficiencies came under pressure due to a scheduled drop in
PGM feed grade over the initial four months from third party suppliers, which
has since returned to previous higher levels that has continued during the
current period.

 

The PGM basket price over the period decreased by 18% to US$2 019 per PGM
ounce compared with the previous period while chrome CIF prices decreased by
16%.

 

 

Zambian Operations Review

 

Health and Safety

 

The Zambian operations maintained their record of no reportable occupational
health or environmental incidents over the six-month period. The combined
operations and projects have achieved 170 days without a LTI with a LTIFR of
2.9.

 

Operational Performance

 

The Zambian operations faced severe power and water interruptions over the
period, which extended into January 2023, and impacted its ability to operate
as intended and effectively. The water infrastructure was successfully
upgraded during December 2022, with the implementation of new private
infrastructure under licence from the Zambian authorities. A further concerted
joint effort between the Jubilee teams and the Zambian authorities to
alleviate the reduced power availability, has resulted in an action plan that
addresses not only the immediate operational challenges, but also offers an
incentive to accelerate the roll-out of Jubilee's copper and cobalt expansion
strategy in Zambia.

 

The jointly agreed and implemented new power management plan better
synchronises operational planned maintenance with scheduled power outages to
ensure more consistent and stable operations for a prolonged period.
Simultaneously power and water infrastructure has been upgraded to offer
operations, such as Roan, the opportunity to expand its operational footprint.
The benefits of the new joint power management plan are clearly visible in the
improved stability of power and operations and the impact on operations will
be better reflected during the second half of FY2023.

 

During the period under review, and to mitigate the risk of equipment damage
and loss of product quality caused by outages, management has taken the
decision to curtail copper production at Sable and instead increase
stockholding of partially processed material at its Roan concentrator, which
is targeted to be refined at Sable following the implementation of the new
power management plan.

 

Through the success of this intervention, Jubilee has updated its copper and
cobalt expansion strategy to focus on maximizing its operational footprint
through the expansion of existing operations to fully utilise the expanded
available infrastructure. This offers the opportunity to not only accelerate
the implementation of the expansion strategy but also to reduce the early
capital requirement through Brownfields expansion of existing operations. The
expansive surface area supported by upgraded infrastructure at Roan, offers
the potential to more than double the existing 780 000 tonne per annum
operational capacity at a significantly lower capital outlay than building a
new Greenfields concentrator facility, and without the uncertainty of
available infrastructure.

 

Roan operations can be expanded through a phased approach, similar to the
successful expansion implemented at the Inyoni PGM Facility in South Africa.
The initial target is the upgrade of the feed material handling and
classification circuit at Roan to offer the flexibility to simultaneously
process both copper tailings and ROM copper material supplied by third party
miners. Such an upgrade can be completed within an 8-week period immediately
facilitating the implementation of the first Northern Refining project
tailings project.

During the period the Sable Refinery continued to expand its operational
capability through the addition of the copper sulphide refining circuit and
the successful completion of the operational trial to produce cobalt hydroxide
saleable product.

As a result of the successful cobalt production trials, the decision was taken
by the Company to debottleneck and expand the cobalt refining capacity to
increase Sable's capability to produce saleable cobalt hydroxide concentrate
from recycled waste materials in Zambia. The debottlenecking of the circuit
will be completed during February 2023 which, targets to increase the
processing capacity of waste materials to an equivalent production rate of
some 270 tonnes per month of cobalt hydroxide (75 tonnes of contained cobalt)
from recycled waste alone. A further expansion is currently under review to
target some 450 tonnes per month of cobalt hydroxide (125 tonnes of contained
cobalt) from recycled waste alone. The capacity is feed grade dependent and
can be increased by further preconcentration of the secured feed supply.

 

Sable's ability to now pivot between metals offers the opportunity to offset a
short-term reduction in revenues from copper production due to the expansion
of Roan, with an increased higher margin cobalt output. This is of noteworthy
value during a time when responsibly soured cobalt from recycled material has
seen a significant increase in demand.

 

 

 

15 February 2023

For further information visit www.jubileemetalsgroup.com
(http://www.jubileemetalsgroup.com/)   or contact:

 

Jubilee Metals Group PLC

Leon Coetzer

Tel:  +27 (0) 11 465 1913

 

PR & IR Adviser - Tavistock

Jos Simson/ Gareth Tredway/ Adam Baynes

Tel: +44 (0) 207 920 3150

 

Nominated Adviser - SPARK Advisory Partners Limited

Andrew Emmott/ James Keeshan

Tel: +44 (0) 20 3368 3555

 

Joint Broker - Berenberg

Matthew Armitt/ Jennifer Lee/ Detlir Elezi

Tel +44 (0) 20 3207 7800

 

Joint Broker - WHIreland

Harry Ansell/ Katy Mitchell

Tel: +44 (0) 20 7220 1670/+44 (0) 113 394 6618

 

JSE Sponsor - Questco Corporate Advisory Proprietary Limited

Sharon Owens

Tel: +27 (11) 011 9212

 

 

 

 

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