Diversified metals and mining group Jubilee is mulling over an offer from an undisclosed buyer to take over its chrome and platinum group metals (PGM) assets in SA.
The deal would see Jubilee focus solely on its Zambian copper operations, while disposing of all its SA assets except for the Tjate platinum mine.
In a statement on Thursday, Jubilee said its board had reviewed a conditional binding offer to sell the SA assets for up to $90m, and that it recognised the offer’s value proposition.
The chrome and PGM business have reached a high level of maturity, said the group, with further growth opportunities limited to joint ventures and projects requiring significant capital outlay.
By contrast, coppers strong market dynamics offer more room for profit. The group said it believed there are “material opportunities to deliver growth at the existing [copper] sites by expanding the portfolio of copper producing assets.”
The world's biggest mining companies are scrambling to secure copper assets before a huge market shortfall, putting copper at the heart of deal making activity in the mining sector.
Demand for copper is expected to surge more than 40% by 2040, driven by the shift to electric cars and solar panels as well as the growth of data centres and AI infrastructure.
However, more than half of global copper reserves come from just five countries, making the global mined supply vulnerable to trade tensions, supply chain disruptions and country-specific policy changes.
Last month, Harmony Gold announced further steps to increase its copper exposure through the $1bn acquisition of MAC Copper, the sole owner of Australia’s CSA copper mine.
Jubilee CEO Leon Coetzer said the group’s board “feel it is an opportune time to accept a fair value offer for the chrome and PGM operations at a time when the two segments of the Company are on markedly divergent paths.
“After years of effort and investment, the SA business has reached a stage of maturity that would require a large capital outlay to achieve any step change in production going forward,” Coetzer said.
“On the other hand, in Zambia, the potential capital returns and earnings growth offered from our exciting suite of assets could not be more evident. The staggered nature of the proposed acquisition consideration, along with funds from the expected sales of noncore assets in Zambia, and project-specific funding discussions, align with our future capital growth plans in the country,” he said.
The group also announced that it had secured more high-grade copper for its Zambian Roan refinery, which would be funded through an equity issue.
Jubilee will issue about 74.7-million new shares at 4.15p per share, for a total consideration of $3.1m. The shares are locked in for a 10-month period following admission.
This is the second time this year Jubilee has issued new shares to support Roan’s expansion and recovery, with the group announcing earlier this year it would issue 51.8-million new shares at a price of 4.2p each to raise $2.7m.
The miner has invested significant capital to expand the Roan operation in recent years. Through the Zambian expansion, Jubilee increased its annual copper output from 2,269 tonnes in the year to end-June 2022 to 3,422 tonnes in the 2024 financial year.
“Execution of Jubilee’s copper strategy has gained significant traction with Roan now fully operational and the near surface mining opportunities, such as Munkoyo and Project G, which offer significant growth opportunities,” said Coetzer.
The offer is subject to conditions, including shareholder and regulatory approvals, satisfying any change of control requirements and entering into definitive agreements.
The group said it was also reviewing its dividend policy to enable possible distributions to be made to shareholders in future. The total $90m consideration was payable through a combination of upfront and deferred cash payments over a roughly three-year period, the company said.
Investors welcomed the announcements, with the group’s shares up 6.25% at R1.02 by 9.50am on the JSE
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