Jubilee Metals: at the centre of Zambian copper

27/8/2024

Long-time readers will know that I view Zambian copper as the one of the best things to invest in; and there is a decent amount on choice on AIM — Arc Minerals, Tertiary Minerals, Firering, Xtract Resources, African Pioneer, Galileo Resources, Bezant…some have better chances of success than others, but it only takes one big winner to see the rest rise.

Of course, the subject of today is Jubilee Metals, which has been firmly ensconced in Chrome and PGMs for years — and is now massively ramping up copper processing operations in Zambia. 

For context, JLP shares fell to a multi-year low of less than 5p in November 2021, but then recovered to 8.35p in mid-May 2024. Since then, minor delays to the Roan upgrade have seen the stock fall back to circa 5.6p — but with all systems now roaring, the stock may be in for a truly exceptional few months.

It seems management agrees. On 23 July, CFO Neal Reynolds purchased 416,000 shares at 6.4p per share, and now holds 0.0138% of the issued share capital of the company. And day later, CEO Leon Coetzer bought 625,000 shares at 6.4p per share and now holds 0.047%.

Okay, these are not lifechanging amounts, but management don’t tend to throw money away. And right now, you can invest at a discount to their buys.

Copper development

On 8 August, Jubilee finally announced the start of operations at the Roan upgrade project in Zambia — with the newly built front-end section adding the expected additional processing capacity and flexibility to the already operating milling and flotation sections. 

After the update of 24 June (covered below), which noted that civil and mechanical completion of the Roan upgrade had been completed, the company has now also installed and commissioned the electrical control system — the final piece of the puzzle that was causing the delay.

Production ramp up has already started, with Jubilee feeding previously mined material into Roan (the stuff which gets upgraded at source before being transported to the processing plant). This material is then processed into a saleable copper concentrate.

At present, this ‘saleable copper concentrate’ is then sent to Sable to be refined into copper cathode — however, Sable will soon be at full capacity from open-pit material from Munkoyo and Project G — leaving the copper concentrate from Roan to simply be sold at open market instead.

Unless Leon can get more processing power (Chambishi has been heavily rumoured). 

JLP is still reviewing the option of expanding the Roan operation to incorporate downstream refining of its concentrate — but this will cost capital and at some point, investors will want all this investment to start paying back rather than being ploughed back into further growth.

But even without further development, this Roan Upgrade provides additional processing capacity complementing the pre-existing sulphide copper concentrate capacity, to a combined maximum design capacity of 13,000tpa of copper depending on the copper feed grades.

This is huge.

As a reminder, the wider Zambian copper strategy is to utilise Jubilee’s market position as the only operator able to extract value from materials often regarded by the industry as either waste or too complex to extract economically through the traditional methods.

These copper resources are split into:

• Previously Processed Material — including tailings, partially processed discarded low-grade materials.
• Previously Mined Material — including historically stockpiled low grade mined material and over burden rock, such as the previously announced IRH Waste Rock Project deal.
• Open-pit Mining of near surface copper reef — such as the Munkoyo operation and Project G.

With Jubilee acquiring masses of all three types — and far more in-country still to claim — the company is transitioning Sable into a dedicated refiner for the processing of open-pit mining operations such as the recently announced Munkoyo operation, while the upgraded Roan will process predominantly Previously Mined and Processed Material. 

In plain English, Sable will produce the premium product; Roan a less valuable product but using material nobody else in the country can process. Combined, the 25,000tpa of copper seems now to be in hand.

Coetzer noted ‘We are proud to announce that the Roan front-end module upgrade project in Zambia has commenced production ramp-up…It has taken a concerted effort by the team to reach this critical point in the ramp-up of the Roan Upgrade project. I look forward to the team completing an accelerated ramp-up of operations during the coming month.’

But more importantly, the CEO enthused that ‘the upgraded Roan, together with our Sable refinery, offers Jubilee tremendous processing flexibility and affords us the unique opportunity to aggressively pursue copper resources that are unlocked by this capability.’

Possibly one of the most important factors to understand is that Jubilee is both generating a profit at Roan but also solving a problem for the miners sending their ‘waste’ material to the plant. This is lucratively profitable, but also politically popular as it solves a longstanding waste problem. 

On 13 August (less than a week later), Jubilee announced first production of copper concentrate from the Front-End Module at the Roan — again remember that this is in addition to the sulphide copper concentrate already being produced from Roan's mill-and-float circuit, which is already traded in the market.

Jubilee is now ramping up for the remainder of Q3. And then it’s going to print money.

Coetzer notes ‘It is an exciting time at Jubilee as we commence delivering on our growth projects. The first upgraded concentrate produced from our processing modules is a significant milestone for the business allowing Jubilee to commence filling the available 

copper production capacity at our Zambian operations.’

Q4 FY24 update

The Q4 update continues with the good news for Zambia. To start with, copper production in the quarter rose by 51.7% to 1,048 tonnes, despite operational stoppages due to construction activities at Roan. And the company delivered 3,422 tonnes for the financial year, meeting prior guidance for FY24 of between 3,250 and 4,000 tonnes.

Perhaps one of the more critical updates concern Roan’s front-end module, where early results indicate it is achieving a ‘10-fold copper grade upgrade into concentrate from Previously Mined Material meeting design specifications.’ Nobody else in Zambia can do this. There is no competition for low grade material. 

Better still, these results are effectively the proof needed that the proposed process design solution being developed for the IRH Waste Rock Project will work. Jubilee is also negotiating for additional open-pit copper resources surrounding both Munkoyo and Project G where it’s implementing processing hubs to upgrade the copper ROM at both locations.

In South Africa, FY24 chrome production increased by 20% year-over-year, exceeding guidance at 1,548,205 tonnes — PGM production fell but this was a conscious decision to benefit from favourable chrome market conditions. For context, the construction of the new chrome processing module at Thutse remains on track for construction completion by the end of September.

The only thorn to consider is the production guidance for FY25:

• Chrome concentrate production guidance is 1.65 million tonnes, a 6.7% year-on-year production increase.
• PGMs production guidance is 36,000oz, flat year-on-year.
• Copper units production guidance of between 5,750 tonnes and 7,500 tonnes, between 68% and 119.2% year-on-year increase.

Given that the copper ramp-up has widely been marketed as going to 25,000 tonnes per annum, there are only a few possible reasons why guidance is so low:

• Jubilee is being extremely conservative, wanting to under promise and over deliver.
• Jubilee is unable to include the Roan upgrade in its forecasts for a regulatory reason.
• Ramping up will take longer than expected at Roan.

I’d argue that this is the most important question at present. The company will get to that target — but the copper prediction for FY25 seems low. I suspect it’s a combination of the first two possible reasons; you can also argue that a 6.7% increase in chrome production in this new financial year is also ignoring the impact of the new chrome module at Thutse which will be operational in a few weeks.

Moreover, Coetzer enthused:

‘As we move forward, we remain committed to delivering on our growth projects for copper in Zambia and chrome in South Africa. This successful quarter further highlights our operational excellence, resilience, and adaptability. With strong, mature operations in South Africa and tremendous strides taken in Zambia, Jubilee is well-prepared to deliver a robust FY2025 performance, with anticipated production increases across all commodities.’

Power Agreement

Today, Jubilee signed a three-year renewable power purchase agreement with Lunsemfwa Hydro Power Company in Zambia — this resolves a longstanding potential risk as both Roan and Sable will now have all their power demands supplied on a continuous basis effective from the 1stof September 2024. 

For context, in mid-June, Zambia approved the Open Access regime allowing private players to access the electricity transmission and distribution lines in the country, to give consumers alternative sources of electricity to encourage the development of generation in the country.

LHPC owns two hydropower plants in the central province, is a member of the Southern Africa Power Pool and an active power trader in the regional market. It’s also building a 20MW solar plant — and this means that 100% of Jubilee’s power demands in Zambia will be supplied by renewable energy sources starting next month. 

The agreement also includes the purchase rights to a further 10MW of solar generated power at reduced rates of below 10 US cents/Kwh — securing power for future production, and enough to cover expansion plans to that magic 25,000ktpa of copper.

This is big news on several fronts: 

• Jubilee will no longer be relying on oil, gas or coal to keep operations up and running (which can get expensive quickly).
• JLP has a completely reliable power source, where previously Roan has had to stop operations due to power outages.
• The company will benefit from increased ESG credentials.
• By being one of the first players to help drive the new policy, it will curry government favour.

Coetzer noted this is ‘a critical step towards securing a reliable and continuous power supply for our operations and addresses the current shortage of power being experienced. This comes at a critical time as we step up the production at our Roan and Sable operations and look to further expand our operations.’

The bottom line

Chrome and PGMs were already profitable at Jubilee even as other operators have had to reduce operations. But Zambian copper will drive profits to huge levels given the heat in the sector and rising copper demand.

But taking a step back — Jubilee was also trading at circa this level five years ago — and in that time, the company has not only built Roan, but upgraded it. It’s also upgraded Inyoni, upgraded Sable multiple times, and sourced feed for all plants. It’s even sourced all the power it could ever need.

The chrome business has jumped to multiples of where it was, and then there’s the deal with IRH that could add further tens of millions to the market cap when it gets cracking.

The share price is a steal, and the re-rate will happen shortly.

Jubilee Metals (LON: JLP) shares were changing hands for circa 5p per share in early March when I first considered the company in depth. By 20 May 2024, the stock had risen to 8.66p, but has since slid to 7p today — still a sizeable return — but not close to the 20p+ highs of May 2021.

On the other hand, the stock is still up by more than 100% over the past five years, including the fall from the high of three years ago. And more growth is in the pipeline.

If you missed the initial coverage, it’s repeated at the end of this piece.

Let’s dive in.

Quarterly Update

On 18 April 2024, investors were treated to a fairly comprehensive operational update — one assumes the update for Q4 will be presented shortly. 

As a reminder, Jubilee starts its financial year in July.

Jubilee saw another record quarter for chrome production at 408,710 tonnes (up from 381,114 tonnes in the same quarter the year before) — and this in a quarter that includes January holidays, making it usually a weaker period. For perspective, the sole month of March set a record monthly production of 145,102 tonnes of chrome concentrates.

And in the nine months from July to March, Jubilee saw chrome production increase by some 19.2% year-over-year to 1,126,506 tonnes. But the growth story is just getting started — the second chrome processing module at Thutse, designed to produce 300,000 tpa of chrome concentrates — remains on track to fire up during August 2024.

Give or take a few weeks — this is Africa after all.

This is all part of the master plan to get up to 2.1 million tonnes of chrome concentrate per annum — a target thought insurmountable a few years ago that now seems eminently achievable.

Importantly, Jubilee has further extended its fixed margin chrome tolling agreements through to 2027 — securing a total processing feed capacity of 2.4 million tonnes per annum in relation to fixed margin fee chrome. These are in addition to Jubilee’s own resources — though an update on the margins would be appreciated. 

It’s also worth noting that PGMs production has fallen by 3.6% year-to-date due to ‘reducing available stock of lower grade feed material.’ While this was more than offset by the chrome, JLP may need to find more PGM feed in the near future.

Chrome and PGM production guidance remains unchanged, with JLP targeting 1.45 million tonnes of chrome concentrates in FY24 (to the end of June), up from 1.2 million tonnes in FY23 — and between 40,000 and 42,000 PGM 6E ounces.

CEO Leon Coetzer noted that the South African chrome operations had ‘delivered an exceptional performance…. The team's performance speaks to our renowned technical and processing capabilities supported by the modular expansion approach. The processing efficiencies underpinning this performance continues to offer additional growth opportunities in this sector.’

However, the lion’s share of the CEO’s comments was directed at the copper expansion — because let’s be real, chrome and PGMs are the bread and butter of the group — but the copper expansion is where Jubilee could become a billion pound company.

As investors know, copper production in Q3 was hit by planned improvement activities at Roan and Sable — with only 691 tonnes of contained copper in cathode and concentrates produced. However, financial year-to-date copper production was up by 68.5% to 2,374 tonnes — driven by already completed expansions at Roan.

But getting Roan producing at its larger envisaged scale is key to getting the share price up — and keeping it up — targeting an annual capacity of 13,000 tonnes of copper. 

As of the April update, ‘Project Roan’ was expecting a six week delay ‘in the delivery of the final electrical components.’ The bottom line was that JLP was expecting Roan’s increased capacity to be up and running by the end of May 2024 — and gave production guidance of between 3,250 and 4,000 tonnes, compared to FY23 of 2,923 tonnes, this accounting for the delay.

Coetzer noted ‘I am encouraged by the team's ability to overcome the final frustrating logistical difficulties that have challenged the completion of Project Roan.’

Copper boom: Roan update

Investors were treated to a comprehensive update on the copper situation on 24 June 2024 — a little over three weeks since Roan was advised to be up and running. Once again, the only thing that matters is Roan. And while, yes, there has been possibly another short delay, in the grand scheme of things, it really doesn’t matter. It’s on the verge of all systems go.

Construction of the upgrade has been ‘completed’ with operational readiness testing underway. Further, the electrical control system (ECS) — which was the source of the delay — is also undergoing final testing before its installation ‘during July 2024.’

That’s now.

Jubilee has also agreed a further off-take agreement for stockpiled low grade mined material, to feed the expanded Roan — this material is upgraded at source before being further upgraded by the plant — with the upgrading already underway in preparation for a fully ramped up Roan. 

Again, the highlight to remember is that the company is conducting an ‘accelerated commissioning and ramp-up during July 2024.’

We’ve gone through the potential numbers before — the economics are exceptional.

Coetzer noted ‘It has taken a concerted effort by the team to reach this critical point in the commissioning of the Roan Upgrade…The Roan Upgrade together with our Sable refinery offers Jubilee tremendous processing flexibility and affords us the unique opportunity to aggressively pursue copper resources that are unlocked by this capability.’

Jubilee’s capital allocation review decision to potentially incorporate downstream refining at Roan, to supplement Sable's refinery capacity, is expected during October 2024.

Wider copper strategy

There are two factors to ‘get’ about Jubilee’s Zambia plans:

1. Copper is the growth driver for the company; chrome and PGMs are the bread and butter
2. Only Jubilee has the operational capacity to extract copper from low grade materials that other players in the region view as either waste or too complex to process economically

Jubilee categorises its copper resources into three segments:

• Tailings and partially processed discarded low-grade materials (Previously Processed Material)
• Stockpiled low grade material
• Near surface copper reef that is accessible through open-pit mining

The key point is that there are masses of copper across all three categories in Zambia — and Jubilee can acquire them easily enough because in the hands of any other operator, they’re worthless. 

One man’s rubbish truly is another’s treasure. 

The company has already carefully pursued three copper resource groups to grow its copper portfolio — allowing it to reframe Sable as a dedicated refiner for material from open-pit operations, while the upgraded Roan will be processing predominantly stockpiled low grade material and previously processed materials.

The two plants will function independently — Sable at full capacity from open-pit operations, and Roan trading its copper concentrate on the market. However, should JLP allocate further capital to Roan in October, the plant could be further extended to accommodate downstream refining of its concentrate, further improving margins.

Jubilee retains its 25,000tpa of copper target comprised of an expanded Sable at 16,000tpa and Roan at 8,000 to 9,000tpa (depending on feed grades) of copper.

And that’s before we consider the Waste Rock Project.

Categorised within the low grade material group, the partnership with IRH is ‘undergoing further resource drilling and process testing as part of an independent technical and processing study being conducted by the joint project team.’ It seems this may take some time to bear fruit — though given the partner at hand, the wait will be worthwhile.

As a reminder, we’re talking about 24,000 tonnes of copper per year at a cost below $4,000 per tonne, processing 260Mt of waste rock — though I encourage you to consider the full details below.

Additional copper resource

Given Jubilee’s positioning as the only company of note able to process low-grade feed, it’s unsurprising that it’s managed to acquire more copper resources at very good terms. 

There are two transactions to consider:

First, an exclusive offtake agreement as sole off-taker from a nearby project, securing low grade material for Roan. Jubilee will pre-process the material at its current location to upgrade the copper content before transporting it to Roan for further processing. 

This is enough copper to secure full capacity of upgraded operations at the plant for the next three to five years — and upgrading this material is already happening now, as Roan gets ready to launch its upgraded operations.

Second, two transactions acquiring a majority ownership in separate operational open-pit copper mines, both to feed Sable. 

JLP processed material from these mines at Sable to confirm quality/viability as part of its due diligence — and has commenced operations at both opportunities with delivery of extracted material expected to ramp-up to a targeted 45,000 tonnes of material with an expected grade of 3-4% copper during ‘Q3 CY2024.’

Further, Jubilee aims to install a satellite upgrade facility near both operations over the coming twelve months as part of its strategy to operate regional material upgrade facilities prior to refining.

Project M — copper ore from this asset grades at circa 1.5% to 3% before upgrading. After initial cash payments, JLP has secured an option to acquire a 95% interest in the project for an additional $1.5 million — settled in circa 15 million JLP shares at 7.81p per share. 

Delivery of material to Sable has commenced three months ahead of schedule, and Jubilee is targeting 300,000tpa (25,000tpm) at a 3-4% copper grade within Q3CY24, with an asset life expectancy of eight years.

Project G — Jubilee is to conclude an agreement to acquire 51% of this asset, an established open-pit operation. The plan is to ramp up to 240,000tpa (20,000tpm) at circa 3-4% grade by Q4CY2024 and with a life expectancy of eight years. Jubilee will pay circa 21 million JLP shares worth circa $2.1 million.

Coetzer enthuses ‘The strategic acquisition of the two open-pit operations is an example of our ability to leverage our process capability to secure significant near-surface copper resources already in operation. Zambia holds numerous similar resource opportunities which we are actively pursuing. Our offering to our resource partners incorporates a sustainable approach to mining and recovery of metals, which ensures lasting value to our stakeholders and distinguishes Jubilee from many potential competitors. The opportunity set is particularly large and capable of driving Jubilee's future copper production well beyond the initial 25 000tpa target.’

The bottom line

Jubilee’s chrome/PGM operations are on track and continue to build to target. I think it’s worth commending the CEO for this — it’s perhaps a little easy to just assume that being on track just happens.

I assure you, it does not.

But we all know that what is going to take Jubilee from a barely £200 million market capitalisation to £1 billion or more is copper. And July is the month — let Roan ramp up, see the profits increase, and watch the share price rise.

Good morning on 5 March 2024.

I have spent the past few months telling investors that Zambia (and specifically Zambian copper) is the place to be in 2024/25 when seeking long-term profits and intend to cover every small-mid cap company operating in the country over the next few months.

While there are several exciting exploratory names to go into, I am going to start with Jubilee simply because it is already a producer — and this separates it from many of the other names in the country.

It also has diversified operations in South Africa. And from a financial perspective, it seems to have traversed that difficult period where it needs to raise money from share placings to keep the lights on: it’s revenue generating, profitable and growing.

This means Jubilee may be a good start as a central portfolio company for anyone looking to invest in critical minerals in Africa. And the good news is that the future rewards seem to be just as good as with an explorer, but perhaps with less risk.

As per usual, I do insist on the standard caveats:

• This is not financial advice. Do your own research and make your own decisions.
• There are some important first steps to consider before investing in AIM shares, or in mining shares. Generically, these centre around developing financial resilience and diversification.
• While Jubilee is further along its journey than others nearby, it is not a major just yet. Of course, looking at Anglo, being a major is not much shareholder protection regardless.

Let’s dive in.

Before we get into operations themselves, it’s important to examine the metals Jubilee is producing — PGMs (platinum group metals), chrome and copper.

The first point to make is that while it does generate significant amounts of PGMs, the company is not a PGM company. It is a multicommodity producer, and arguably, has been miscategorised elsewhere in the past.

Chrome — Chrome was recently listed by FastMarkets as a metal to watch for a potential Chinese export ban, alongside tungsten (see GMET) and several others. The metal is well-known for several uses in which it is essentially irreplaceable; it’s corrosion and heat resistant, so is often used as an alloy in stainless steel or superalloys.

Chromium compounds are also common in plating, and the chemical industry, including pigments, dyes, and catalysts. Most importantly, it has an important (if small) position as a critical mineral for semiconductor manufacturing and is also used in multiple aerospace components due to its unique properties.

High-grade reserves are depleting rapidly, and supply comes from a handful of countries including Russia — where supply is being artificially cut. Demand for stainless steel will continue to grow while production of chrome is expected to remain stable — which could see prices rise over the longer term.

Unlike copper, there is little discussion in the mining space, but chrome has risen sharply in price and will continue to remain elevated.

Chrome is currently the most important metal in Jubilee’s portfolio — in half-year results, it generated 70% of revenues. Of course, you have to be careful with statistics; chrome is having a good year, copper an average one, and PGMs terrible. But that’s the advantage of being multicommodity — it offers significant protection from commodity fluctuation.

And within the commodities themselves, there is further protection as Jubilee processes chrome at a fixed margin for sources not of its own — currently standing at 59% of the total. 

This leaves a double-walled economic moat of revenue generation.

The chrome processing is itself modular — read scalable — and services at Jubilee’s world class facilities are open to clients at large.

The processing facilities can process both Run-of-Mine material and chrome rich tailings to produce a saleable chrome concentrate and PGM rich by-product which acts a primary feed to Jubilee’s Inyoni PGM Processing Plant. Jubilee’s chrome operations are based in South Africa and include Windsor Chrome, Windsor 8 and Inyoni Cr.

Again — this should be stressed — PGMs are a by-product of the chrome production. In HY24, the company produced 718,189 tonnes of chrome concentrates — and 20,244 ounces of PGMs. In forward guidance, it expects, and is on track, to generate 1.45 million tonnes of chrome concentrates alongside 42,000 ounces of PGMs.

The longer-term plan is to reach 2 million tonnes of chrome concentrate production per annum by 2025, which should improve margins via economies of scale. For context, in FY20, it generated just 377,883 tonnes of chrome concentrates. Chrome margin now stands at $17 per tonne — up 240% year-over-year.

To make this expansion happen, Jubilee now plans to expand Thutse’s capacity further by constructing two new 50,000tpm modules, which are expected to be operational in Q3 CY24, and capable of producing 300,000 tonnes of chrome concentrates per annum. While there is a $12 million cash cost, this is expected to be funded by current chrome operations.

And the best news is that unlike PGMs, chrome should — and I say should because metals are unpredictable — remain elevated simply because there is limited processing capacity compared to demand. There is a reason why Jubilee has managed to expand its processing capacity so quickly: there’s appetite for it.

In PGMs, Jubilee saw production increase by 11.2% to 20,244 ounces in H1 FY24, but ‘challenging’ market conditions saw net realised prices fall by nearly 30% — for reasons explained above.

However, while there were also significant cost increases due to the cyclical feed material blend, these are expected to fall within the current reporting period. And for some context, while PGM margin fell by 81.6% to $126/oz and other operators were forced to slow production, the PGM business at Jubilee continued to remain profitable.

The PGM processing operations are centred on the Inyoni PGM Processing Plant in South Africa. Investing in African countries does come with elevated jurisdictional risk, but the trade-off is that opex is much lower — and this makes it possible to continue profitable activities much longer than is possible in (for example) the likes of Canada or Australia.

Chrome is the bread and butter for Jubilee, PGMs are the side dish — but Zambian copper exploration/production is where the true growth story will come into play. The reality is that copper is not a major component of Jubilee’s current revenue streams at less than 10%, but this all changes in calendar 2024.

For context, H1FY24 saw copper production increase by 46.5% to 1,683 tonnes.

There are multiple streams to be aware of:

Jubilee started off in Zambia by acquiring Sable in 2019. In April 2021, Jubilee commenced site construction — then in May 2021, established its copper concentrator (Roan) in Ndola.

The Roan plant — where the concentrator front-end upgrade is on the verge of completion — should start to ramp up as soon as the end of April. Capacity will then reach 13,000 tonnes per annum of copper concentrates — and it seems on time to deliver, with the company’s technical team working to keep to the timeline (though always budget for a few weeks of delay regardless).

The Sable refinery is also due an upgrade — with the copper sulphide circuit expansion already commenced and expected to be operational at some point between July and September. This increased processing capacity will accommodate the increased copper production surge from 

Roan and Munkoyo — with combined capacity to increase from 14,000 to 16,000 tonnes of copper cathode and copper in concentrates.

Then there’s the recently announced copper waste rock JV signed with Abu Dhabi based International Resources Holding (affiliated with International Holding Company, the most valuable listed company in Abu Dhabi) to consider, announced on 12 December. Jubilee will end up with a 30% position in the JV.

The market has completely ignored this opportunity — and Jubilee is trading for less than when it was announced. It has secured a massive area of copper waste rock assets on surface in the country — estimated at some 350 million tonnes, with surface sampling establishing grades higher than 1.5%.

It’s worth noting that Jubilee has a technical team on the ground, which has ‘commenced extensive resource definition and process technical review with the aim of completing the project implementation detail,’ with the timeline due to be established within the next month or so.

The initial capital expenditure is expected to be in the region of $50 million — but Jubilee has 

executed a binding funding term sheet with IRH to form an SPV to acquire the copper waste rock asset and fund all the capital requirement, through a combination of equity in the vehicle alongside shareholder loans. This is expected to conclude by mid-March.

For clarity, Jubilee is in charge of implementing and operating the mining and processing solution; and plans to construct and commission the proposed copper units by the end of the year, with mining to start at the beginning of 2025.

Technically, the JV is targeting 24,000 tonnes of copper per year at a cost below $4,000 per tonne, processing 260Mt of waste rock. While details are being finalised, Jubilee plans a more detailed resource definition.

CEO Leon Coetzer enthuses that the transaction is a ‘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.’

It’s worth noting (again) that the Middle East has plenty of money and little technical mining expertise. You can read this lesson across to multiple other companies in the space.

In addition, Munkoyo (close to Sable) is on schedule — again with that caveat around timelines — and should be capable of supplying ROM to Sable by Q4 2024, meaning a further quality supply of copper.

In terms of full-year guidance, the company has guidance for copper at 5,850 tonnes on the assumption that Roan is upgraded on time.

The joyful underbelly of small cap finances.

In recent half-year results, Jubilee saw group revenue rise by 18.4% year-over-year to £74.7 million, with EBITDA up by 13.3% to £11.7 million. This left the company seeing profit after tax rise by 7.3% to £4.4 million. Unlike other operators, it is revenue-generating, and profitable.

Chrome/PGM sales rose by 17.9% to £68.4 million, while copper sales rose by some 23.5% to £6.3 million. Copper units cost per tonne improved by 13%, while copper units gross profit rose by more than two-thirds to £2 million.

You can see how the copper is currently small fry, but also that the future of growth rests in the division — as there is significant future potential with the various streams, and the copper price itself should rise sharply from 2025 onwards.

One financial question to be answered is on the net cash position and recent capital expenditure. Capex for the half was £12.9 million, 57% below the £30.1 million spent in the same half in 2023 (due to expansion projects in Zambia and South Africa concluding), though the cash position fell by 60.3% to just £5 million.

In mid-December, Jubilee placed shares at 5.5p per share (above the current price), raising some £13 million with ‘certain institutional and other investors.’ The money was to be used to make an initial payment of $1.75 million for the IRH JV copper waste rock dump (total $4.5 million), expand sulphide recovery circuits at Sable ($5.7 million), and progress project development at Mufulira ($2.5 million).

The placing concluded on 4 January, so I am assuming this cash is in addition to the £5 million cash at hand. That answers any immediate placing concerns.

Is the capital expenditure for the next 12 months going to fall to correspond with the cash position? You might presume so — but it’s a question worth asking. But it is clear that the company is past the highest risk stage. And on a fundamental balance sheet basis, Jubilee is clearly undervalued.

In terms of management, Coetzer is a qualified chemical engineer with more than three decades of experience, including at Anglo American, and then as CEO of Braemore which was eventually acquired by Jubilee where he was appointed CEO in 2010.

The Non-Executive Chairman is Ollie Oliviera, currently lead independent director of Vale SA, and a chartered accountant — who has decades of experience in corporate finance and strategy within the mining sector. Technical Director is Dr Evan Kirby, a metallurgist who owns consulting business Metallurgical Management Services, and has served on the board of many listed companies.

Let’s consider what investors are getting for a circa £150 million market capitalisation:

• Ramp up to 2 million tonnes of chrome concentrates per annum, including two additional 50ktpm modules at Thutse
• Ramp up to 25ktpa of copper, with upgrades at both Roan and Sable and Mukoyo on target
• Zambia waste rock partnership with IRH, potential for a stand-alone 25ktpa project
• Multicommodity, multi-jurisdictional operator
• Revenue generating and profitable

There are even rumours coming out of Zambia that Jubilee is considering buying the Chambishi copper plant, further increasing potential capacity. Given the plant has been in care and maintenance for years, I can’t imagine it would be particularly expensive.

It’s worth noting the push by African nations to ensure processing in their native country — the massive expansion of copper exploration in Zambia (including companies I will get around to soon) means their finds will need to be processed somewhere.

Jubilee has that somewhere. In the ‘gold’ rush, the one selling spades makes the money. It would not be surprising to see buyout offers in the not-too-distant future.

The other important final consideration is the modular tech. Jubilee has a huge advantage in 

that it has specialist knowledge in modular units within both chrome and copper — though presumably, this could read across to most metals.

This means it can scale over time at an affordable and realistic pace and pack up and reassign modules as and when an exploratory asset is spent. It can also expand operations to almost anywhere in the world, and especially in Africa where demand continues to rise for novel solutions in a continent where infrastructure is often lacking.

Jubilee is extremely well placed in the African mining story — and is one of the top stocks to watch over the next few years. I like to

It’s perhaps not as exciting as an explorer at the mercy of the drill bit. But the takeaway is that while the chrome and PGMs are profitable, Jubilee is about to hugely boost its copper operations at multiple sites — in one of the best regions in the world for copper, and just before copper prices are widely expected to rocket.

The recent share price decline may be the bottom.