Jubilee Metals Group PLC (AIM:JLP, FRA:JI5, JSE:JBL, OTC:JUBPF) has done “a great bit of business” according to stockbroker WH Ireland, which sees a compelling investment case for the miner following its latest deal.
The company today announced it has agreed to work with Mopani Copper Mines PLC, a subsidiary of ZCCM Investment Holdings PLC, to create additional copper and cobalt refining capacity in Zambia.
Under the project, Jubilee will be able to refine the copper and cobalt concentrate produced at its Kitwe and Luanshya copper and cobalt tailings in Mopani’s processing facilities.
The additional refining capacity will increase Jubilee’s existing capacity by 17,000 tonnes of copper per annum.
Together with the Sable Refinery, Jubilee’s total potential refining capacity could increase to more than 31,000 tonnes per year, exceeding its 25,000 tonne target.
Jubilee chief executive Leon Coetzer highlighted that the agreement improves expected project timelines and required project capital while reducing overall project risk through the access offered to existing refining infrastructure.
“From the outside this looks like a great bit of business for Jubilee,” WH Ireland analyst Paul Smith said in a note.
“With the potential to reduce upfront capital by using an existing plant, using shared tailings from Mopani, and with the logistics (e.g. water and power) already onsite, potentially supplemented by tailings arising from current production and all combined with a strong operating partner; the investment case looks compelling.”
Smith added: “We believe it brings forward Jubilee’s expanded copper production plans, provides access to a source of acid and gives Jubilee an offtake partner for the non-oxide concentrate produced from its northern projects.”
WH Ireland is presently keeping its forecasts under review, for the time being, until it has a fuller understanding of the final agreement. Nevertheless, the stockbroker believes it will be value-enhancing.
Smith described it as “a demonstration, once again, of how Jubilee can take unwanted assets (plants or tailings) and create a viable production, revenue and profit centre.”
“This is not the first time Jubilee has shown this level of sophisticated, low-capex, deal-making and we anticipate not the last.”