Jubilee Metals Regulatory News (JLP)

Jubilee Metals Group PLC

Registration number (4459850)

AltX share code: JBL

AIM share code: JLP

ISIN: GB0031852162

("Jubilee" or "the Company")

Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR). Not for release, publication or distribution in whole or in part in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction.

UNAUDITED INTERIM RESULTS

FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Our thoughts and best wishes go out to all during these unprecedented times.

Jubilee Metals Group ("Jubilee" or the "Company" or the "Group"), the AIM and Altx traded metals processing company is pleased to announce its unaudited interim results of the Group for the six months ended 31 December 2019.

HIGHLIGHTS

Financial highlights

· Group earnings increased 778 % to £ 6.67 million (ZAR 115.2 million) (2018: £ 0.76 million (ZAR 13.2 million))

· Cash generated from operations up 570 % to £ 4.89 million (ZAR 84.7 million) (2018: £ 0.73 million (ZAR 12.5 million))

· Revenue increased 205 % to £ 25.40 million (ZAR 439.4 million) (2018: £ 8.32 million (ZAR 143.9 million))

· Attributable group earnings increased 146 % to £ 9.85 million (ZAR 170.4 million) (2018: £ 4.0 million (ZAR 69.9 million))

· The group balance sheet strengthened further on the back of the strong financial performance and large strategic investments, with total assets standing at £ 118.8 million, up from £ 102 million at the end of June 2019, total equity increasing by 12 % to £ 88 million, for the same period, maintaining a high 74 % equity ratio (30 June, 2019: 77 %)

· The group paid a substantial £ 17.7 million in cash for investments made during the period under review, whilst at the same time reducing external debt by £ 2.2 million, keeping the net gearing ratio at a low 0.3 %

· Backed by a strong £ 4.89 million cash generated from operating activities and proceeds of £ 6.5 million from an oversubscribed capital raise, the cash and cash equivalents stood at £ 10.2 million, with short term assets covering a healthy 166 % of short term liabilities

· Basic earnings per share for the period 0.35 pence (ZAR 6.09 cents(i)) (2018: 0.06 pence (ZAR 99 cents))

(i) Conversion rates used for revenue and earnings are at the average conversion rate for the period and for balance sheet at the spot rate at period end. Conversion rates used for capital expenditure and acquisitions are at current spot rates

Operational and projects highlights

· PGM(ii) production up 72 % to 21 082 ounces (2018: 12 288 ounces)

· PGM revenue up 130 % to £ 16.28 million (ZAR 281.6 million) (2018: £ 7.09 million (ZAR 130.6 million))

· PGM attributable earnings up 137 % to £ 9.70 million (ZAR 167.7 million) (2018: £ 4.09 million (ZAR 75.60 million))

· Chrome revenue up 707 % to £ 9.12 million (ZAR 157.8 million) (2018: £ 1.13 million (ZAR 19.5 million))

· 186 249 tonnes (2018: 17 011 tonnes) of saleable coarse chromite concentrate produced

· Completed the acquisition of the Sable Zinc Refinery in Zambia and produced first high grade copper metal in December 2019 while also commencing with the construction of the zinc refinery circuit

· Inyoni Operations acquired 100 % of current PGM surface tailings (estimated at 3.33 million tonnes) as well as future PGM tails, further extending the project life and taking full control of all operational aspects and gaining 100 % economic rights

· Inyoni Operations also secured rights to all chrome contained in estimated 3.33 million tonnes of surface tailings and produced first chrome concentrate for own sales in November 2019

· Oversubscribed placing of £ 6.5 million to support targeted growth

(ii) Platinum Group Metals (6E platinum, palladium, rhodium, iridium, osmium, and gold)

Leon Coetzer, CEO says: "It is a challenging time to express one's appreciation and satisfaction to a team for delivering an outstanding performance The Jubilee team has delivered yet another exceptional set of results during the period under review. We call it 'the Jubilee Way', which focusses on translating leading in-house technical excellence and innovation into industry leading operational efficiencies.

"We have made some very significant progress, including the completion of two strategic transactions, and the results as a whole, demonstrate the robustness of our business model generating significant cash flow for the Group. Despite volatile metal prices, including in particular the volatility we have seen in chrome prices, our diversity across commodities has meant we have delivered record earnings on the back of increased production.

"We have continued to invest significantly in our business having advanced in excess of £ 17 million into our future growth with the acquisition of the Zambian based Sable Zinc Refinery, which completed in August 2019, and the acquisition in November 2019 of 100 % of the PGM and chrome surface rights at our Inyoni Operations. The Sable Zinc Refinery has further enhanced the Company's operational earnings capability, expanding Jubilee's operations to other geographical areas and metals. These strategic investments are quickly translating Group investments into cash generation.

"In addition, and to assist with the financing of these transactions, we were very grateful for the support from investors which raised £ 6.5 million in an oversubscribed placing.

"In what has been an incredibly fast moving and evolving situation, as a group we are not immune to the current global COVID-19 pandemic. The safety of our team and employees is our highest priority at this time and we therefore applaud the pro-active decision taken by the South African government to enforce a 21-day nationwide lockdown. Whilst we are aware that the COVID-19 situation is evolving, we have a robust business model and are confident that the business will be able to withstand this disruption having, in anticipation, already taken proactive measures to minimise costs and maximise production leading up to this guidance. Furthermore, whilst work on the ground has been temporarily halted, we will continue to work remotely where possible, to progress operations and continue to advance our growth strategy.

"We would like to take this opportunity to send our thoughts and best wishes to all at this unprecedented and difficult time."

KEY STATISTICS

1= Attributable earnings refers to earnings attributable to the group based on its contractual rights in each project.

2= Adjusted EBITDA refers to EBITDA adjusted for non-cash expenses including impairments, gain on bargain purchase

and foreign exchange differences on transactions.

3= The adjusted PGM production unit cost includes all direct and indirect costs attributable to the project including allocated corporate charges. The Dec 19 period includes all operating costs for the Windsor PGM Joint Venture allocated to the Jubilee attributable PGM ounces.

4= The chrome revenue is recognised on an ex-works basis after costs of export logistics including freight, shipping and marketing.

1= Post the period under review a further payment of £ 3.3 million was made towards the PGM and chrome rights acquisition as announced on 4 November 2019. The final payment on the transaction was made on 19 March 2020. In terms of the acquisition agreement the final payment was adjusted for certain PGM and chrome variables which, resulted in a downward adjustment to the total purchase consideration of £ 2.2 million. The total foreign exchange conversion difference for the transaction amounted to a gain of £ 0.004 million. At current conversion rates the foreign exchange gain on the transaction would have been £ 0.77 million.

Chairman's Statement

Dear Shareholder,

This interim period has, again, produced exceptional results arising from maturing operations, strategic acquisitions, productivity improvements and an austere approach to our business activities. At the time of writing this statement we, like every other company and individual, are facing the challenges of the COVID-19 pandemic. We remain very optimistic for the long-term outlook but are mindful of short-term risk. On 24 March 2020 we provided an update to our shareholders relating to the announcement by the South African government of a 21-day nationwide lockdown and its potential immediate impact on our operations. The measures that have implemented by the Group are focussed on preserving the Company's liquidity and ensuring that we are able to rapidly restart operations following the enforced stoppage. At the time of writing this statement, our operations in Zambia remain unaffected by the COVID-19 virus. However, the guidance being given in respect of the COVID-19 outbreak is evolving and the Company will continue to monitor the situation closely.

Our longer-term vision for the Company remains and has been clearly demonstrated with the expansion of the business during the period under review, having grown and diversified our earnings base. On 23 August 2019, we announced the completion of the acquisition of the Sable Zinc Refinery in Kabwe (the 'Refinery'). This acquisition presents Jubilee with a very well-placed platform from which to enjoy the various base metal opportunities presented by Zambia. The Refinery expands our commodity basket to include copper, vanadium, zinc and lead. Having a diversified commodity basket, such as we now have, provides us with considerable resilience in the face of fluctuating metals prices, some of which we have seen of late - both very strong, and much weaker. In addition we have acquired a facility that was brought in part into operation within 4 months of the acquisition therefore reducing our lead time to production. The copper circuits are advanced with a capacity of some 15 000 tonnes of contained copper per annum so we are accelerating our copper endeavours, whilst updating the zinc facility.

In July 2019, our Windsor PGM project in South Africa commenced operations and by the end of August 2019 all circuits were functional with productivity initiatives being implemented, during this interim period to date.

On 4 November 2019, we announced that we had acquired 100 % of the earnings of the Inyoni Operation in South Africa (previously named Hernic). The objective of this acquisition was to transform Jubilee from a contracting joint venture partner to a full owner of 100 % of the economic rights, without additional risk. In acquiring full control, Jubilee has increased its flexibility and now has the opportunity to increase throughput, respond to market conditions and optimise certain aspects of the operation to its ultimate benefit.

To support these acquisitions and to assist in financing targeted expansion plans both in Zambia and South Africa, we completed an oversubscribed placing of some £ 6.5 million in mid-November 2019.

Looking forward, the Board is convinced that the long-term fundamentals for copper are exceptional and as such have put focus on the Kabwe copper project to ensure that maximum production capability is achieved. Our presence in Zambia has demonstrated and re-asserted that many opportunities exist to expand our business model into all aspects of copper production in the country. We are currently exploring and prioritising these opportunities and will continue to advance due diligence on potential acquisition or partnership opportunities with a view to expand future earnings in a sustainable manner.

With our sustainable business model, Jubilee and our brand is now well recognised globally. With the ever increasing requirement across all continents for legacy environmental clean-up and a cleaner planet, we are known as being a company able to deliver on this need. We are unique with in-house technical excellence, high technological capabilities, and vast knowledge in the field of reprocessing mine waste and metals recovery across a broad basket of metals.

With so much opportunity for growth from our current business activities alone, the Company will be focussing on maximising this benefit from current operations in the medium term, where we know the risks and where we believe incremental benefit can be substantial. We will of course, however, continue to assess strategic business and acquisition opportunities for the long-term benefit of Jubilee and all shareholders. Despite the current volatile economic climate globally, we continue developing our business activities, consistent with our mission, and remain positive that our unique position in the industry will be exploited for the benefit of all our shareholders.

Colin Bird

Non-Executive Chairman

INTERIM PERIOD OVERVIEW

The continued growth of Jubilee's operations and overall business is testament to 'the Jubilee Way' which is built on technical excellence and innovation translating into operational and metallurgical efficiencies.

During the 6 month period under review ending 31 December 2019, Jubilee acquired the multi metal refinery Sable Zinc Refinery in Zambia, commenced operations at its Windsor PGM project and completed the acquisition of the PGM and chrome rights of more than 3 million tonnes of surface material. These activities boosted the PGM operations delivering an increase of 72 % in produced PGM ounces while diversifying Jubilee's metal portfolio across geographical areas and into base metals such as copper, zinc, vanadium and lead.

Since acquiring the Refinery, the Company has commenced with the construction of the zinc refinery circuit and has brought the copper refinery circuit into operation producing its first high grade copper metal in November 2019.

Beyond growth in revenue and earnings Jubilee has also strengthened its asset base by significantly increasing its access to chrome and PGM surface material with acquisition of all historical and future PGM tailings and all historical chrome rights at the Inyoni Operations. The acquisition transformed the operation from a co-operation processing agreement to full ownership of the economic rights, without additional risk to the Company.

Platinum Group Metals (PGM) Operations update - South Africa

Jubilee's PGM operations consist of the Inyoni and Windsor PGM operations.

The PGM operations showed a significant growth in output delivering 21 082 ounces of PGM concentrate for H2 2019, up 72 % from H2 2018. The majority of the growth in output came from the Group's Windsor PGM project coming into operation during August 2019 and reaching stable production for the month of November 2019. The Windsor PGM operations ("Windsor") is a Joint Venture Project ("JV") with Eland Platinum ("Eland") under which the platinum processing plant at Eland is used for the processing of Windsor PGMs material. Under the terms of the JV the PGM earnings generated from the project are shared between the JV partners with the majority of the earnings returned to Windsor. The Jubilee attributable PGM ounces reported for the Windsor PGM project account for approximately 60 % of total ounces produced under the JV. Jubilee's unit cost to produce a PGM ounce remained below US$ 520 per ounce. The unit cost accounts for 100 % of the operating cost for the JV allocated to only the PGM ounces attributed to Jubilee.

As announced on 24 October 2019, Jubilee acquired 100 % of the rights to PGM earnings from the current and future tailings produced at the Inyoni Operations. In addition to the current unprocessed 1.70 million tonnes of historical tailings at the Inyoni Operations and the 630 000 tonnes of previously processed tailings, Jubilee has acquired the rights to a further circa one million tonnes of PGM rich material. As reported under Inyoni Chrome, at the time of reporting the Company had completed the recapitalisation of the Inyoni feed systems to reach the targeted 50 000 tonnes per month feed rate. The new feed system will be ramped up during Q1 2020.

PGM revenue for H2 2019 increased by 107 % to £ 16 million (ZAR 298 million) compared to H1 2019.

The table below presents the combined operational revenue and earnings performance for PGMs for the period under review. The figures represent the final results based on reconciled production inputs and the allocation of costs have been standardised to fully account for all in sustainable costs:

1= The unit cost per PGM ounce produced excludes any inter-company charges for the production of the PGM containing tailings material. In the case of the Windsor JV all operating cost is allocated to the Jubilee attributable ounces.

2= Attributable earnings refers to project earnings allocated to the group based on the group's contractual rights in each project. 

The PGM basket price has appreciated during the period driven by the shortfall in the supply of PGMs to meet industry demand and with no new significant supplies of PGMs targeted in the short term. Post the period under review the PGM basket price saw a sharp reduction in price linking to the uncertainty caused by the COVID-19 epidemic.

Chrome Operations update - South Africa

Jubilee's chrome operations include the DCM Chrome, Windsor Chrome and Inyoni Chrome (following the acquisition by Inyoni of the chrome rights in November 2019). The DCM Chrome operation includes the leading Jubilee Fine Chrome facility, successfully extracting fine chrome from previously discarded chrome wastes.

Jubilee now holds a total chrome ore processing capacity of 145 000 tonnes per month of feed material, which delivered 186 249 tonnes of chrome concentrate during H2 2019. This new production record reflects only two months' worth of chrome production at Inyoni, the impact of which will be better reflected during H1 2020.

Since the acquisition of the Windsor Operation in January 2019, Jubilee has invested into improved processing technology and significantly improved operational efficiencies, which strengthened the operations ability to react to weakening metal prices. The chrome operations are well positioned to capitalise on any recovery in the chrome market and to deliver PGM rich tails to the PGM operations.

As announced on 5 November 2019, Jubilee acquired 100 % of all further chrome rights to the chrome contained in all the historical tailings at Inyoni. In addition, Jubilee has increased the scope of its Inyoni Operations to take control of the re-mining of tailings to control the feed supply, targeting to increase feed rate to 50 000 tonnes per month.

The table below presents the combined operational revenue and earnings performance for chrome for the period under review. The figures represent the final results based on reconciled production inputs and the allocation of costs have been standardised to fully account for all in sustainable costs:

Integrated Kabwe Operations, Zambia - Copper, zinc, lead and vanadium update

The Company's Kabwe Project combined with its multi-metal Sable Zinc Refinery, establishes Jubilee's fully integrated multi-metal recovery and refining operational footprint in Zambia. The Sable Zinc Refinery, which acts as a central processing facility for third party material in the region, gives access to a current resource comprising of an estimated 6.4 million tonnes of surface waste assets containing 356 843 tonnes of zinc, 351 386 tonnes of lead and 1.26 % equivalent vanadium pentoxide.

During the period under review, the copper refinery circuit was brought on-line to process historical copper tailings as well as third party sourced run-of-mine material. The first high grade copper metal commenced production in December 2019, with the completion of the solvent extraction circuit. The accelerated ramp-up of the copper circuit remains a strong focus and at present has not been impacted by the COVID-19 epidemic.

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2019

Consolidated Statement of Comprehensive Income for the six months ended 31 December 2019

Consolidated Statement of Financial Position as at 31 December 2019

Consolidated Statement of Cash flow for the six months ended 31 December 2019

NOTES TO THE UNAUDITED INTERIM RESULTS

1. Basis of preparation

The Group unaudited interim results for the 6 months ended 31 December 2019 have been prepared using the accounting policies applied by the company in its 30 June 2019 annual report which are in accordance with International Financial Reporting Standards (IFRS and IFRC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU ("IFRS, including the SAICA financial reporting guides as issued by the Accounting Practices Committee, IAS 34 - Interim Financial Reporting, the Listings Requirements of the JSE Limited, the AIM rules of the London Stock Exchange and the Companies Act 2006 (UK)). This condensed consolidated interim financial report does not include all notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2019 and any public announcements by Jubilee Metals Group PLC. All monetary information is presented in the presentation currency of the Company being Great British Pound. The Group's principal accounting policies and assumptions have been applied consistently over the current and prior comparative financial period. The financial information for the year ended 30 June 2019 contained in this interim report does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

2. Financial review

Earnings per share for the six months ended 31 December 2019 are presented as follows:

The Group reported a net asset value of 4.36 pence (2018: 4.33) per share (ZAR 80.69 (2018: ZAR 74.92) cents per share)) and a net tangible asset value per share of 1.37 (2018: 1.09) pence per share (ZAR 25.31 (2018: ZAR 19.92 cents per share)). The total shares in issue as at 31 December 2019 were 2 017 510 million (2018: 1 363 486 million).

3. Business Combinations

3.1 Acquisition of Sable Zinc Limited (Zambia)

As announced on 21 March 2019, Jubilee executed the acquisition of 100% of the issued capital of Sable Zinc Kabwe Limited in Zambia from two subsidiaries of Glencore plc "Glencore" for a consideration of £ 9.16 million (US$ 12 million) (ZAR 175.97 million) (the "Acquisition"). The Acquisition was funded through a combination of debt and equity. Jubilee secured a convertible loan note for £ 6.11 million (US$ 8 million) (ZAR 117.31 million) with ACAM LP and successfully completed a placing of 491 814 444 new Jubilee shares at an issue price of 2.25 pence per share to raise £ 11.07 million (US$ 14.50 million) (ZAR 212.57 million) before expenses. On 23 August 2019 the Acquisition became unconditional ("Closing Date"), Jubilee obtained control and commenced with the implementation of a fully integrated multi-metal refinery in Zambia.

The fair value of the purchase consideration, net assets acquired and gain on bargain purchase are as follows:

There were no acquisitions made by Sable Zinc Limited in the previous period.

The acquired assets did not contribute to revenue or profit for the period under review.

3.2 Acquisition of PGM and chrome rights

Jubilee owns and operates a chrome and PGM processing facility at Inyoni with a processing capacity of 55 000 tonnes per month. Previously, Jubilee had a Co-Operation Agreement ("Hernic Agreement") with Hernic Ferrochrome (Pty) Ltd ("Hernic Ferrochrome"), whereby Jubilee had the rights to all PGM earnings from the tailings at Hernic until it secured a 30 % return on investment, where after Hernic secured the majority of earnings. Under the Hernic Agreement, all of the chrome concentrate produced is returned to Hernic Ferrochrome for its own use or sale to the market. As announced on 24 October 2019, Jubilee has entered into a Framework and Tailings Purchase Agreement ("Tailings Agreement") with K2018239983 (SOUTH AFRICA) (PTY) LTD ("NewCo"), a subsidiary of one of the world's largest ferrochrome producers to acquire 100 % of the rights to PGM earnings from the current and future tailings produced at Jubilee's Inyoni Operations (previously Hernic) located in the Bushveld Complex, South Africa. In addition to the current unprocessed 1.70 million tonnes of historical tailings at the Hernic Operations and the 630 000 tonnes of previously processed tailings, Jubilee has acquired the rights to a further c. 1 million tonnes of PGM rich material.

As announced on 5 November 2019, NewCo has exercised its rights in terms of the Exclusive Agreement announced on 24 October 2019, to sell all further chrome rights to the chrome contained in all of the historical tailings at Inyoni to Jubilee. Under the Exclusive Agreement, Jubilee has acquired 100 % of all further chrome rights to the chrome contained in all of the historical tailings at Inyoni.

The purchase consideration was paid in tranches the last of which were made on 19 March 2020. In terms of the acquisition agreement the final payment was adjusted for certain PGM and chrome variables which, resulted in a downward adjustment to the total purchase consideration of £ 2.2 million. The total foreign exchange difference for the transaction resulted in a gain of £ 0.004 million. At current conversion rates the foreign exchange gain on the transaction would have been £ 0.77 million.

4. Dividends

No dividends were declared during the period under review (2018: nil).

5. Business segments

In the opinion of the Directors, the operations of the Group companies comprise four reporting segments for the period under review, being:

• the recovery of metals from surface mine waste and tailings ("Operations");

• the evaluation of various mine waste opportunities and the development of suitable metal recovery processes to diversify across multiple commodities and in different countries including platinum, chrome, cobalt, copper, zinc, lead, vanadium and gold to hedge income risk and to align with global trends. ("Business Development");

• the parent company operates a head office based in the United Kingdom which incurs administration and corporate overhead costs ("Corporate").

Segment report for the 6 months ended 31 December 2019

Segment report for the 6 months ended 31 December 2018

Segment report for the year ended 30 June 2019

6. Share Capital and warrants

Share Capital

During the period under review the Company issued 162 208 900 new Jubilee shares at a price of 4 pence share to raise £ 6.5 million before expenses. Following the issue the Company's total issued share capital comprises 2 017 509 573 ordinary shares.

Warrants

At the period end and at the time of publishing these results the Company had the following warrants outstanding:

7. Going concern

The directors have adopted the going-concern basis in preparing the interim financial statements.

8. Unaudited results

These interim results have not been reviewed or audited by the Group's auditors.

9. Interim report

Printed copies of the interim report are available to the public free of charge from the Company at 1st Floor 7/8 Kendrick Mews London SW7 3HG, United Kingdom Tel: +44 (0) 20 7584 2155 Fax: +44 (0) 20 7589 7806 and from Jigsaw Office Park, Ground Floor, Support Services Place, 7 Einstein Street, Highveld Techno Park, Centurion, 0157, Gauteng during normal office hours for 30 days from the date of this report and are also available for download from www.jubileemetalsgroup.com.

The financial information in this announcement is unaudited.

United Kingdom

26 March 2020

**ENDS**

For further information visit www.jubileemetalsgroup.com or contact:

Jubilee Metals Group PLC

Colin Bird/Leon CoetzerTel +44 (0) 20 7584 2155 / Tel +27 (0) 11 465 1913

Nominated Adviser - SPARK Advisory Partners LimitedAndrew Emmott/James KeeshanTel: +44 (0) 20 3368 3555

Broker - Shard Capital Partners LLPDamon Heath/Erik WoolgarTel +44 (0) 20 7186 9900

Joint Broker - WHIreland

Harry Ansell/Katy Mitchell 

Tel: +44 (0) 20 7220 1670/+44 (0) 113 394 6618

JSE Sponsor - Sasfin Capital (a member of the Sasfin group)

Sharon OwensTel +27 (0) 11 809 7500

PR & IR Adviser - St Brides Partners Limited

Catherine Leftley/Juliet Earl

Tel +44 (0) 20 7236 1177

Annexure 1

Headline earnings per share ("HEPS") is calculated using the weighted average number of shares in issue during the period under review and is based on earnings attributable to ordinary shareholders, after excluding those items  as required by Circular 1/2019 issued by the South African Institute of Chartered Accountants (SAICA).

In compliance with paragraph 18.19 (c) of the JSE Listings Requirements the table below represents the Group's Headline earnings and a reconciliation of the Group's loss reported and headline earnings used in the calculation of headline earnings per share: