REG - Jubilee Metals Group - Six Month Operations Update - H2 2021

Jubilee MetalsAnnouncement

08/02/2022 07:00

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RNS Number : 0034B  Jubilee Metals Group PLC  08 February 2022

Jubilee Metals Group PLC

("Jubilee" or the "Company")

Registration number (4459850)

AltX share code: JBL

AIM share code: JLP

ISIN: GB0031852162

 

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Six Month Operations Update

H2 CY2021

 

Jubilee Metals Group PLC, a leader in metals processing with operations in
Africa (AIM: JLP/Altx: JBL), is pleased to announce its unaudited operational
results for the six months to 31 December 2021 ("H2 CY2021").

 

PGM Operations - South Africa

·    Jubilee successfully recommissioned on-time and in-budget the
significantly upgraded and fully integrated new Inyoni PGM(1) processing
facility in South Africa in November 2021

·    The £ 17.5 million (ZAR 377 million) (2) investment program enables
the new integrated facility to produce up to 44 000 PGM ounces (previously
30 000 PGM ounces) and 615 000 tonnes of additional chrome concentrate per
annum (complete rebuild of old Hernic chrome plant)

·    The investment in Inyoni has materially increased the Group's
production capacity of PGM ounces and, importantly, increases the proportion
of the ounces produced that are fully attributable to Jubilee along with the
associated earnings compared with the significant dilution of earnings caused
by the Windsor PGM JV where up to 40% of earnings was attributable to the JV
partner

·    The new Inyoni processing facility is a state-of-the-art plant that
is uniquely able to process both a wide variety of chrome and PGM containing
mined ores as well as historical tailings. Previously the plant was limited to
processing only a single feed source

·    The investment program included the construction of a new 80 000
tonnes per month Chrome processing facility ("OBB Chrome Plant") integrated
with the new upgraded Inyoni PGM circuit, delivering a world class fully
integrated chrome and PGM processing facility able to process a wide variety
of chrome and PGM containing mined ores as well as historical tailings

·    The new integrated facility sets a strong foundation for sustained
future growth and is the culmination of Jubilee's extensive investment into
achieving class leading efficiencies

·    Jubilee was able to maintain contractual obligations during the
re-build of the program with 20 316 PGM ounces sold during H2 CY2021 despite
scheduled production downtime during expansion at Inyoni

·    Unit cost and revenues are skewed by a one-off release of PGM stock
as a lower grade PGM material

·    January 2022 saw monthly production levels up 66% compared with H2
CY2021. The higher production levels reflect the new Inyoni facility reaching
full design capacities

·    During the period, Jubilee further increased its access to both mined
chrome and PGM material, as well as historical tailings, which further
supports Jubilee's targeted processing capacity expansion into the Eastern
Limb. This expansion would not only offer an offset to the current transport
cost incurred by this material but also offers significant growth
opportunities in this PGM and chrome-rich region of South Africa

·    Overall, the investment in capital expenditure over this period
totalled 19.3 million (ZAR 414 million) with a further £ 17.7 million (ZAR
380 million) invested in acquisitions, leaving cash and cash equivalents at
the end of the period under review standing at £ 21.7 million (ZAR 466
million), compared with £ 19.6 million (ZAR 384 million) at the year ended 30
June 2021

 

1.        PGM - 6 Element Platinum Group Metals including platinum,
palladium, rhodium, ruthenium, osmium and gold

2.        Average conversion rates used for the period under review for
income statement purposes and the spot rate at period end for balance sheet
purposes

 

 

Chrome Operations - South Africa

·    Full integration of the new 80 000 tonne per month OBB Chrome Plant
with the expanded Inyoni PGM plant was achieved within budget and in record
time during November 2021, delivering an integrated chrome and PGM processing
facility with the unique ability to process multiple feed sources

·    Production of chrome concentrate increased by 41% to 609 734 tonnes,
illustrating the early contribution from the new OBB Chrome Plant which was
brought on-line at the end of Q2 2021 and ramped-up during Q3 2021 before
being integrated with the newly expanded Inyoni Plant during November 2021

·    Chrome revenue was up 28% to £ 30 million (ZAR 611 million) from H1
CY2021

·    Chrome earnings were up 15% to £ 2 million (ZAR 42 million) from H1
CY2021

·    The new chrome beneficiation facility follows the completion of the
Windsor 8 Chrome Plant in October 2020 and which, combined, expands Jubilee's
chrome feed capacity to 250 000 tonnes per month of both chrome run-of-mine
ore and historical tailings

·    The increased chrome processing capacity directly contributes to
increased PGM feed supply as a tailings stream produced from the chrome
processing circuit

 

 

Copper Operations - Zambia

·    Sable Refinery copper production up 70% to 1 314 tonnes compared
with 774 tonnes for H1 CY2021 as part of the process to ensure operational
readiness to accept first copper concentrate production from Jubilee's Project
Roan

·    The commissioning of Jubilee's Project Roan copper concentrator
neared completion during the period with early commissioning activities
commencing. The project remains on schedule to reach full production levels
during the current period targeting an annual production rate of 10 000 tonnes
per annum

·    Jubilee's Sable Refinery reported revenue from the sale of copper
cathode of £ 8 million (ZAR 165 million) up 57% from H1 CY2021

·    Sable Refinery achieved positive earnings as part of its operational
readiness activities with attributable operational earnings of £ 3.2 million
(ZAR 66 million) up 70% from H2 CY2021

 

 

Leon Coetzer, Chief Executive Officer, commented:

"I wish to congratulate the Jubilee team for successfully completing our fully
integrated, world-class, Inyoni chrome and PGM facility in South Africa, and
for further delivering on our Southern Copper Refining Strategy in Zambia. The
current reporting period is an example of Jubilee's continued commitment to
invest into our company to secure further growth and sustainability of our
operations.

Despite this challenging undertaking that lays our foundation for future
performance, the team delivered a stellar operational performance.

"The Jubilee team has displayed exceptional commitment and ingenuity by
implementing on-time and in-budget the complex integration of the newly
constructed OBB Chrome Plant, with a fully upgraded and expanded Inyoni PGM
circuit. The safety of our team was paramount during this complex project with
the full project delivered without a single lost time injury to any member of
our team, all while continuing to operate certain sections of the facility to
maintain contractual commitments for the delivery of PGM ounces.

"This new circuit at Inyoni, expands our capability to produce 44 000 PGM
ounces per annum, from 30 000 ounces previously, reducing Jubilee's reliance
on the Windsor JV agreement which led to a significant dilution of earnings.

"Our chrome results already illustrate the early impact of the new OBB Chrome
Plant with an increase of 41% in the production of chrome concentrate during
the period under review. In addition, the recovery of chrome from the various
feed supplies produces an upgraded PGM feed stream to our PGM recovery
plant.

"Our Southern Copper Refining Strategy in Zambia has reached a significant
milestone with the commencement of commissioning activities at our newly
constructed copper concentrator situated in Ndola (Project Roan) that delivers
copper concentrate to our Sable Refinery and third-party suppliers.

"The early material produced under Project Roan as part of our Phase 1
implementation is already delivering results with a 70% step-up in copper
production at our Sable Refinery.

"I look forward to the Jubilee operational team's performance over the next
six months with the full impact of the Inyoni facility being felt, as well as
the targeted ramp-up at Roan enabling us to take another major step in our
commitment to achieve annual copper production of 25 000 tonnes."

 

Combined Operational and Financial update

 

The Company saw the culmination of a continued period of planned substantial
infrastructure investment and integration across its projects, which resulted
in scheduled operational downtime at the chrome and PGM operations to
facilitate the construction and integration of new processing circuits. The
newly constructed and commissioned fully integrated chrome and PGM facility
has set a tremendous platform for future growth for the Company. It sets the
example of the type of facility that the Company plans to develop as it
expands its chrome and PGM operational footprint in the Eastern Limb of the
Bushveld complex in South Africa. This is a strategic development,
demonstrating Jubilee's ability to continue to grow its business by
re-investing its earnings into high growth projects.

 

During this period, the Company maintained its contractual obligations to
deliver the required PGM production despite its Inyoni PGM operation only
being partially operational to achieve 20 316 PGM ounces sold for H2 CY2021
(H1 CY2021: 21 975 ounces). The PGM results are skewed and impacted by the
staged decommissioning and re-commissioning of the new integrated Inyoni
facility over the reporting period resulting in the one-off release of certain
lower-grade PGM inventories and refilling of the operational pipeline over the
period. The total PGM ounces sold included in-process stock released as part
of the recommissioning of the expanded and upgraded PGM facility. The
in-process stock was sold as a lower grade PGM material and prior to the
completion of the newly commissioned final product cleaning circuit. This
release of inventory does not reflect the normally incurred full operational
revenues and cost and therefore skews the overall PGM unit cost and PGM
revenues delivered. These ounces are therefore excluded from the calculation
of the reported PGM unit cost below.

 

Chrome operations achieved 609 734 chrome concentrate tonnes for H2 CY2021
(431 390 tonnes during H1 CY2021) on the back of increased operational
capacities following the commissioning of the new OBB chrome beneficiation
circuit which was fully integrated with the newly commissioned upgraded Inyoni
PGM facility during the period under review.

 

In Zambia, copper production increased to 1 314 tonnes of copper for H2 CY2021
(H1 CY2021: 774 tonnes) as part of ensuring operational readiness to accept
first copper concentrate production from Project Roan. Project Roan's
integrated copper concentrator near completion during the reporting period
with early commissioning activities underway at the time of writing. The Roan
concentrator is targeted to ramp up during the current period to deliver a
targeted 10 000 tonnes of copper units annually. The fully operational Sable
Refinery delivered increased positive earnings as part of its operational
readiness activities with attributable operational earnings of £ 3.2 million
for H2 CY2021, compared to £ 1.9 million for H1 CY2021.

 

The table below presents the combined unaudited operational revenue and
operational earnings performance for H2 CY2021:

 

 COMBINED   Project revenue (£'000)   Project revenue (1) (ZAR'000)  Project earnings (£'000)   Project earnings (ZAR'000)  Jubilee attributable earnings(2) (£'000)   Jubilee attributable earnings (ZAR'000)

 H2 CY2020  51 949                    1 101 115                      31 174                     662 531                     29 500                                     627 336
 H1 CY2021  75 623                    1 526 846                      40 383                      819 965                    40 118                                     814 643
 H2 CY2021   61 813                   1 264 325                       20 215                     413 480                     19 002                                     388 663

1-        All amounts in this announcement are converted at average
conversion rates for the period for income statement
                       purposes and at the period end
spot rate for balance sheet purposes

2-        Attributable earnings represent Jubilee's net share of
operational earnings after distributions to JV partners and before development
costs

 

 

PGM Operations Update - South Africa

 

Jubilee's PGM operations consist of the Inyoni PGM operations and the Windsor
PGM JV (operated under a JV agreement with Eland Platinum). Jubilee
successfully completed and commissioned the new fully integrated and enlarged
chrome and PGM facility at the 100% owned Inyoni during November 2021. The
investment in Inyoni has materially increased the Group's production capacity
of PGM ounces and, importantly, increases the proportion of the ounces
produced that are fully attributable to Jubilee along with the associated
earnings compared with the significant dilution of earnings caused by the
Windsor PGM JV where up to 40% of earnings was attributable to the JV partner.

 

The new Inyoni facility integrates the new OBB Chrome Plant with the
expanded and upgraded Inyoni PGM operations. The Inyoni PGM operations were
expanded to increase its processing capacity by 45% to 75 000 tonnes per month
and to diversify its capacity with the addition of a multi feed blending
circuit and additional PGM recovery circuit. This has allowed for the feeding
and recovering of PGMs from a wide variety of feed material. This new fully
integrated chrome and PGM circuit has overcome the historical limitations of
only being able to process material from the then Hernic operations and
historical waste. The new integrated chrome and PGM facility increases
Jubilee's Inyoni operational capacity to 615 000 tonnes per annum of chrome
concentrate and 44 000 ounces of PGM per annum. This increased Inyoni
capacity reduces Jubilee reliance on the Windsor PGM JV, reducing future
earnings dilution and exposure to significantly reduced efficiencies. Jubilee
now holds an annual PGM capacity that consists of up to 44 000 PGM ounces at
Inyoni (previously only 30 000 PGM ounces) with the additional option of
accessing the Windsor PGM JV at a capacity of 16 000 PGM ounces - this
represents a material increase in the anticipated production of PGM ounces
which will be attributable to Jubilee. Following the recommissioning of the
integrated Inyoni operation and the restocking of the in-process pipeline the
expected production target for the full financial period is readjusted to
between 43 000 to 48 000 PGM ounces depending on the supplementary
production achieved for the remaining period through the Windsor PGM JV.

 

The investment by Jubilee into the completed integrated project totalled £
17.5 million (ZAR 377 million) and it illustrates Jubilee's continued
commitment to investing into its operations to creating the foundation for
sustained future growth.

 

As announced on 3 and 4 June 2021, Jubilee's current PGM operational footprint
has been largely focused on the Western Limb, a single area of the two main
PGM areas in South Africa. The Eastern Limb has been a key focus for Jubilee
to expand its PGM reach and operational capacity following the completion of
its fully integrated Inyoni facility. The additional PGM Supply Agreements
from the Eastern Limb entered into gives Jubilee access to this area offering
a platform to establish a dedicated integrated chrome and PGM facility and to
pursue further growth opportunities.

 

The Eastern Limb PGM Supply Agreements are mostly based on the LG6 chrome reef
known for its high rhodium content accounting for approximately 12% of a
produced PGM ounce compared with as low as 7% of other chrome reefs. The PGM
Supply Agreements has secured the rights to long term PGM feed supply with the
potential to produce up to 14 500 PGM ounces per annum, with further growth
opportunities available. Jubilee will initially process the increased PGM
feed at the Company's expanded and newly integrated Inyoni PGM operations,
while pursuing the implementation of a dedicated processing facility in the
Eastern Limb. The temporary increase in costs to transport this material to
our Western Limb Inyoni facility is offset by the strategic investment to
secure the material for the Eastern Limb strategy and the long-term growth it
offers.

 

During the period, the Company maintained its contractual obligations to
deliver the required PGM production despite its Inyoni PGM operation only
being partially operational to achieve 20 316 PGM ounces sold for H2 CY2021
(H1 CY2021: 21 975 ounces). The PGM results are skewed and impacted by the
staged decommissioning and recommissioning of the new integrated Inyoni
facility over the reporting period resulting in the once of release of certain
lower PGM grade inventories and the refilling of the operational pipeline over
the period. The total PGM ounces sold included in-process stock released as
part of the recommissioning of the expanded and upgraded PGM facility. The
in-process stock was sold as a lower grade PGM material and prior to the
completion of the newly commissioned final product cleaning circuit. This
release of inventory, which does not reflect the normally incurred full
operational cost, skews the PGM unit cost and PGM revenues delivered. These
ounces are excluded from the calculation of the reported PGM unit cost
below.

 

Operational project unit costs expressed as US$ per PGM ounce produced
consisted of US$ 560 per ounce processing unit cost and a US$ 262 per PGM
ounce transport cost for the material sourced from the Eastern Limb.  The
average PGM basket price realised per ounce sold reduced by 35% over the
period but showed a strong recovery at the end of the period which was
sustained during January 2022.

 

The table below presents the combined unaudited operational revenue and
operational earnings performance for PGMs for H2 CY2021:

 

 PGM        PGM ounces delivered  Project revenue (£'000)   Project revenue (ZAR'000)(1)  Project earnings (£'000)   Project earnings (ZAR'000)  Jubilee attributable earnings(2) (£'000)   Jubilee attributable earnings (ZAR'000)  Unit cost / PGM oz (US$)
 H2 CY2020  28 187                36 593                    776 032                       26 959                     572 782                     26 387                                     560 450                                  470
 H1 CY2021  21 975                47 155                    956 869                       36 725                     746 657                     36 459                                     741 335                                  658
 H2 CY2021   20 316                23 885                    488 544                       14 966                     306 117                     13 753                                     281 300                                  822(3)

1.         All amounts in this announcement are converted at average
conversion rates for the period for income statement
                       purposes and at the period end
spot rate for balance sheet purposes

2.         Attributable earnings represent Jubilee's net share of
operational earnings after distributions to JV partners and before development
costs

3.         Unit cost includes a transport cost component of US$262 per
PGM ounce

 

 

Chrome Operations Update - South Africa

 

As previously announced, in November 2020 Jubilee commenced the construction
of an additional 80 000 tonnes per month OBB Chrome Plant, which on
completion increased Jubilee's overall processing capacity to 250 000 tonnes
of chrome ore and tailings per month. The facility consists of four integrated
chrome recovery circuits to maximise chrome efficiencies, which includes
Jubilee's fine chrome operation.

 

The final integration of the new OBB Chrome Plant into the new and upgraded
Inyoni PGM facility was completed in November 2021. The operational levels of
the OBB Chrome Plant were largely maintained during the rebuild and
commissioning of the new Inyoni facility with the produced PGM discard from
the OBB Chrome Plant stockpiled for later reintroduction into the new fully
integrated chrome and PGM facility.

 

Chrome operational earnings for H2 CY2021 increased by 15%, to £ 2 million
from H2 CY2021. Chrome revenue for H2 CY2021 increased by 28% to £ 30 million
from H2 2021.

 

The table below presents the combined unaudited operational revenue and
operational earnings performance for chrome for H2 CY2021:

 

 CHROME     Chromite concentrate produced  Project revenue (£'000)   Project revenue(1) (ZAR'000)  Project and Jubilee attributable earnings (£'000)   Project and Jubilee attributable earnings (ZAR'000)

            Tonnes
 H2 CY2020  319 834                        11 565                    244 435                       1 320                                               28 522
 H1 CY2021  431 390                        23 340                    468 153                       1 762                                               35 576
 H2 CY2021  609 734                         29 872                    611 004                       2 034                                               41 600

1-        All amounts in this announcement are converted at average
conversion rates for the period for income statement
                       purposes and at the period end
spot rate for balance sheet purposes

 

Chrome prices continued to be volatile during the period under review due to
the disruptions in the supply chain over the sixth-month period. These price
fluctuations are expected to continue over the next six months as the world
emerges from the Covid-19 pandemic and supply and demand fundamentals are
better matched.

 
 
Zambian Operations Update

 

The roll-out of Jubilee's copper and cobalt strategy offers the potential of
significant continued earnings growth in addition to the achievements of its
PGM and chrome operations.

 

Background
The Company's Kabwe Project combined with its multi-metal Sable Refinery establishes Jubilee's fully integrated multi-metal recovery and refining operational footprint in Zambia. The Sable Refinery, which acts as a central processing facility for third-party material in the region, gives access to a current resource comprising of an estimated 6.4 million tonnes of surface waste assets containing zinc, lead and vanadium pentoxide in addition to the approximately 300 million tonnes of copper and cobalt tailings secured in 2020.
 

As previously announced, during 2020, Jubilee entered into joint venture
agreements to secure rights to process over 300 million tonnes of copper and
cobalt containing tailings in Zambia. The copper and cobalt tailings are
located in three central locations named Project Roan, Project Lechwe and
Project Elephant.

 

Jubilee aims to construct a processing facility at each of the three
locations. The scope of the processing facilities will be determined by the
refining capacity at its Sable Refinery, currently standing at 14 000 tonnes
per annum. Jubilee has a set target to expand its access to refining
capacity, to achieve a targeted 25 000 tonnes of copper units per annum.

 

During H1 2021, the first of the processing facilities entered its
construction phase at Project Roan, which targets an annual production rate of
10 000 tonnes of equivalent copper units.

 

The Project Roan copper concentrator neared completion during the reporting
period with early commissioning activities commencing. The completion of
construction has commenced well post the period, with the final integration of
the copper oxide and copper sulphide circuit targeted for completion during
March 2022 to complete the ramp-up of the fully integrated circuit during the
current period.

 

The table below presents the combined unaudited operational revenue and
operational earnings performance for copper for H2 CY2021:

 

 COPPER     Copper units produced  Project revenue (£'000)   Project revenue (1) (ZAR'000)  Project and Jubilee attributable earnings (£'000)   Project and Jubilee attributable earnings (ZAR'000)

            Tonnes
 H2 CY2020  614                     3 791                     80 648                         1 793                                               38 365
 H1 CY2021  774                     5 128                     101 824                        1 897                                               37 732
 H2 CY2021  1 314                   8 056                     164 776                        3 215                                               65 762

1-        All amounts in this announcement are converted at average
conversion rates for the period for income statement
                       purposes and at the period end
spot rate for balance sheet purposes

 

 

Project Lechwe Update - Zambia

During the period, the completion of the design work for the Company's second
copper processing facility, Project Lechwe, whereby Jubilee has secured the
rights to approximately 150 million tonnes of copper containing surface
tailings, further progressed with final pilot runs under way to confirm the
design work. Project Lechwe targets to reach the production of 7 500 copper
units per annum in addition to Project Roan by Q2 of CY2023.

 

8 February 2022

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

Jubilee Metals Group PLC

Colin Bird/Leon Coetzer

Tel +44 (0) 20 7584 2155 / Tel +27 (0) 11 465 1913

Nominated Adviser - SPARK Advisory Partners Limited

Andrew Emmott/James Keeshan

Tel: +44 (0) 20 3368 3555

Broker - Shard Capital Partners LLP

Damon Heath/Erik Woolgar

Tel +44 (0) 20 7186 9900

Joint Broker - WHIreland

Harry Ansell/Katy Mitchell

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

 

JSE Sponsor - Questco Proprietary Limited

Sharon Owens

Tel +27 (0) 11 011 9200

 

Lead PR & IR Adviser - Tavistock

Jos Simson/ Gareth Tredway/Charles Vivian

Tel: +44 (0) 207 920 3150

 

 

Notes to Editors

Jubilee Metals Group is a diversified metal recovery business with a
world-class portfolio of projects in South Africa and Zambia. We create value
for all stakeholders through the transformation of mining liabilities into
profitable assets in a manner that addresses mining's historical footprint and
improves the quality of life for surrounding communities. Our distinguishing
value proposition is our net positive impact on all stakeholders and the
environment.

Our business model focuses on the retreatment and metals recovery from mine
tailings, waste, slag, slurry and other secondary materials generated from
mining operations. In effect, while extracting maximum financial returns, we
responsibly rehabilitate environments scarred by the surface footprint of
historical mining operations and solving air and water pollution issues
associated with those installations.

The Company's expanding multi-project portfolio provides exposure to a broad
commodity basket including Platinum Group Metals ('PGMs'), chrome, lead, zinc,
vanadium, copper and cobalt.

Jubilee is listed on the London Stock Exchange's AIM (ticker: JLP) and the
Johannesburg Stock Exchange (ticker: JB).

 

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