MIDAS STOCK TIPS: Clean Up! By investing in Jubilee Metals, the mining waste company that is helping make car exhaust greener
Mining is a wasteful industry. Companies try to extract as much metal as possible from the earth and ore they dig up, but their processes are rarely 100 percent efficient, leaving a lot of material behind, generally in the form of large dams and manure piles.
These so-called tailings can be toxic, unsightly and harmful to the environment. They also often contain traces of metal that were rejected for one reason or another during the mining process.
Jubilee Metals converts these mining tailings into valuable assets, remediating tailing dams and producing high value metals through the process. The shares are priced at 15.2p and should appreciate significantly as CEO Leon Coetzer expands and develops the business.
Green Machine: Jubilee Metals turns mining waste into valuable assets, remediating tailing dams and producing high-value metals through the process
Jubilee started out as a consulting firm providing advice to major mining corporations on how to become more efficient. But it quickly became apparent that there was tremendous opportunity to recover metal left behind by traditional mining techniques.
Coetzer first turned his attention to chromium mines in South Africa, where most processes were found to reject chromium below a certain purity and platinum-group metals, including palladium and rhodium, used in catalytic converters that reduce car pollution.
Jubilee devised a method to extract all of these metals from overburden while ensuring that dams no longer endanger the environment and the land can be reused. Proving that the technology was safe and effective took time, but the work has been done and this year Jubilee is expected to produce 44,000 ounces of platinum group metals and 1.2 million tonnes of chromium. This makes the company one of the five leading chrome producers in the world, although it does not own a single mine.
There is still plenty of potential for further expansion as there are two major chromium mining districts in South Africa and Jubilee has so far focused on one – the Western Limb. However, Coetzer recently secured a deal for the east leg and more deals are expected.
After proving its ability to extract metal from chromium tailings, Jubilee began looking at copper this time, this time in Zambia. The company has now developed a way to recover pure copper cathodes from tailings, some of which have been idle for years. Trials have been underway for several months and the Group’s processing facility is expected to be fully operational within a few weeks.
The Company has already identified 300 million tonnes of copper waste and expects to produce around 25,000 tonnes of grade copper annually in Zambia alone. Coetzer will start small, supplying 500 to 800 tons of copper per month in the summer, but production will ramp up quickly thereafter.
There are also by-products, including cobalt, a key ingredient in lithium batteries and also used in car airbags.
When miners come on board, long-term contracts are signed giving Jubilee the right to reuse and process customers’ tailings and sell the mined metal. There are many opportunities to grow over time. Independent research shows that there are more than 8,000 inactive and closed tailings dams worldwide, totaling almost 300 billion tons.
Jubilee is focusing on South Africa and Zambia for now, but Coetzer hopes to expand into South America and Eastern Europe, where there are numerous discarded dams.
In the short term analysts are forecasting rapid growth with sales of £160m for the year to June this year rising to £250m next year. Profits are forecast at £36m this year, rising to £68m in 2023.
The group is now not a dividend payer as excess cash flows back into the business. But Coetzer and his fellow board members are keen to start paying a dividend in later years.
Midas Verdict: Jubilee Metals has found a way to convert waste into valuable, high-value metals while reducing miners’ environmental footprint. It has taken the company a while to prove its processes and gain the trust of miners, but much of the hard work is now done, interest is rising fast and the future looks bright. At 15.2p, shares are a buy.
Traded on: TARGET Ticker: JLP Contact: jubileemetalsgroup.com or 020 7584 2155
MIDAS STOCK TIPS: Clean up by investing in Jubilee Metals
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