Jubilee Metals Group (JLP) – A Tailings Tale, with Scale!

Jubilee Metals Group PLC
  • AIM: JLP
  • Shares Outstanding: 2.02B
  • Share price GB£0.04 (23.06.2020)
  • Market Cap: GB£80M

Interview with Leon Coetzer, CEO of Jubilee Metals Group (AIM: JLP).

Here at Crux Investor, we’re big fans of tailings stories. They provide investors with access to much of the exciting upside of mining investment with a significantly more attractive risk profile. Rather than drilling into the ground and hoping to hit the jackpot, tailings companies deal with material that is already at surface, with known grades and a proven processing technique.

Tailings stories also fit nicely into the ESG thematic that is becoming increasingly popular. Companies are now confronting their supply chains head-on, with consumers demanding ethicality be placed towards the top of their agendas.

However, a consistent theme for tailings stories is that they don’t quite seem to capture the market’s imagination, or excitement, like conventional mineral exploration plays. While the opportunity for an exploration lottery ticket remains appealing, investors may want to consider appreciating the predictable, consistent returns that tailings companies can provide. The opportunity for a 20-bagger might not be there, but I certainly know what kind of company I’d rather base the core of my portfolio on.

Matthew Gordon talks to Leon Coetzer, 23rd June 2020.

Jubilee Metals Group

Jubilee Metals is a company that extracts minerals from tailings dumps. The company has a multi-project portfolio across South Africa and Zambia, featuring commodities such as platinum group metals (PGMs), chrome, lead, zinc, vanadium, copper and cobalt. While we’ve always appreciated the company’s high-quality leadership, the recipe has always been missing one key ingredient: scale. Tailings stories already lack sexiness, and the small scale ‘service provider’ nature of the company has been detrimental to its invest-ability. The common balance sheet restrictions that all startups have to struggle against have been a major hurdle.

However, CEO Leon Coetzer is now keen to let the market know that things have changed in a big way. Jubilee Metals group is no longer a service provider; it’s an owner. more specifically, it’s secured the rights to a 150Mt copper tailings processing project to be refined at the company’s Sable refinery in Zambia, acquired from Glencore in August 2019 for US$12M. The company also refurbished and recommissioned the cooper refinery circuit in late-December, 2019.

This could be a transformative moment for the company. The new project was acquired by entering into a JV with the rights holder, Star Tanganika Limited. It could more than double Jubilee Metals’ current earnings profile. 150Mt would be a sizeable mine, let alone a tailings project with no mining risk.

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The real question that investors will want to know the answer to is ‘what is the next phase of growth?’ If Coetzer has some more of these acquisitions lined up, Jubilee Metals could become primed for growth, and it would become a very interesting investment proposition indeed.

There are some organic growth plans going forward, as Jubilee Metals plans to expand its available resources via continual investment, including a US$11M investment in its zinc circuit, as the company cleans up an area that previously was very hazardous. The company will also be looking at M&A, as it looks to line up the next project with a similar scale. In addition, the company is looking to diversify the jurisdiction risk profile, and Chile looks like an attractive region to do business for the company.

Jubilee Metals is finally upping its game. Now, it needs to show investors the money. If Coetzer and his team can continue in the same vain, exciting times could be inbound for tailings investors.

Company Website: https://jubileemetalsgroup.com/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

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