Jubilee Metals’s growth strategy puts a shine on earnings

Jubilee Metals showed strong second-half earnings as its growth strategy in a broad range of minerals in SA and Zambia gained momentum.

Jubilee, which is listed in Johannesburg and London, has platinum group metals (PGMs) and chrome production in SA — the largest source of these two commodities — and a new base metals business in Zambia, where it has started copper output.

Jubilee has steadily grown its chrome and PGM tailings retreatment business in SA over recent years and made two acquisitions during 2019, adding the Inyoni chrome and PGM business as well as the Sable refinery in Kabwe, Zambia, to advance its metal diversification and spread its geographic risk.

Operational earnings in the second half of the year to end-December grew 47% from the first half to R154m, off a 74% increase in revenue to R462m, with the PGMs business the star performer with record earnings for the period.“It has been an exceptional period which included two transformational transactions while we maintained our growth trajectory,” said CEO Leon Coetzer.

“Our PGM operations delivered record earnings on the back of increased production and metal prices, while our chrome operations showed their resolve, maintaining positive earnings against much softer chrome prices, delivering increased output and higher efficiencies,” he said.

Jubilee’s share price has risen 91% in the past 12 months to 84c, giving the company a market capitalisation of R1.7bn. PGM earnings and revenue doubled to R150m and nearly R300m respectively, with strong growth in metal production.

Jubilee increased PGM output to 21,082oz from just shy of 12,000oz of six metals making up production in the first half of the year. PGMs come from the Inyoni and Windsor projects and there’s a third circuit awaiting approvals at the Dilokong Chrome Mines operation (where Jubilee extracts chrome in a fine form), a product the SA industry had once regarded as unrecoverable.

The Windsor circuit was brought into production in August and the full benefit of this project, which treats more than 100,000 tons of material a month, will be seen during the first half of 2020, Coetzer said. Inyoni handles 50,000 tons a month of historical and previously treated tailings.

The earnings line in the chrome business shrank during the second half, falling to R3m of attributable earnings from R29m in the first half of the year. Jubilee has three chrome businesses, DCM, Windsor and Inyoni, where it acquired the chrome rights during November 2019.

“Chrome revenue from all operations delivered continued growth, increasing by 35% despite a drop in metal prices by more than 30% over the period,” said Coetzer.

Weak chrome prices stemming from weak growth in stainless-steel output and robust supply of chrome has pulled prices down, forcing the restructuring of a number of SA chrome businesses.

The Sable refinery purchase in August 2019 gave Jubilee access to large tailings dumps and a role to play in processing third-party material in northern Zambia. Sable generated its first copper in December and will reach 250 tons a month of copper cathode during the first quarter of 2020 before ramping up to 400 tons a month before June, generating cash flows as Jubilee builds zinc and vanadium refining circuits at the plant.