Jubilee's Pivot

Swapping South Africa for Zambia

Good Morning Team.

Last week, Jubilee Metals announced plans to sell off almost the entirety of its South African chrome and PGM business for a consideration of up to $90 million - and then use the capital to massively expand growth into Zambian copper.

One thing is certain: selling a reliable, revenue producing business asset to fund the earlier-stage side is going to significantly increase both the potential risks as well as the reward profile.

But the question remains.

Is this a good idea?

I spoke to Leon over the weekend and recorded the conversation, so you can make your own minds up.

Let’s consider.

The CEO put it plainly: ‘The South African business has reached a stage of maturity that would require a large capital outlay to achieve any step change in production going forward.’

Clearly, JLP thinks that the only way to get the required level of further expansion capital into the chrome business would be a crushing level of dilution. The alternative would be to not grow, continue operations - and hope for pricing to recover.

I’m not sure that’s a good idea.

By contrast, Zambia presents a compelling frontier, with lower capital barriers, increasing output and stronger margins - where most importantly, JLP owns both the processing and the mines - unlike in SA where it owns limited mining material.

And the copper footprint in Zambia is already anchored by producing assets including Roan, Sable, Munkoyo and Project G —offering ‘significant growth opportunities’ with comparatively lighter capital requirements.

From a financial perspective, the deal does make sense. Leon notes that the $90 million valuation of the South African assets represents a significant multiple of their current earnings - you can argue the toss on how many years - but in essence, Jubilee is unlocking value from mature operations to fund high-margin growth opportunities in copper — without dilutive shareholder funding.

And consider this: it’s an in-built hedge. If USD strengthens, then the staged payments become ‘worth’ more - if USD weakens, then copper rises in USD terms.

And best of all.

JLP sentiment has always been damaged by repeated placings to fund expansion.

No more dilution.

Ever.

And there is no denying that Zambia offers real upside. The Roan concentrator continues to deliver steady throughput with high copper recovery potential. Munkoyo’s high-grade feedstock and Project G’s open-pit expansion are promising.

Jubilee’s operational credibility is further supported by recent success in securing a high-grade stockpile grading over 1.7% Cu, which is immediately processable.

Meanwhile, the company’s Sable Refinery expansion - expected to be completed in Q1 2026 - should increase processing capacity to 14,000 tonnes of copper per annum, creating an integrated production platform capable of handling multiple feed sources.

However, opportunity must still meet execution. The copper strategy hinges not just on grade and throughput, but on logistics, scalability, and sustaining profitable supply agreements.

The success of modular processing units and the Large Waste Project - where partner negotiations remain ongoing - will be critical to fulfilling the promised upside.

It’s also worth noting that Jubilee will retain exposure to South African PGMs via the Tjate Platinum project, a long-term optionality that preserves a foothold in a key precious metal.

While management has hinted at a future dividend policy review, language around distributions has softened slightly, from the prospect of near-term dividends to the broader idea of ‘being in a position’ to return capital. That distinction matters.

There are reasons for cautious optimism. Jubilee is reallocating capital from a lower-margin, mature business to one where growth is already taking shape, backed by clear operational milestones and confirmed feedstock.

The pricing of the South African assets appears favourable, and the transaction structure — combining upfront and deferred payments over three years — matches the pace of Zambian development plans.

JLP built the SA operations from nothing to a year-to-date output totaling 1,427,220 tonnes - and expected this to rise to 1.85 million tonnes of chrome by the end of the year.

What happens when you march into Zambia with $90 million and try the same expansionary strategy?

It’s one of the hottest mining areas in Africa right now - Vendanta is weighing a Zambian IPO to raise $1 billion to increase copper production at KCM to 300,000 metric tons annually within the next five years.

Barrick is expanding its Lumwana mine with a $2 billion investment to double copper production to a life-of-mine average of 240,000 tons per year - including the construction of new infrastructure, including an airport and an industrial supplier park, and the creation of 550 permanent jobs.

First Quantum is investing over $1 billion to expand its Kansanshi mine and smelter - to increase copper production and enhance downstream beneficiation.

IRH acquired a 51% stake in Mopani in 2024, including a $300 million capital investment to boost copper production at the mine to 200,000 metric tons within the next three to four years.

And Bill Gates-backed KoBold Metals is developing the Mingomba copper project, with an expected production of between 500,000 and 600,000 metric tons.

The project requires a $2 billion investment and is anticipated to become one of the largest copper mines globally.

Then there’s whatever Anglo’s widely plans might be…

But bottom line, Zambia wants to see annual copper production rise to 3 million metric tons by 2031 - and is seen as much safer jurisdictionally than in the past due to the Mines Regulatory Commission Act and the draft Geological Bill.

Then there’s the infrastructure being built - in particular upgrades to the Lobito Corridor - the Africa Finance Corporation is spearheading $500 million in financing for the greenfield rail line connecting Zambia to Angola.

But the US DFC is also committing a total of $4 billion, marking it as the largest US infrastructure project in Africa in decades.

Meanwhile, the European Union, as part of the Global Gateway initiative, has mobilised nearly $1 billion for the project.

Meanwhile, the private consortium of Trafigure and Mota-Engil will enjoy a 30 year concession to operate and maintain the railway along the Corridor.

JLP can tap into this capital investment - without needing to provide the capital.

Consider where we are in Zambia now

The company’s recent processing trials at the Roan Concentrator have now confirmed its ability to unlock value from shallow transitional copper reefs - resources historically viewed by many operators as uneconomical or too complex to process.

This breakthrough is a game-changing achievement (and previous risk), proving Jubilee’s technical expertise and solidifying its competitive advantage.

The majors in the region will want this tech.

For context, the trials conducted over eight weeks at Roan have not only met but exceeded expectations, achieving copper recoveries of approximately 65% from run-of-mine (ROM) transitional ore grading around 1.4 to 1.5% copper.

These results are especially significant given the transitional reefs had previously been relegated to waste status or deemed too complex for profitable processing. And the trials have paved the way for Jubilee to enter a long-term feedstock supply agreement - a critical milestone for the copper strategy.

Production under this agreement has now commenced, with the Roan concentrator targeting an operational throughput of between 35,000 and 40,000 tonnes per month, translating to an anticipated copper unit production of between 240 and 360 tonnes per month.

Complementing Roan’s success, Jubilee’s Munkoyo mining operations are maintaining a strong mining rate of approximately 80,000 tonnes per month. Significantly, about 3,500 tonnes of this is high-grade ROM material averaging over 2.5% copper, which is directly delivered to Sable for processing.

Jubilee plans to ramp up this high-grade output to 4,500 tonnes per month this month and further increase it to 8,500 tonnes by October 2025.

At Munkoyo, lower-grade ore averaging around 0.7% copper is being stockpiled on surface and earmarked for future processing. To that end, Jubilee is progressing with extended pilot trials on a copper leaching and precipitation process, intending to install two modular 30,000 tonnes per month processing units.

These units, once commissioned - expected by Q1 2026 - will add approximately 350 tonnes of copper units per month capacity, significantly boosting overall output.

But we’ve also got new resource drilling at Munkoyo, with an aim to upgrade resource confidence and optimise the open-pit mine layout. Similar initiatives are underway at Project G, where drilling is expected to start this month.

Project G benefits from proximity to existing mines and infrastructure, including power and road access,allowing for potentially faster project development. And Jubilee’s vision also includes integrating Project G with neighbouring operations via a central processing facility.

Portfolio Optimisation

From a portfolio perspective, Jubilee has successfully monetised non-core waste assets outside of its large copper tailings portfolio, concluding a transaction worth $12.3 million payable over the next 20 months.

This divestment will provide even more capital to support the core Zambian growth projects - and additionally, Jubilee has commenced the trade of 10 million tonnes of material from its Large Waste Project, valued at approximately $6.75 million, with deposit payments already received.

The Large Waste Project itself holds a significant estimated 260 million tonnes of transitional copper waste at surface - meaning the business already has a massive resource base and long-term upside potential from its innovative processing methods.

Remember, Leon thinks the original IRH deal is no longer good value because of the due diligence done on this material.

Clearly, there are other potential partners in the works.

Looking ahead, Jubilee is positioning itself to achieve a combined copper production target of around 288 tonnes per month this month from Roan and Munkoyo, stepping up to 400 tonnes per month by August, and potentially reaching 500 to 550 tonnes per month by October.

Sable is being expanded, which will increase refining capacity to approximately 14,000 tonnes per annum, with completion targeted for Q1 2026, ensuring downstream infrastructure keeps pace with upstream production.

It’s going to scale - and the $90 million cash injection is going to supercharge this.

This share price floor could well be an exceptional entry.