JUBILEE Metals has received two offers for its Large Waste Project, a copper tailings resource in Zambia it bought only last year for $18m.
Leon Coetzer, CEO of Jubilee Metals, said in an announcement on Monday that the offers indicated “an outright premium” to the group’s initial purchase. The sale comes as Jubilee seeks to derisk it business, having sold $100m worth of assets to date.
“The Large Waste Project is a Greenfields project and as such requires significantly higher capital at greater project execution risk,” he said.
Funds raised from the sale, expected to be completed in the fourth quarter, will be ploughed into the expansion of the firm’s Molefe mine which Coetzer said offers “greater returns”. Molefe delivers 3,500 to 4,500 tons of copper ore per month to Jubilee’s Sable refinery for processing into cathode. The plan is to expand ore supply to 10,000 tons monthly by October for total cathode production from Sable of 2,000 tons annually.
Sable is also supplied with concentrate from Jubilee’s Roan processing facilities which also supplies some material to third parties. All operations are located in Zambia.
Jubilee recently offered Galileo Resources, a UK-listed developer, a farm-in agreement for 23.75% of the Molefe mine in return for spending $700,000 on resource development and exploration.
In terms of the proposed sale of Large Waste Project, the two bidders have until August 27 to make an initial deposit allowing them a further 90 days for due diligence. The successful bidder then has 10 days for completion of a definitive deal. The balance of the consideration will be paid in instalments over the next three years, said Jubilee.
As Jubilee has not yet completed its own payment for last year’s purchase of Large Waste Project, it has agreed with the original seller to conclude the deal using shares. The company will issue about 150.5 million shares for 2.5 pence per share, about 4.5% of Jubilee’s enlarged share capital, paying $5m. The shares are being issued at slight discount to the firm’s current price in London of 2.6p/share.
Shares in Jubilee are 27% lower year-to-date despite near record copper prices, partly owing to the firm’s status as a third party supplier rather than primary metal producer. Jubilee also withheld copper guidance for the year partly owing to the twin effects of weather disruptions and changes in Molefe’s mine plan.
