Diversified metals processor Jubilee Metals has reported record output for the first half after completing an expansion of its SA chrome operations in December, but softer chrome prices and Zambian power outages pushed headline earnings lower.
Jubilee, which processes chrome and platinum group metals (PGMs) in SA and copper in Zambia, reported revenue at $141.50m (R2.58bn) for the six months ended December, up by more than a half from the previous comparable period.
The group produced just under 975,000 tonnes of chrome concentrate in the first half, a record high for its interim chrome output.
The main driver of record half-year production, said Jubilee CEO Leon Coetzer, was that new chrome processing modules at Thutse, the newest addition to its SA portfolio, reached their design targets in December. As a result, chrome production was up 36% year on year, while chrome profit increased 31%.
The first quarter saw the group prioritising chrome recoverability to capitalise on favourable chrome markets, which resulted in it recording lower PGM revenue as PGM output declined 9% year on year.
However, the average price of chrome fell from $309 per tonne in the first three months to $252 in the second quarter, reaching $200 by December.
Chrome prices have since recovered, said Coetzer, while copper prices “continue to receive strong support”. He expects the group to benefit from its exposure to both metals in the second half, particularly as the expansion of Jubilee’s Munkoyo Open-Pit mine opens the door to “significantly boost copper output at our Sable Refinery”.
Still, softer chrome prices together with unplanned power outages affecting its Zambian operations towards the end of last year saw Jubilee report a 14% year on year fall in headline earnings per share (HEPS) to 6 US cents.
After failing to meet its copper production guidance for the period, the group said that an updated guidance should be released by the end of April.
“While we were able to deliver our Roan expansion project in Zambia and begin the parallel processing of waste and run-of-mine material, severe power disruptions on the grid at the end of the period, meant this start-up was short lived,” said Coetzer.
“The ability of Jubilee to react to this challenge is a testimony to the resilience of the team to execute, post period end, an additional power agreement with a new broad based power provider to supplement the existing power supply agreement as a more permanent solution,” he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.