UNAUDITED INTERIM RESULTS 31 DECEMBER 2017

Jubilee Metals Group PLC

Registration number (4459850)

AltX share code: JBL

AIM share code: JLP

ISIN: GB0031852162

("Jubilee" or "the Company")

 

 

Not for release, publication or distribution in whole or in part in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction.

 

7 March 2018

 

UNAUDITED INTERIM RESULTS

FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

 

 

Jubilee announces its unaudited interim results of the Group for the six months ended 31 December 2017.

 

HIGHLIGHTS

 

Financial highlights

 

·      Jubilee Group delivers increased positive earnings before non-cash operating expenses and interest for the period of GBP 1.54 million (ZAR 27.20 million) ⁽ⁱ⁾  (2016: loss of GBP 0.23 million (ZAR 4.06 million))

·      Gross profit up 161.53% to GBP 2.37 million (ZAR 41.85 million) (2016: GBP 0.91 million (ZAR 16.20 million))

·      Revenue up 23.51% to GBP 5.99 million (ZAR 105.80 million) (2016: GBP 4.85 million (ZAR 86.80 million))

·      Capital investment in surface processing projects totals GBP 14.07 million (ZAR 248.50 million) (2016: GBP 11.18 million (ZAR 190.02 million))

·      Loss (including non-cash expenses and interest) per share for the period reduced by 51.92% to 0.025 pence (ZAR 44.15 cents) (2016: loss 0.052 pence (ZAR 95 cents)

 

(i)       Conversion rates used for revenue and earnings are at the average conversion rate for the period and for conversion rates used for capital expenditure are at the spot rate at period end and current spot rate for capital expenditure post the period end

 

 

Operations and Projects highlights

 

 

Hernic Ferro Chrome Platinum and Chrome Tailings Operation ("Hernic operations")

 

·      PGM⁽ⁱ⁾ production of 6 629 ounces⁽ⁱⁱ⁾  following commissioning in March 2017, for the period under review

·      Unit cost per PGM ounce produced achieving record low of USD382 in Q4, one of the lowest cost platinum producers in the industry

·      Hernic project revenue for the period under review GBP 3.59 million (ZAR 63.59 million)

·      Operational earnings for the period under review GBP 1.46 million (ZAR 26.06 million)

·      Total capital expenditure on the Hernic project to 31 December 2017 totalled GBP 12.94 million (ZAR 228.53 million)

·      PGM production of 2 949 ounces for the first two months of Q1 2018

 

^{(i)                    = Platinum Group Metals (6E platinum, palladium, rhodium, iridium, osmium, and gold)}

^{(ii)                   = No comparative information available as the plant was commissioned 29 March 2017.}

 

Dilokong Chrome Mine Platinum and Chrome Tailings Operation ("DCM operation")

 

·      26 922 tonnes (2016: 45 956 tonnes) of saleable chromite concentrate for the period under review

·      DCM operational earnings attributable to Jubilee for the period under review GBP 0.61 million (ZAR 10.79 million) (2016: GBP 0.96 million (ZAR 16.87 million))

·      Jubilee announces decision to construct dedicated PGM recovery plant at DCM operation

 

 

Chief Executive Leon Coetzer commented:

 

"It is with great pride that I present these results for the 6 months ended December 2017.  It reflects a period during which Jubilee can proudly claim its position as one of the lowest cost producers of platinum and chrome in the industry, while the Jubilee Group delivers positive cash earnings.

 

The Jubilee team has demonstrated their commitment to excellence by delivering the Hernic project in time and on-budget and ramping up the project to already achieve a unit cost per PGM ounce produced of only USD 382.  These numbers demonstrate the return on investment offered by Jubilee's strategy for metals recovery from surface waste and stockpiles.

 

Jubilee's project pipe-line includes further surface projects containing platinum and chrome and we have expanded our reach into Zambia by securing a position in the surface lead, zinc and vanadium project at Kabwe.  We are actively pursuing further potential projects to include further metals such as cobalt and copper into our pipeline.

 

I look forward to continuing to build on our current performance in the year and simultaneously executing our exciting surface project pipeline."

 

 

INTERIM PERIOD OVERVIEW   

 

The objectives of Jubilee's metals recovery strategy are three-fold:

 

·      Secure low risk, low capital intensive, long-term commodity production at an attractive point on the global cost curve from mine waste by using advanced environmentally sustainable metal recovery techniques. This ensures a much lower cost entry point to produce metals compared to traditional mining;

·      Diversify across multiple commodities and in different countries including platinum, chrome, cobalt, copper, zinc, lead, vanadium and gold to hedge income risk and to align with global trends; and

·      Rehabilitate the adverse footprint left by legacy mining in accordance with acceptable International Environmental Standards.

 

 

 

Hernic - South Africa

 

Jubilee operates a chrome and platinum recovery plant at Hernic's ferrochrome mine in South Africa.

The Hernic project continued to deliver significant operational improvements quarter-on-quarter following the commissioning and first production in March 2017. The improvements are in line with the ramp-up and operational optimisation phase on the project. The project achieved a unit cost per PGM ounce produced of USD 382, which makes the operation one of the lowest cost platinum producers in the industry. 

 

Capital expenditure on the Hernic project totalled GBP 12.94 million (ZAR 228.53 million). Overall debt incurred towards the construction and commissioning of the project has to date reduced to GBP 1.83 million (72.50% reduction).

 

The table below presents the performance of the Hernic operation for the period under review. The project has already produced 2 949 PGM ounces for the months of January and February 2018 despite the down time during January 2018 caused by the tailings dam spillage as previously announced.

No comparative information is available as the project was commissioned in March 2017:

	Tailings processed tonnes	PGM ounces delivered	Project revenue (i) (GBP'000)	Project revenue(ii)  (ZAR'000)	Project earnings(iii) (GBP'000)	Project earnings (ZAR'000)	Jubilee attributable earnings (GBP'000)	Jubilee attributable earnings (ZAR'000)	Unit cost / PGM oz (USD)
Total Q3 2017	105 673	2 874	1.539	26.581	496	8.592	496	8.592	476
Total Q4 2017	121 644	3 755	2.047	37.011	965	17.466	965	17.466	382
Total 2017	227 317	6 629	3.586	63.592	1 461	26.058	1 461	26.058	423

 

Project Summary	Revenue / PGM oz (USD)	Unit  cost / PGM oz (USD)	Earnings / PGM oz (USD)
Q4 2017	724	382	342

  

 

(i)= Revenue from the current project phase - 100% attributable to Jubilee until full capital recovery. Revenue is projected based on latest   average PGM market prices and USD exchange rates and results are only final once final Quotational Period has passed

(ii)= Average monthly conversion rates used

(iii)= Project Earnings include all incurred operational costs including management services and mineral royalties

 

 

 

DCM - South Africa

Further to previous announcements, completion of the necessary process upgrades at DCM allowed for a more flexible operation to expand the processing of 3^rd party material. Operational efficiency enhancements developed by the Company's in-house technical teams, were also implemented during the period under review. The DCM operational performance was affected in Q4 by a significant plant upgrade of the chrome recovery circuit. The plant upgrade was to further increase both the operational flexibility of the chrome recovery circuit as well as the crushing capacity for the processing of 3^rd party run-of-mine material ("ROM").The improved processing flexibility was required to compensate for the increased feed variance introduced by the processing of 3^rd party ROM.

 

During the period under review, and in an ongoing co-operation with DCM, the Company executed a framework treatment of tailings and chrome ore agreement with DCM ("Framework Agreement") and a 3^rd party ore agreement for the toll-refining of ROM chrome ore ("ROM Ore Agreement"). 

 

The Framework Agreement cancelled and superseded all existing agreements in respect of chrome processing and PGM recovery at DCM. The Framework Agreement transformed Jubilee's DCM operations as an equal joint venture with DCM, on all chrome ore including 3^rd party chrome ore. The Framework Agreement now affords Jubilee the right to 50% of all earnings generated from the processing of chrome ore. This compares with the Company previously holding no rights to chrome earnings at the outset of the DCM project. The Framework Agreement further secured Jubilee's unencumbered PGM rights from all material processed at DCM irrespective of source.

 

The platinum processing options for the PGM material after the chromite recovery were reviewed following a detailed test programme and the preferred option now is an owner-build/operate stand-alone PGM-recovery plant at DCM. Construction of the PGM-recovery plant is expected to commence in 2018.

 

The table below presents the operational performance of the DCM operation for the period under review and below that the operational performance for the comparative period:

 

	Chromite concentrate produced Tonnes	Project revenue (GBP'000)	Project revenue (i) (ZAR'000)	Jubilee attributable earnings(ii) (GBP'000)	Jubilee attributable earnings (ZAR'000)
Total Q3 2017	15 134	1.129	19.526	356	6.139
Total Q4 2017	11 788	1.254	22.858	254	4.654
Total 2017	26 922	2.383	42.384	610	10.793

 

	Chromite concentrate produced Tonnes	Project revenue (GBP'000)	Project revenue (i) (ZAR'000)	Jubilee attributable earnings(ii) (GBP'000)	Jubilee attributable earnings (ZAR'000)
Total Q3 2016	26 848	2.141	38.368	587	10.505
Total Q4 2016	19 108	2.642	45.714	368	6.367
Total 2016	45 956	4.783	84.082	955	16.872

 

(i)= Average monthly conversion rates used

(ii) = Project earnings include project expenditure on plant and equipment

 

 

 

 

Kabwe Project - Zambia

 

Jubilee entered into a joint venture agreement with BMR Group PLC ("BMR") to execute its Kabwe surface processing project, which targets the recovery of lead, zinc and vanadium from historical surface mine tailings and discards in Zambia. This transaction extended Jubilee's reach beyond the borders of South Africa into both PGMs and base metals, thus leveraging off its in-house metallurgical skill, project execution track record and operational performance.

 

The Kabwe Project comprises an estimated 6.4 million tonnes (3.2 million JORC compliant) of surface assets.

 

Jubilee's due diligence of the Kabwe Project has confirmed the Company's understanding on the quantity and quality of the surface stockpiles, tailings and underground resources. Initial test work by Jubilee has also confirmed that the material leaches in a satisfactory manner. The Company has also assisted in the determination and confirmation of the optimal metal extraction process.

 

The second round of leach tests were concluded the result, which confirmed the high recoverability of the lead, zinc and vanadium contained in the surface resource as well asset grade predictions. Following these results, Jubilee advised BMR of its intention to exercise its option to earn a 40% interest in the Kabwe Project. This will enable Jubilee to increase its effective interest in the Kabwe Project to 57.41% (comprising 40% direct and 17.41% indirectly as a shareholder in BMR). Exercising of this option is subject only to final documentation against previously agreed binding commercial and material terms.

 

Jubilee and BMR have agreed under the joint venture agreement to extend the date for the fulfilment of all conditions precedent from the 28th of February 2018 to the 31st of March 2018 ("the Long Stop Date").  The extension of the Long Stop Date is to allow BMR and the Kabwe Project to remedy the revocation of its current small scale mining licence. BMR has submitted a notice of appeal against the revocation to the Zambian Mining Ministry and Jubilee will continue to engage with the Zambian Mining Ministry to assist BMR in resolving this matter.

  

PlatCro Platinum Project

Jubilee continued acquiring further access to valuable surface resources, which included the acquisition of the PGMs contained in the surface material at PlatCro Minerals ("PlatCro") in South Africa.

The PlatCro project executed in March 2017, targets a processing rate of 25 000 tonnes per month to complement Jubilee's surface tailings platinum production by a further 14 200 ounces of 4E PGMs per annum.

The Company commenced metallurgical test work on the PlatCro material in order to optimise the process flowsheet and incorporate a flexible design for processing either in a stand-alone plant or utilising processing capacity within an existing operation. This work is scheduled for completion during the second half of 2018.

 

 

Project Pipeline

 

Jubilee has continued to develop both in-house and in-partnership successful proprietary processing solutions, which optimise metal recovery from waste in an environmentally friendly and sustainable manner, targeting both platinum group metals and base metals. These proprietary processes are at the core of Jubilee's processing successes.

On 9 August 2017, Jubilee secured a project funding structure of USD 50 million pre-approved debt funding, targeting multiple surface-based metal recovery projects based on established individual project criteria,.

 

Jubilee now holds a project portfolio comprising low-risk, high-return, short-term projects, which includes:

 

·      Platinum project to recover PGMs from the estimated 1 400 000 tonnes surface stock at PlatCro in South Africa

·      Platinum project to recover PGMs from the estimated 800 000 tonnes at surface at DCM in South Africa

·      Kabwe project to recover lead, zinc and vanadium from the estimated 6 400 000 tonnes  (3 200 000 tonnes JORC compliant) surface tailings at the Kabwe operations in Zambia

 

Jubilee is well positioned to secure a significant position in the global metals recovery market as it continues to refine its project execution schedule for various targeted pipeline surface processing projects. These pipe-line projects offer significant growth potential in the short term and we are actively in discussions to secure further such surface projects.

 

Change of Name 

At the Company's annual general meeting held on 4 December 2017, shareholders approved a change of the Company's name to Jubilee Metals Group PLC, with effect 15 December 2017.  The change better reflects the Company's increasingly wider focus on metals other than PGMs and chrome.

 

Chairman's statement

 

Dear Shareholder,

 

The period under review has been very active with the ramping up of the Hernic operation. The activity has included technical modification, optimisation and rationalisation of process routes. The outcome of this work has been month-on-month improvement in production, productivity and financial returns. PGM production at Hernic reached 6 629 ounces for the period under review, and 2 949 ounces to date for Q1 of 2018.

The Dilokong operation has advanced very satisfactorily and is a mature provider of operational cash flow.

The Company acquired an interest in the lead, zinc and vanadium tailings project from BMR Group PLC ("BMR"), which was announced on 23 October 2017. The project is in Kabwe, Zambia. During the period under review we have interrogated all raw data received on the project. Following this review period, on 6 February 2018, we advised BMR that we intend to exercise our option to earn a 40% interest in BMR's Kabwe project.

The Company is now moving towards developing the optimal flow sheet to extract the various metals. On 19 January 2018 the Company acquired a 29.01% interest in BMR.

Throughout the period under review and to date we have continued our new business activities and are at an advanced stage with a number of projects, any of which could substantially add to the income generating capacity of the Company and its overall value.

We are committed to our stated mission of taking our brand into other commodities and other countries and Kabwe is the first mover in this fast track mission.

Colin Bird

Non-Executive Chairman

 

 

 

 

 

 

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

 

Consolidated Statement of Comprehensive Income for the six months ended 31 December 2017

 

		Unaudited	Unaudited	Audited
		Group	Group	Group
		6 months	6 months	12 months
		ended 31 December	ended 31 December	ended 30 June
		2017	2016	2017
		GBP '000	GBP '000	GBP '000
Revenue - operations		5 992	4 851	9 806
Cost of sales - operations		(3 623)	(3 945)	(8 039)
Gross profit - operations		2 369	906	1 767
Operating costs - cash items		(834)	(1 137)	(2 308)
Profit/(loss) before non-cash operating expenses and interest		1 535	(233)	(541)
Operating costs - including depreciation and share based payments		(1 802)	(348)	(1 131)
Loss before taxation and interest		(267)	(581)	(1 672)
Other income		25	92	-
Impairment of intangible assets		-	-	(18 571)
Investment income		8	4	19
Finance costs		(204)	(42)	(199)
Loss before taxation		(438)	(527)	(20 423)
Taxation		-	-	9 850
Loss for the period		(438)	(527)	(10 573)
Other comprehensive income
- Profit on translation of foreign subsidiaries		367	5 764	6 104
Total comprehensive (loss)/profit		(71)	5 237	(4 468)
Attributable to:
Owners of the parent:
Loss for the period attributable to owners of the parent		(283)	(515)	(10 570)
Non-controlling interest
Loss for the period - non controlling interest		(155)	(12)	(3)
Loss for the period		(438)	(527)	(10 573)
Total comprehensive loss attributable to:
Owners of the parent		50	5 244	(4 879)
Non-controlling interest		(121)	(7)	411
		(71)	5 237	(4 468)
Weighted average number of shares		1 118 361	994 765	984 780
Loss per share (pence)		(0.025)	(0.052)	(1.073)

 

 

Consolidated Statement of Financial Position as at 31 December 2017

 

 

		Unaudited	Unaudited	Audited
		Group	Group	Group
		6 months	6 months	12 months
		as at 31 December	as at 31 December	as at 30 June
		2017	2016	2017
		GBP '000	GBP '000	GBP '000
Assets
Non-current assets
Property, plant and equipment		12 322	10 838	13 161
Intangible assets		47 890	66 793	48 167
Deferred tax		-	254	-
Total non-current assets		60 212	77 885	61 328
Current assets
Inventories		193	-	44
Current tax receivable		16	16	16
Trade and other receivables		4 067	3 650	3 222
Other financial assets		-	588	-
Cash and cash equivalents		2 456	3 637	4 636
Total current assets		6 732	7 891	7 918
Total assets		66 944	85 776	69 246
Equity and liabilities
Share capital		87 675	83 448	87 675
Reserves		23 794	23 586	23 078
Accumulated loss		(57 583)	(44 644)	(57 262)
Total equity before non-controlling interest		53 886	62 390	53 491
Non-controlling interest		2 784	(50)	2 867
Total equity		56 670	62 340	56 358
Non-current liabilities
Other financial liabilities		-	-	688
Deferred tax liability		5 323	15 403	5 362
Total non-current liabilities		5 323	15 403	6 050
Current liabilities
Other financial liabilities		2 145	6 459	3 084
Trade and other payables		2 806	1 574	3 754
Total current liabilities		4 951	8 033	6 838
Total liabilities		10 274	23 436	12 888
Total equity and liabilities		66 944	85 776	69 246