Jubilee Metals showing return of investment through growth of earnings (LON:JLP)

Jubilee Metals Group plc (LON:JLP) Chief Executive Officer Leon Coetzer caught up with DirectorsTalk for an exclusive interview to discuss their operational update, weathering the storm well in global markets and what investors can expect over the coming months.

Q1: Leon, Jubilee Metals has updated the market this morning. What were the key points in your opinion during the six month period for H2?

A1: I think the results as they show for us this past period was a massive period of delivering on two very significant strategies.

The one being in South Africa, where we completed the very large upgrade and rebuild of our South African PGM platinum group metals and chrome operations, where we expanded that operational footprint on the platinum side by nearly 45% and on the Chrome side, nearly doubling it. The chrome operations to where we are today, we target 1.2 million tonnes of chrome concentrate, making us one of the world’s biggest chrome producers with no mine. We are just a company who process waste or perceived waste and our PGM business has grown to 45,000 ounces from our own facilities.

I think that’s a very important point quite often missed by the market that previously we produced our platinum group metals, some of it’s going through our operations and a very large portion being processed through joint venture agreements, where we sacrificed high inefficiencies and cost and massively dilutive earning on that. We had taken the decision to rather expand our operations so that going forward all our production will be through our South African, our own operations. All of that was brought online during March of this year so this past six months period was only exposed roughly about three to four months of this new large facility, but already the results are coming through.

I think key results if had to pick them out is the sheer drop in our unit cost to produce a single platinum group metal basket ounce that, that basket ounce of platinum, palladium, rhodium etc. We dropped nearly 32% in cost to produce an ounce during a time when there’s inflation pressures on power, water, diesel etc and that stems from the significant increase in efficiencies we get in the scale of our operations. Of course our chrome operation, which is a by-product, we make chrome as a by-product to subsidise the operation of our platinum group metals and that expansion ensures that the subsidising of our platinum group metals all work together to reduce our unit costs to a record low for Jubilee and in fact, probably for the industry. That bodes extremely well for the next 12 months period, as we now expose the 12 months to this new operation.

Of course, it didn’t stop there. Simultaneously, we constructed built and commissioned our Southern Copper Refining Strategy now in operation in Zambia where we launched that integrated facility from a copper concentrated integrated into a copper refinery to make cathode where this capacity the system holds is starting 12,000 tonnes of copper cathode per annum. That was completed, commissioned, and brought into operation during June and July of this year, stepping up to reach roughly about now really 90% of its design capacities this week. That again, bodes really well for the next 12 months as the next 12 months we’ll see the impact of the large South African operations and the results, as well as the copper operations coming through.

Of course, we told the market that also in the background, there’s another significant potential hovering and that is the upscale of our cobalt circuit so we are targeting to get to a position where the company over this 12 months period will be producing earnings from chrome, platinum group metals, copper, and cobalt, delivering on this diversified metals producer that we promised our investors and shareholders we would deliver.

Q2: The company seems to have weathered the storm in global markets really well. Does this position you better than others in your space?

A2: Well, I think the one key thing that this world has taught us is that unit cost and control of cost is vital, margin management is vital, we can’t manage the metal prices in the market that we get but we certainly can manage our cost and unit cost.

I think if you look at our results in what we’ve achieved over the past six months as these new operations have come into being, our unit cost operations speak for themselves but we’ve ensured a very solid margin, in fact, growth in margin, even when metal prices are pulling back. Yes, that bodes particularly well for the business, that puts us in a position to capitalise from that strength, to look at other opportunities during these times that could add value to our group.

Q3: I think you’ve touched on this already, but with so much going on, what can investors look forward to from Jubilee Metals over the coming months?

A3: I think the key thing now is with this very large investment programme, nearly £60 million going into operation, most of it from our own cash. What investors can now look forward to is the returns on that investment, the returns from this very large commissioned operational South African business in chrome and PGMs and equally the returns now to come through in Zambian copper business and operations with the cobalt being added.

I think that is what investors should expect from us, to really show that return of that investment through the growth of our earnings and operations over the next period.

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