Jubilee Metals Group (LSE:JLP) — Company Update

0:01 Good morning, ladies and gentlemen, and welcome to the JUBILEE METALS GROUP PLC company update. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, as usual, we would like

0:32 to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to CEO, Leon Kutzer. Leon, good morning, sir. Good morning, and welcome everybody to this webinar. First of all, thank you for yet again showing the interest and taking the time to better understand Jubilee. And then and and as we go through a very eventful year for Jubilee over the past months and then, of course, culminating in last week's update, which I really would like to take the time and talk our investors and our shareholders through and what this all means for JUBILEE if we look as we look to the end of our calendar year and very excitingly looking towards the start of a new year in the coming week or so.

1:20 Maybe just as a quick step back as we review our two businesses, which falls under JUBILI, and and and thank you for all the questions that we've received. I'll incorporate that into the update as we go through JUBILI and and as a as a company. JUBILEE, if you look at JUBILEE, of course, is made up of its two significant components. On the one side, you've got our chrome and PGM operations in South Africa. And if you take a step back from from what JUBILEE has achieved in South Africa, and you just roll the clock back three and a half years. Because at the moment, we often speak of yet another chrome module or processing module coming into our operations and and the sheer size and the magnitude of that operations. But if you roll the clock back three and a half years, JUBLIE started on this path of targeting reefs, materials at surface that the industry had overlooked and discarded either through its complexity to value to low value or purely didn't suit their processes.

2:23 We carved out a position back then three and a half years, four years ago when we told the industry that, you know, if we dial the clock forward, everybody will be looking at this area that we're trying to establish as a business, as a true industry in its own right. And I and I do believe that if you look at what we've achieved in South Africa, that's truly what JUBILEE has brought to the fore. Today, JUBILEE speaks of a 1,400,000 tons of chrome per annum from its modest 40,000 tons per annum, only a couple of years back. We speak of the projects that we've brought online during this year, project Tutsi, that came into our portfolio, and today performing to plan, producing to budget its output and adding to that 1,400,000.

3:13 And we're currently reviewing, as we announced earlier this year, the further expansion under our agreement with Tutsi of adding yet another processing module into into the Tutsi operations, which means we're stepping up, you know, annual production by another potential 300,000 tons and more of chrome product as we march towards that target of reaching 2,000,000 tons of chrome concentrate per annum, which will make us the biggest at what we do in the world. That's the the the the level of success that's been achieved in our South African operations over the past years. We are the South African operations is going through its final maturity and evolution as a company where we started as four four four and a half, five years ago as a toll processor to to find a position in this market, which meant that we were processing these discarded materials or overlooked reefs under a tolling agreement to extract the chrome and give that back to the owners while we then recovered the platinum group metals that remained in that reef for our benefit.

4:25 On the back of that success and the recognition we achieved for the efficiencies, we achieved on this material and, of course, implementing new groundbreaking techniques today, is commonly spoken by so many companies, recovering chrome, the ultra fine chrome, bringing that as a commercial strategy into the industry, where today we're now evolving that company into a company that has both tolling agreements and processing materials from its own resources, its own reefs, its own discarded wastes. Growing that margin even on chrome where, you know, modestly of 4 to $5 margin during the tolling agreements are now growing that margin up to past $20.25 dollars per ton of chrome produced as the company matures.

5:15 This expansion drive of our South African business is funded off its own cash flow and its own balance sheet. It's reached that maturity where its capital requirements are serviced by itself as an entity. It's also coming to the end of a significant capital investment program, where over the past two years, we had to expand our platinum group metals processing footprint to take up more of this discard coming from our chrome operations. That was successfully concluded as a very complex project where we're expanding an operating facility to minimize the downtime and impact on that operations. At the same time, we've expanded our chrome through this modular process units we implemented.

6:01 It was in the reaction to the challenges we faced in South Africa, where we're operating in the country that is well spoken about its infrastructure challenges, its power challenges we face, its harbor and logistical challenges we face, which impact our ability to roll our projects out in a very clear timeline, but we've overcome those challenges by adjusting our designs. It speaks to our in house technical process development capacity, which is renowned in our industry, our capability of going from research to development to prototype to solution implementation, all within an integrated path within JUBILEE.

6:49 Our modules today are fitted with backup power systems so that we are able to operate irrespective of the availability of power by simply switching onto our backup power systems, yes, at a higher cost, but still able to maintain our production levels. That's the maturity that the South African business, has reached. And I look forward to seeing how these modules are further, grown and expanded into our business as we march towards that 2,000,000 tons. The successes we've reached in South Africa has been taken note by many resource owners. So today, JUBILEE has the fortune of having access to many more opportunities in chrome to expand and and benefit from that investment that, in many cases, you help fund the process solutions we've secured, the process solutions we've developed through our research and and our development center that today now reaps that benefit.

7:50 We come to the end of that capital phase where going forward, we speak of modular rollouts with very modest capital investment as we roll out these modules. We spoke of these modules of roughly 5 to $6,000,000 per module, adding, as I said, nearly 300,000 tons of production for each of these modules. That's where the South African business has come to. We took the decision back in 2019 to diversify diversify and replicate the success we've achieved in chrome and platinum group metals, in a metal we strongly believe in, in a metal that is future looking, and a metal that's well spoken of in copper.

8:35 We chose Zambia as the jurisdiction in which to replicate and fast track replication of that success in South Africa. Zambia comes with its own challenges. It's a landlocked country, very exposed to infrastructure, logistics challenges. And, of course, as we've seen in our initial foray of of implementing projects into Zambia, which is where I am today, its own limitations on power infrastructure, water infrastructure, and road infrastructure to service the operational footprint. There were hard lessons we had to learn when we started off in Zambia. We implemented initially a large operational footprint concept, centralized processing through this operational footprint.

9:22 It became apparent very quickly. And thanks to the development happening in South Africa, the distributed modular approach is critical in rolling out our strategy as a mitigated risk as well as the capability to scale rapidly. So we've become less less reliant on central large infrastructure to carry operational expansion plot plans, but rather have a distributed operational footprint and being able to, as in South Africa, provide backup power and infrastructure to these modules. These lessons were quickly learned in Zambia. The other critical component we look to fast track the replication of the success in South Africa was to evolve to processing of your own resources faster in our copper strategy than what the time we did it in South Africa because of the limitations of our balance sheet at the time. We're in South Africa. We're now evolving to a company where the majority of our future growth comes off our own material and, therefore, the margin that that brings.

10:28 We seek to establish that upfront in Zambia. And when we look at Zambia and the the opportunity for copper in Zambia, it comes into three different categories. On the one category we evaluated and invested into is the category called processed tailings, material that's been discarded from processes that have processed the material, recovered copper, and then discarded into a fine tailings the the remaining value or discard from these concentrators and refineries and smelters. The second category we looked at with a clear target to secure is material that had never been processed before, but discarded by the mining operation either because it's too low grade, weathered, or has the wrong composition of copper for its specific processes.

11:24 Often far greater value than the process tailings where copper had been recovered before, needing a very different processing solution than the tailings. The third component, very much speaking to our success in South Africa as well, are those reefs that have been discarded in situ because of its mineralogy, left in open pits, shallow near surface and abandoned because of the type of copper left in situ. Those are the three categories we had identified to try and target and secure the premier asset within each of these three categories. At the end of this year, we today sit as Jubilee and Copper with a portfolio that has the premier assets within historically processed tailings in the form of Muflira slag.

12:17 Its value per ton compared to other tailings resources is in a complete different order with both cobalt and copper running at grades of above north, comma, four north, comma, 7% copper and north comma 4% cobalt, exceptionally valuable asset to have, where our teams are now with partnership of Mopani reviewing that processing strategy to deploy that solution that could unlock that value, as a joint project being executed. In the category of material that had never been processed before, we announced last week we secured that key resource. Not only is it the biggest of its kind in Zambia and probably the biggest in Southern Africa, it also, through the test sampling, indicates grades well above that of historical process tailings.

13:14 Clearly, a priority for the company to extract that value and process it. The sheer magnitude of that resource offers the potential to be able to scale operations through multiple modular process plants deployment to catapult us into and beyond that 25,000 ton per annum mark we had set originally when we entered this space. At the third component, which is that reef or that institute waste, as we call it, that had been discarded, we brought to market our project m or project Monkoy, which is its full name. Under that project, technical department has sampled the reef, which is visible in daylight.

14:00 We've drilled out and trenched out the reef, and it's come back far bigger than even what we had imagined the potential value of this reef is. This project is being done as an example for the industry, where often these mines are dogged by artisanal mining activity, and we are demonstrating how these operations can be transformed into operations at scale run with the same efficiencies, environmental and safety standards as when one would expect a company to operate. There are plethora of these opportunities in Zambia on the back of that example. We told the market back in August and September that we are funded to implement our South African our our Zambian copper strategy.

14:51 We have the support of various metal trading and debt providers to to to to implement that strategy. What changes to the benefit was the addition of this resource we were able to secure last week, A resource, as we said, offered a whole different potential in its scale. To execute a project of that magnitude, we seek to partner with a company that has clearly shown its strategic intent in Zambia. We negotiated a partnership with a company called the IRH, which is the mining divisional resource division of the industrial holding company of Abu Dhabi.

15:37 They have clearly staked their intentions and and their flag in the ground here in Zambia with a successful award of the Mupani copper mines, one of the jewels in the crown of government's assets. A a Mupani copper mines with a capability of producing or refining up to 300,000 tons of copper cathode per annum. With them entering into Zambia and the commitment that comes under that government to government commitment through power commitments, infrastructure commitments that is being made to the Zambian government. It was clearly an optimal strategic relationship that we seek with that kind of company coming in with that intention into Zambia. And I we were extremely excited to be able to secure a transaction where we form an official partnership, a partnership that recognizes JUBILEE's technical and processing capability and expertise and their ability to provide a funding to offer scale in the implementation outside of JUBILEE's balance sheet and requirement to fund.

16:49 That partnership seeks to use this OB transaction we announced and the scale of it to demonstrate how a waste project can be implemented and what scale can be provided in such a project. Our immediate approach on that project during this time is to upgrade the definition of that resource as it's the definition of the resource that will educate how fast, how big, how many process modules we'll deploy through that partnership. Under that partnership, Jubilee is appointed as the operator, as the manager of that joint venture. We will design, implement, and operate those solutions under a commercial agreement.

17:35 So JUBILEE's access to the effective earnings of that partnership far exceeds our equity participation, which is a complete free carry in that relationship. So finally, we bring JUBILEE's copper strategy after some tough lessons learned forward to a new year where we have the premier assets in each of the categories we pursued. Today is JUBILEE copper. We have the resources. We've secured the resources that we've seek. We have formed the partnerships with the correct strategic alliances to execute on those resources.

18:20 We have processing assets where our project Rowan and project Monkoy combined already shows the potential to exceed our refining capacity capacity at Sable. Yet we've partnered with a company who has access to far, far greater refining resources and capacity to ensure that we're not refinery limited in our capacity and in our dreams to expand our resources. That's where JUBILEE has come to over this past very short period for being in Zambia. Yes. We had to ask our investors to support this exciting acquisition and to ensure that we are able to put critical measures in place for this project on this OB waste rock asset to ensure by the time our partnership is completed, which we set ourselves a particularly short timeline till the January 30, that we have not lost any opportunity during that time to ensure that our refining capacity can be expanded, to secure even a bigger portion of that potential output of this joint venture for our refining capacity, equally to ensure that the resource definition and the process designs that follow from that resource definition has a head start during this time.

19:50 And lastly, just to ensure that the mechanical manufacturing capacity to build these process modules are secured for this project while most companies have gone on holidays during this time. Those were the critical steps, and that's why the support we asked from our investors were limited to a number far, far smaller than what a capital or acquisition cost would be for this resource. In the meantime, Jubilee continues to invest at pace and accelerate it to the growth of our chrome company and to the current copper projects in the completion of our own upgrade, our Mongkoy development project in Zambia.

20:38 Those are the capitals we are spending outside of what we discussed last week. We've invested nearly £47,000,000 over the past twelve months into building that capacity in a project and laying the foundation for this growth of our company. Going forward, we enter into a period of far lower capital exposure for our group as we come to the end of the capitalization program in South Africa with only modular expansion of our chrome funded off its own balance sheet. While in Zambia, we come to the conclusion of our capital expenditure for our own upgrade and our project development on Amonkoy and tailings. While going forward, our project relationship or joint venture under our Obi transaction ensures JUBILEE does not carry that capital future or capital liability to invest and develop that project.

21:36 That's the maturity JUBILEE has come through. It's also the recognition JUBILEE has received from partners like the IHC, from companies, resource owners in in South Africa and GROUP on our track record of processing efficiency, of developing solutions to extract metals out of materials that the industry simply turned a blind eye to. That's the final evolution we as a company have come to. If we then look to the new year, what lies ahead, I look forward to seeing our chrome operations chase down that 2,000,000 ton target, each module being value accretive to our company.

22:22 I look forward to completing that upgrade of our Tutsi operations with its second process module being implemented and potentially even the third coming in because of the demand we expect from other similar resource owners to form similar partnerships with our processing capacity. In copper, we look forward to the outcome of Monkoy and Rowan filling Sable to its full capacity, breaching that 10,000 tons of copper and 14,000 tons of copper capacity at Sable as these two projects come to its full delivery and fruition while we accelerate the implementation and development of this extremely exciting venture we have formed on this overburdened waste rock opportunity at that scale.

23:16 How big do we go? It'll be defined by the resources, but I looking at the initial indication, one can expect that that resource will be far, far greater than the combination of our Rowan and Monkoy venture has offered, Jubilee to date. That's the year we look forward to. All of that packaged around the fact that we are funded to implement that. We have a partnership in our OB that provides that funding to develop and deploy that exciting project. That's the fundamentals behind what we've chased down, why we've secured these assets, and why we asked for the support last week to execute what could be one of our most exciting projects yet in Jubilee's history of development.

24:11 That's how we've come together. That's where we are today, and that's the update that I wanted to provide you and put into context what we as a group have chased down during this calendar year. I want to conclude by again thanking you thanking you for your questions, ones we are emailed outside of even our webcasts, the debates we have with our investors, the interest you show into what we're doing, why are you supporting us. If we then look at our current metal portfolio, yes, we face a PGM market that's depressed. Markets prices have come down sharply, but we're perfectly poised as JUBELIE to benefit from any recovery in the PGM market because of a cost to opt to produce a PGM ounce as a discard from our current operations, ensuring that we remain profitable even at these prices and therefore poised to benefit from that recovery in the PGM market. You've seen the news how much PGM, opera production is being taken out of market by the big producers.

25:27 It's all putting pressure to reach that parity between supply and demand on PGMs, which is the expected catalyst for the rerating of the PGM price. While this is happening, our chrome operations is benefiting from a chrome price that has been very supportive and buoyant, driven by both demand for the product, but also the challenges faced by the chrome industry to not only produce, but to also, through logistics, export that product, continuously putting upward pressure onto that chrome market as our margins show as they continue to grow. While in copper, copper has enjoyed great support. It continues to be priced well above its $8,000 mark.

26:15 You've seen it equally as with PGMs, the news flow on copper with copper production coming out of market because of regional geopolitical challenges, ensuring that copper faces a future of a high likelihood of short supply in copper. We need to be ready as Jubilee that our operational performance steps up to benefit from that expected chrome copper upward pricing. It's a target we have to chase down in the coming calendar year as JUBILI. I hope with that summary, I've given it gives you a sense of comfort on the vision we've got, how we're implementing and driving the strategy going forward, how the company views the future, and why we're doing what we're doing.

27:10 And may I close by wishing you all a wonderful festive period, and I look forward to engaging in the New Year and providing you an update on how we're executing rolling out these exciting projects. Thank you for taking the time to listening to me and and JUBILI. Perfect. Leon, thank you very much indeed, for the update this morning. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. Leon, we did obviously receive a number of presubmitted questions ahead of today's event, and as you can see there in the q and a tab as well, we have received a number of questions from investors this morning. Thank you to all of those on the call for taking the time to submit their questions. And, Leon, perhaps if I may just hand back to you just to address those questions where it's appropriate to do so, and then I'll pick up from you at the end, that'd be great. Thank you.

28:05 100%. Thank you. I mean, I really the questions group group again to quite a few common categories. There's a category that I hope we've addressed on on on the funding we seek for support to execute and implement this transaction that we were able to secure over the last week and why we seek that support and the value proposition that offers to our group. On the timing of completion of that transaction, as we said, we're running down the January 30 to complete all the transactional agreements, which includes the the formation of our joint venture, the the the registering of the company, appointing of the boards, and the funding that follows immediately after for the implementation under a very accelerated timeline of that project going forward. Under our production, as we've said, we've given our guidance in the market for both our chrome, PGM, and copper production, which we stand by at this time.

29:14 And on our delivery of our projects, if you look at our copper production, you can see that the second half of this year really will reflect the production levels reached by SIBLE through the support of Rowan and Monkoe, coming into into operation for that project. On the capitalization and funding questions, as we come to the end of our significant funding cycle or capitalization cycle as JUBILILEE, both for our South African expansion and our Zambian expansion, it does afford the board now the opportunity to debate the near future of a company with surplus cash flows and how to best apply that with its distribution to shareholders, share buyback plans, whatever it might be. The first step to reaching that point is, however, delivery of our projects, specifically in Zambia, to complement and support the earnings profile that South Africa has already reached.

30:20 The third category, of questions, which really is is around South Africa and and Zambia and whether, in fact, South Africa is expected to slow down its growth to allow and fund the the the copper investment in in in Zambia, and the the the some plants is absolutely not. Yes. With our new CFO, Neil, joining us, there's a very strict capital allocation review program, But the South African growth is driven on the back of its own capital return, funded by its own revenue and its balance sheet. And that drive to complete that growth we have stated to the market is independent of our copper initiatives. And as I said, I look forward to bringing to the market the the timelines for that next growth at Tutsi as we look to put down yet the next process module, taking our process modules to nine units in South Africa and ultimately 10 to reach our 2,000,000 tons target for South Africa.

31:23 On the copper side, Monkoy, Rowan, all is funded via JUBILEE and its cash flow. Our current additional funds coming in is purely around acceleration and readiness on our Obi transaction we have announced and getting that into operation as fast as we can. Again, the scale of that operations will be dictated to by the resource definition we're undertaking during this period now at the moment. But all indications suggest that, you know, if we had to put down four or five or six modules onto that

32:00 asset, we would, just for that joint venture alone, be producing north of 25 up to 40,000 tons of copper. That's the potential we chase down on on that joint venture because of the scale. We're speaking of 350,000,000 tons of rock scattered across eight square kilometers of of material, and that's just simply one of of these overburden. Yes. It's the premier one, but this is only one of many other such opportunities in Zambia. And, again, Zambia going forward becoming a capital light investment and growth opportunity for JUBILEE as we brought along a very large, very significant strategic investment partner that already has shown its intention in Zambia as it pursues acquisitions of large copper companies in in in in the industry targeting its significant growth targets it has set.

32:59 Those are the three categories of questions that was really grouped under the many we received from from our investors going forward. And and we, of course, will be the keeping you abreast of our developments as this project is brought on to stream. You can expect communications from our project success coming out. You can expect updates on the resource definition and implementation plan of our OB project, and you can expect communications on the next processing module for South African operations and the timelines to implement that coming through, relatively shortly. We've adjusted our implementation of our projects to as best we can address the nightmare of logistics we're facing in the modern world and in South Africa, specifically, where we've moved to local manufacturing to make sure that we are able to more accurately secure equipment manufacturing and and and and development of our projects through management of local manufacturing to alleviate some of the logistical challenges companies face to get and import the appropriate equipment into our projects, which allows us to give far more clear clarity on our project timelines, which we look forward to bring to market.

34:27 Leon, if I may just jump back in there, thank you very much indeed for addressing all of those questions that we had from investors. And, of course, given the significant attendance on today's call, we will be able to give you back all of the questions that were submitted today as well as any further ones that do come through and back immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so, and we'll get all those responses published on the platform. But, Leon, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments to wrap up with, that'd be great. Oh, thank you. I mean, really, if my real hope is that through this discussion we've had, we can reflect on on the past year and and recognize the key steps we've taken, laying the foundation to now implement through a clear path our strategy of achieving 2,000,000 tons of chrome and well exceeding 25,000 tons of copper.

35:31 That strategy is supported by the acquisition and securing of critical resources, which we can now deploy our processing expertise and ability. Together with executing agreements and bringing along with us funding partners who share the same strategic intent and view of our Zambian copper strategy. And in South Africa, being an entity which is able to fund its own growth and enjoy that success from its performance of its operations as it chases down its 2,000,000 tons of target. Looking to this future, looking into the year that lies ahead, shareholders can expect regular operational project updates as these projects are brought to fruition because that's where the true benefit lies for JUBILEE and its investors.

36:28 And just again, if I may, thank you for your support. Thank you for the sheer number of people, again, logging on today, which just speaks to the interest of our investors and shareholders. And for that, I wanna say truly thank you. Leon, that's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of management team of JUBILEE METALS GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.