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Jubilee Platinum PLC: THE INVESTMENT CASE

Jubilee Platinum’s transformation into chrome-producing cash cow continues

Jubilee Platinum is bringing a new project on stream at Hernic, and this will add to an already impressive cash generative chrome portfolio
Jubilee Platinum’s transformation into chrome-producing cash cow continues
INVESTMENT OVERVIEW: JLP The Big Picture
Construction at Hernic

Early in January, shares in Jubilee Platinum PLC (LON:JLP) hit a 12 month high of 4.325p. Although this price is some way off the levels hit during the peak times of the last mining boom, it’s not far off the three year high of 4.625 hit in September of 2015. 

Given that times have been tough in platinum for many years now, as supply continues to outstrip demand, that’s not bad going.

So, what’s the secret?

A turnaround story

“Jubilee’s a real turnaround story,” says chairman Colin Bird.

“At Dilokong it’s going well. We’re making a lot of money with chrome. Our original deal was to treat the dump, take out the platinum and give back the chrome, but now we’ve got the rights to the chrome as well.”

This has meant that Jubilee has been transformed from a mining and mining processing technology company into a serious cash cow.

Income is rising

This process had just begun when the company reported its last set of full year results, back in November 2016, but the signs were already clear enough. In the year to June 2016, Jubilee was still loss-making, but it was talking about total earnings from Dilokong in the third quarter of £2.291 mln.

Now, says Bird, the income from a full year of tailings processing at Dilokong is likely to come in at between US$8mln and US$10mln.

With a second tailings processing operation now coming on stream at Hernic nearby, a similar sized income stream is about to be added.

This is a far cry from the company that struggled to make a success of its deep-level platinum resource on the Bushveld and then moved into speculative exploration in Madagascar.

The key is the deployment of the specialist Conroast processing technology by the company’s able chief executive Leon Coetzer. It’s the careful application of this technology in a space that many other companies have tried and failed to move into that is now turning waste rock into dollars for Jubilee, and moving up the share price.

“We’re getting all this chrome, and now we’re stockpiling all this platinum," says Bird.

Platinum plans add further potential

That last is a conundrum though. After a modest rise in the middle of last year, platinum price has resumed their downward trajectory, a trend that’s been ongoing for six or seven years now.

“We tried to defer building a plant for the platinum,” explains Bird. “We thought, if we’ve got all this platinum why not let it go to a platinum company, and the companies would have bought our product, but they weren’t willing to pay enough. So, we’re going to build a small and economical plant after all, and that’s going to work really well for us.” 

Meanwhile, things finally seem to be moving on the company's Tjate platinum project, where a mining right has been awarded after a drawn-out process.

The execution of the mining right is a significant milestone in the development of the project, located in the Limpopo province of South Africa, and adds extra credibility to Jubilee's mine-to-metals strategy.

It means the Tjate Platinum Corporation now has the right to mine and process all platinum group metals (PGM), chrome, nickel, copper, gold and various other minerals in the project mining area.

As Tjate’s largest shareholder, this is excellent news for Jubilee.

More deals on the way?

So, what’s the company going to do with all the cash that’s coming in?

First, there’s ongoing debt to pay down, but Dilokong is allowing that to be serviced with ease.

“Some of the debt commitments we’ve got in front of,” says Bird.

Perhaps more significant for the longer-term, he hints that there may be a certain amount of corporate activity in the pipeline.

“We’ve one or two deals on the go,” he says.

It’ll be interesting to see what happens next.

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Jubilee Platinum PLC Timeline

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