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PGM and chrome production from Jubilee Metals is now generating more revenue per year than its market valuation

Jubilee Metals will be adding significant extra production capacity in the short to medium term

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Workers at the Hernic project

There’s a straightforward financial dynamic about Jubilee Metals Group PLC (LON:JLP) that the market hasn’t woken up to yet, according to chairman Colin Bird.

The company is generating around US$700,000 per month in operating cash flow from the treatment of old ore from South African platinum and chrome mines.

At the Hernic operation the most recent numbers show the company exceeding expectations by passing through a monthly production rate of 2,500 ounces of platinum group metals, including rhodium and palladium which have benefitted from strong prices this year.

Meanwhile, chrome production at the nearby DCM project is steady at around 9,500 tonnes of chromite per quarter while an expansion build out completes.

Thereafter production should rise “dramatically” according to company literature, after the new fines recovery plant is completed.

And that’s not all the growth that’s on offer either.

The first material from Jubilee’s Platcro project has now been delivered to the Eland operation owned by Northam Platinum (JSE:NHM) as part of a plan to build up an inventory of 200,000 tonnes of platinum rich material. Early in 2019, the processing of this material will begin, and the revenue from the resultant platinum will add yet another income stream.

And if that wasn’t enough, following on behind is the recently acquired Kabwe project in Zambia, which holds a significant lead, zinc and vanadium resource. Here, Jubilee is currently building in processing circuits to cater for each metal and expects first production in the second quarter of 2019.

With all this going on, it’s not surprising that some market watchers confidently predict that Jubilee’s earnings could go as high as US$60mln per year in a relatively short time.

Set against the current market capitalisation of £29mln, that’s quite a thought.

Some punters are already waking up early. There’s been a slight uptick lately ahead of a new round of London marketing that’s on its way. The shares rose by nearly 10% on 29th November, and with Bird and Jubilee’s chief executive Leon Coetzer now turning their minds seriously to promotion and getting the story out there could be more to come.

To date, the focus has been primarily on driving the company forward at a project level. After all, it’s not easy to make money in the current mining market, and it’s even less easy to build a company with such an attractive growth profile.

With that job done, it’s now time to get out and tell people about it.

“Not many people appreciate the shear magnitude of the waste created by centuries of mining in Southern Africa,” says Coetzer.

“But there’s a common theme in the industry now: let’s extract every ounce of value we can out of the blood and sweat it took to bring the metal to the surface.”

And now that the African foundation stone of the company has been laid, Coetzer and Bird are looking up to Europe and beyond for the next opportunity. Because these are entrepreneurs now supported by significant and growing cash flow – they’ve shown an appetite for deal-making and an ability successfully to conclude transactions.

They are unlikely to rest on their laurels, so expect plenty of newsflow in the weeks and months ahead.

 

Quick facts: Jubilee Metals Group

Price: 3.565 GBX

AIM:JLP
Market: AIM
Market Cap: £75.31 m
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