Diversified metals and mining group Jubilee has announced the long-awaited sale of its SA chrome and platinum group metals (PGM) operations.
The group will receive up to $90m from buyer One Chrome in exchange for all its SA assets except the Tjate platinum mine.
The deal marks a turning point for Jubilee, with the company now focused solely on its Zambian copper operations. Jubilee first announced that it was mulling over an SA exit in June, declaring that its chrome and PGM business had reached a high level of maturity, with further growth opportunities limited to joint ventures and projects requiring significant capital outlay.
By contrast, copper’s strong market dynamics offer more room for profit. Geopolitical noise aside, demand for the metal 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.
The projected market shortfall, coupled with copper's vital role in economic development and all things electric, has put the metal at the heart of mining deal making activity in recent years.
Most notable was the failed takeover attempt by Australian giant BHP of Anglo American, with BHP offering $49.8bn for the company in a bid to gain ownership of Anglo's South American copper mines.
SA gold miner Harmony Gold has also invested considerable amounts in its copper growth ambitions, including R4.1bn for the acquisition of its Australian Eva Copper project in 2022 and $1bn for the acquisition of MAC Copper, the sole owner of Australia’s CSA copper mine, in June.
In April, AngloGold Ashanti also signed an agreement with Australia’s Kincora Copper that will see the miner invest $25m-$50m in copper exploration over the next seven years.
Jubilee was upbeat that the sale would allow it to realise value from its chrome and PGM operations while repositioning the business within the copper sector, which has “significantly greater investor recognition and valuation multiples as compared with chrome and PGMs”, it said.
With an enterprise value of about $146m, the transaction represents a 6x multiple on Jubilee's SA assets’ earnings before interest, tax, depreciation and amortisation (ebitda) in the latest financial year, said the miner.
The $90m cash injection provides much-needed funding for Jubilee’s copper-driven growth ambitions, which have been set back by power and infrastructure challenges this year.
Unplanned electricity outages in Zambia saw the miner put its Roan concentrator on care and maintenance for a prolonged period earlier this year, resulting in a 35.4% slump in copper output in the 12 months to end-June.
To protect profit margins, the group said it was investing in further exploration to expand its copper resource base and drilling to test the potential of combining the component pits of its Munkoyo mine to form one, large-scale open-pit operation.
In its latest update, Jubilee said the proceeds of the sale would substantially exceed these short-term capital requirements.
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