Jubilee Metals : JLP) - Growth and opportunity

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Share Price

17.2p

Ticker	JLP
Index	FTSE AIM
Sector	Mining
Market Cap	£418m
Shares in Issue	2,430m
NAV	6.4p

07 December 2021

Jubilee Metals

Growth and opportunity

Jubilee operates several chrome-Platinum Group Metal (PGM) operations in South Africa. Growth will come from its Zambian two-refinery strategy where it is expected to produce upwards of 31kt/year of copper (in cathode and concentrate) with an, as yet, undefined contribution from cobalt. The strategy has benefited from the acquisition of the Nkana refinery from Mopani (Zambian-government owned), which provides many logistical and technical benefits to Jubilee. Jubilee remains on a growth trajectory and is still only at the beginning of its journey, in our view. Jubilee embodies a metals "recovery" business, not "scavenging" what was left behind - it treats each opportunity openly, judging how best to maximise recovery and profit. Jubilee has made progress and its growth in revenues and profits over the past few years has been remarkable and market-leading. The next phase of growth will establish Jubilee as an important regional player and a one-of-a-kind metals recovery business. We see the potential for further enhancements to its project portfolio and see fair value at 29p/sh.

Performance	Share	Sector
1 month:	5%	2%
3 months:	6%	5%
12 months:	127%	8%
High/Low	21.9p / 7.0p

	Source: © 2021, S&P Global Market Intelligence
Analyst	Paul Smith
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Jubilee is a highly profitable PGM producer in South Africa through its low-costInyoni plant. Jubilee's new flexible chrome/PGM strategy means it is uniquely positioned to process Bushveld ore from the full variety of chromitites. In Zambia, it has the Sable refinery at Kabwe (commissioning) and the Leopard refinery (to be refurbished) at Nkana. It has an aggressive copper production growth plan from multiple raw material sources to become a regional copper producer of scale.

Jubilee provides exposure to low-cost PGM, copper production with future exposure to zinc-lead (vanadium): Jubilee has a low-cost, high-marginbusiness that capitalises on an experienced, technical management team, which has developed innovative processing techniques to generate cash from (mainly) the waste material produced as part of the mining cycle; "the Jubilee Way". We see Jubilee as a highly cash-generative business with exceptional ESG credentials.

Momentum and growth: Jubilee continues to grow revenues and profits. The expanded Inyoni PGM plant is the mainstay of revenues and we see the growing importance of copper production from Zambia. We are struck by Jubilee's ability to move quickly and self-buildsmall production units using internal, technical capability; a distinction shared with few other companies. This will be funded largely from cashflow with some debt, but supported by current operations and the strength of the Jubilee balance sheet. The

Jubilee story is still only just beginning.

Critical metals, prices for PGMs still high, copper building: The price of PGMs, although volatile, is still high. Jubilee's operating cost (~$500/oz PGM 4E) against a SPOT net basket price of ~$1,800/oz is a high-margin, cash-generativebusiness; one of the lowest-costPGM producers globally. With the copper price also at its highest level since 2012, an uncertain medium-termproject pipeline and continued demand growth for a low-carbonfuture, now is an excellent time to commission a copper project and take full advantage.

Key catalysts: We look to news from Zambia on the progress in commissioning the new copper tailings plants and we expect wild cards from management on new opportunities. Continued high metal prices will be positive for Jubilee and its cashflow.

WHI view: Jubilee is a high-margin business with a growing production profile in a high- price environment with further growth projects and an experienced management team, which we think distinguishes Jubilee from many companies in the sector. We see fair value at 29p/sh based on a simple average between conservative P/E and EV/EBITDA multiples against peers and a DCF suitably risked for stage.

Marketing Communication

This document has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Please refer to important disclosures towards the end of this document.

Under the Markets in Financial Instruments Directive II

("MiFID II"), this research is paid for by the subject issuer as

declared in the disclosure and disclaimer pages of this document.

Y/E June	2020A	2021E	2022E	2023E
Revenue (£m)	54.8	132.8	206.4	258.9
EBITDA (£m)	22.4	50.5	119.5	159.7
PBT (£m)	13.7	43.0	110.7	130.0
EPS (pence)	0.9	1.8	4.0	4.2
Net cash (£m)*	(4.4)	(19.8)	32.9	121.1

Source: Company accounts, WH Ireland estimates *Net cash - cash/cash equivalent minus current liabilities

WH Ireland Limited, 24 Martin Lane, London, EC4R 0DR, tel. [phone]

WHIreland is authorised and regulated by The Financial Conduct Authority and is a member of The London Stock Exchange.

Important disclosures and certifications regarding companies that are the subject of this report can be found within the disclosures page at the end of this document.

Definitions:

PGM - Platinum Group Metals

There are different ways to express PGM production or resource depending on the proportions of the PGMs in the ore.

2E - Platinum (Pt)+ Palladium (Pd)

2E + Au - Pt + Pd + Au (3E)

4E - Pt + Pd + Rhodium (Rh) + Gold (Au)

6E - Pt + Pd + Rh + Ruthenium (Ru) + Osmium (Os) + Au

Iridium (Ir) is also a platinum group element

Chromite - principal ore mineral for chromium used in stainless steels. (Fe, Mg)Cr2O4. The key to quality is the amount of Fe and Mg in the chromite

• and the ability to remove minerals contained silica and aluminium.

Chromitite - a rock formed predominantly from chromite

Sx-Ew - Solvent Extraction, Electrowinning. A way to increase the copper content in a leachate to a level where it can be plated as copper cathode

Copper concentrate - a raw material. Produced by the 'concentration' of the copper-bearingminerals in an ore into a form that can be transported for further processing. Usually produced by froth flotation. The concentrate is usually composed of copper sulphide minerals - typically chalcopyrite (CuFeS2) - and grading up to 34.5% copper (typically 27-30%).Usually smelted to produce copper metals.

Jubilee Metals

Jubilee Metals.................................................................................................................	1
Growth and opportunity...............................................................................................	1
Jubilee investment case................................................................................................	3
Jubilee strategy ............................................................................................................	5
Southern strategy (Sable refinery at Kabwe) .............................................................................	5
Northern strategy (Leopard refinery at Nkana) .........................................................................	5
How does Jubilee produce copper in Zambia? ..............................................................	7
How Solvent Extraction Electro Winning (SX-EW) works...........................................................	7
Key risks and other considerations ...............................................................................	8
Valuation......................................................................................................................	9
Valuation approach ........................................................................................................	9
Peer companies ............................................................................................................	10
Opportunities and upside.............................................................................................	13
Jubilee model cashflows (operations included in financials) .......................................	14
Sensitivity .....................................................................................................................	15
Jubilee Metals operations...........................................................................................	16
Zambia ..........................................................................................................................	16
Leopard Copper (Northern refinery strategy) ..............................................................	16
Tailings processing plants at Lechwe and Elephant .................................................................	18
Production (expected from 2023 onwards).............................................................................	18
Sable Copper (Southern refinery strategy)...................................................................	22
Production (building up from Q3 2021)...................................................................................	22
Kabwe (ZnPbV) tailings resources ................................................................................	23
ZnPbV resources ......................................................................................................................	23
Zinc Circuit ...............................................................................................................................	24
Lead Circuit (potential) ............................................................................................................	24
Future plans and upsides .........................................................................................................	25
South African PGM-chrome operations .......................................................................	26
The chrome tailings resource opportunity ..............................................................................	26
Inyoni .......................................................................................................................................	27
Windsor and Windsor 8 ...........................................................................................................	28
Dilokong (DCM)........................................................................................................................	29
Tjate.........................................................................................................................................	29
Financials....................................................................................................................	31
Model inputs ................................................................................................................	33
Chrome ....................................................................................................................................	33
PGM .........................................................................................................................................	33
Copper .....................................................................................................................................	33
Zinc-lead(-vanadium) ..............................................................................................................	34
Operating costs........................................................................................................................	34
Capital costs.............................................................................................................................	34
PGM market ...............................................................................................................	35
Chromite ....................................................................................................................	35
Copper........................................................................................................................	35
Jubilee board and management .................................................................................	36
Shareholders ..............................................................................................................	36

WHIreland

2

Jubilee Metals

Jubilee investment case

Robust business

Cash-generative

Production growth momentum

Increasing revenues, profits and cash

The story is growth, growth andcontinued growth

Jubilee Metals (AIM:JLP, Alt-X:JBL) is quickly transforming into a full-scale operating company, and beginning to generate significant amounts of cash. It operates several chrome-PGM operations in South Africa and is constructing a series of copper raw material and refining plants in Zambia. It has a growth pipeline, with the "Jubilee Way" combining an experienced, technical management team with innovative processing techniques to generate cash (mainly) from the waste material produced as part of the mining cycle. The company's model to recover metal from waste puts the company in line with the many new ESG principles being demanded by investors.

We see fair value in Jubilee at 29p/sh.

Low-risk production. Established processing techniques on waste materials at the surface and pre- crushed/-ground.

Growth and expansion in all aspects of the business. This is the start of the process to turn Jubilee into a large multi-commodity and multi-country producer.

Simple production techniques

Low-risk production and new strategy in South Africa: Jubilee has a productive and low- cost PGM flotation plant at Inyoni (recently expanded to 55koz/year), which processes the tailings from chrome processing - tailings arising from Jubilee-operatedchrome separation plants and existing tailings that it owns. The new PGM strategy presented is for a fully flexible, unique series of chrome recovery plants to take run of mine (ROM) from various chromitite layers from the Bushveld (Figure 17) with the Inyoni PGM plant set up to maximise recovery from the different mixes of tailings (gangue, PGM ratios, etc.). Costs of PGM production are low (lowest quartile of the cost curve) and offer a route for investors to expose themselves to South African PGMs without the risks associated with deep mining. Jubilee's plans to grow have involved it taking control of the production of its own PGM-richmaterial by treating chrome ore for other people and keeping control of its own tailings. The deals done leave Jubilee with a modest profit for pre-treatingits own feed.

Growth and expansion plans in Zambia: Jubilee is transferring its expertise in treating waste and dump materials to Zambia and where it has a two-prong refinery strategy to recover ~30kt/year of copper. It has recommissioned its Sable refinery (to be supplied by its Roan tailings project at Ndola) and will now embark upon recommissioning the Nkana SX-EW plant (to be renamed Leopard) to treat tailings from its Lechwe and Elephant plants (at Luanshya and Kitwe, respectively). A phased construction and commissioning schedule should see full production from Sable (14kt/year) in FY2022 and then sequential production from Leopard from FY2023. This is Jubilee's growth trajectory and we don't rule out additional tailings projects being added to the portfolio.

Simple concept in South Africa: The process developed by Jubilee removes the fine- chrome from tailings, thereby upgrading the level of PGM in the tails to levels that can be economically recovered. With Jubilee now taking charge of the full plant for chrome processing at Windsor, Windsor 8 and Hernic Jubilee is effectively controlling the feed into the Inyoni PGM plant as well as being paid a fixed margin to treat the chrome ore. This is a win-win for Jubilee; a win-win created by its technical excellence.

Co-product production reduces risk Co-productadvantage: We are struck by the co-product nature of the Jubilee projects, whereby chromite and PGMs in South Africa, and copper and cobalt in Zambia can be produced from the same material treated - thus ensuring separate revenue streams of metals and metal products that may be at different points in their own commodity cycles; a natural hedge. Once the Kabwe tailings project is up and running (2023 WHIe) Jubilee will also have exposure to zinc and possibly vanadium and lead as well and will become a multi-commodity,multi-jurisdiction company.

Chrome production - essential for upgrade and production of PGMs and can be a lucrative product in its own right

Chrome is a useful by-productcredit: At the moment, with chrome prices depressed, chrome is not contributing much to profit; it is, however, a necessary first step in the upgrade of PGMs to recoverable levels so, in effect, chrome production is paying to pre- concentrate the PGM circuit feed. However, once every few years, the recent experience has been for there to be a large price spike (see below in the Chrome commodity section)

• at full production, Jubilee chrome could generate a useful contribution to profits.

Don't underestimate the green	Value in the "clean-up" profile of Jubilee: With the growing demand for solutions to
credentials of tidying up mine waste	mining wastes and the growing requirement for ESG in mining investments, the pedigree,
	experience and ability of Jubilee will be of increasing importance over the coming years,
WHIreland	3

Jubilee Metals

PGM market is strong and likely to remain so for the foreseeable future

Management team a key differentiator

Not complicated - the key is the people operating the plants

Diversification of commodity and country reduces risk

We see plenty of opportunity to present itself in South Africa

Growth profile in Jubilee establishes a momentum

Ever-increasing cash generation - so important in the current equity market

in our view.

Clean-upand cash generation in Zambia: The years of zinc-lead production at Kabwe in Zambia have left a legacy of tailings at the surface. Jubilee's applied processes will significantly reduce the historical tailings footprint while at the same time recovering valuable metals. This could be seen as a model for other environmentally sensitive areas.

Exposure to PGMs at the right point in the cycle: The recent rise in price of the PGM metals on the back of increased demand and issues on security of supply (geopolitical or scarcity concerns) is well timed for Jubilee. As Jubilee consolidates its PGM production at Inyoni, the price rise has ensured significantly enhanced revenues per ounce at just the right time in the company's development. The PGM business is the current driver for profits at Jubilee and PGM production will maintain its position as an important component of revenue and profit going forward, even as Zambia expands.

Experienced management team: The management team is made up of experienced engineers with a thorough pedigree in the metals mining industry. This is a process- and technology-led company where working on the margins is essential to ensure high recoveries.

Simple technology (it's not what you do, but the way you do it): The processes used by Jubilee in South Africa are not new and do not require a special "black box" - the technology is off-the-shelf.The key is the control of the material through the plants and in a well-designedJubilee process flow sheet - the IP is in people and methodology with constant drive to improve.

Diversification: Jubilee operates in several commodity markets and in two mining countries in Africa. With its innovative approach to treating wastes, and with many accumulations of surface waste across Africa (and the world) there is significant potential for Jubilee to expand its footprint once it has achieved its expansion in South Africa, developed its copper strategy in Zambia and commissioned the Kabwe zinc(-lead) plant in Zambia. Jubilee will have demonstrated its credentials in a wide variety of circumstances and, hopefully, will become a partner of choice on further legacy tailings projects

But first… …roll out in South Africa further? In our opinion, there are plenty of opportunities to access waste chrome dumps. Jubilee has already shown it can partner with larger producers and has demonstrated that its approach works well in recovering additional chromite. We expect Jubilee to take advantage of any opportunity.

Momentum: Jubilee is moving from development to cashflow and expansion. A company hitting its own targets and showing opportunity creates its own momentum. Perhaps the best demonstration of this has been earnings growth over the past year(s) - Figure 24 - and where Jubilee can demonstrate delivery on its projects and promises to the market. We point to key catalysts over the coming years that could substantially improve the position further: expand copper production in Zambia, add in Kabwe zinc production and lead production with the potential for vanadium production. This is before we see the rollout of fine chrome and PGM plants in South Africa to take advantage of the waste from decades of chrome mining with tailings that are still available for further treatment.

Increasing cash generation: The profile for Jubilee is all about growth: increasing production, increasing revenues, increasing profits, and ever-increasing cash generation. In current markets, the ability to generate cash is a major positive, in our opinion, as it leads to balance sheet strength, independence and negotiating power. .

Jubilee is a low-risk,multi-commodity,multi-country metal producer with low overheads and low operating costs. It is cash-generative, with supportive shareholders and a profile of significant growth and opportunity. It relies on off-the-shelf technology, tailored to each individual situation by its talented team of engineers. The gold reprocessing space is full of peers, but few are looking at the obvious potential of non- gold opportunities in Africa - Jubilee is in pole position to benefit from this ambition.

WHIreland

4

Jubilee's strategy is growth

Applies new thinking to old problems of metal recovery

This is not "scavenging" what was not recovered before, but a holistic approach to "recovery" - looking at things in a new way

Blueprint established in South Africa now rolling out in Zambia: start small, own facility and add in existing tailings and expand footprint by making strategic partnerships

Who are Mopani ?

Mopani owns and operates mines, and processing plants at Mufulira and Nkana and has a traditional smelter/refinery for sulphide copper concentrates at Mufulira

Existing and functioning Sable refinery at Kabwe - plan is to fill it up with raw material

Add in a second production facility centred on the Leopard refinery at Nkana deep in the CopperBelt and surrounded by closed and operating mines with plenty of raw material dumps.

Jubilee Metals

Jubilee strategy

Jubilee's strategy appears, in our opinion, to be focused on growth, based on: i) applying a sound foundation based on technical excellence (Jubilee's senior management are all experts in either mining, mineral processing or metallurgy); ii) gaining access to resources of base and precious metals, which have been overlooked or put in the "too difficult" category; and iii) applying new thinking to recovering the contained metals.

We want to stress that we do not believe this is "scavenging" the final bits of metal left behind in tailings, but rather relooking at the whole basis for metal "recovery". This is making the most of the metal that remains to be recovered and taking advantage of the fact that the metal is contained in materials that are pre-ground, often in one discrete volume, easily mined (hydro mining or just free dig and move) and often just "in the way". For example, the relocation of tailings away from the centre of Kitwe and Kabwe could create valuable real estate land.

Recent successful PGM strategy in South Africa: Jubilee's recent success is based on tying up supplies of PGM-rich tailings in South Africa left behind from the chrome industry and to recover those PGMs; obviously helped by the historically high prices of PGMs. This strategy has been achieved, with Jubilee actually taking over production for several companies, and producing a stream of chrome concentrate back to the miner while keeping the PGM-rich tailings for its new expanded and flexible PGM flotation plant at Inyoni. Jubilee now has a steady production pipeline, although we do not rule out further enhancements and additions to its portfolio over time. Jubilee offers a partnership for the suppliers of chrome ore, which leads to a stable relationship, in our opinion.

Onto the growth engine for Jubilee - Copper strategy in Zambia: For a long time, Jubilee talked about expanding its existing 15kt/year capacity copper refinery at Sable into a 25kt/year copper cathode producer. This made sense in that the infrastructure was available, even if the copper raw material supply was some distance away. However, with the announcement of a deal with Mopani −now Zambian government controlled (83%) after Glencore sold its 73% holding in 2021 − Jubilee has articulated a new strategy, which incorporates a two-refinerystrategy: Northern and Southern. The "Southern" refinery is the existing, commissioning Sable plant while the "Northern" refinery is an existing plant (on care-and-maintenance)to be renamed "Leopard" at Nkana. The plan, as we understand it, is for:

Southern strategy (Sable refinery at Kabwe)

• To produce 13kt-14kt/year of copper cathode at the Sable refinery.
• 10kt/year to be supplied from the Roan plant (processing ROM and then high-grade tailings at Ndola) and also 3-4kt/year from third-party suppliers (paid a % of the copper price)
• Roan will also produce a small amount of copper sulphide concentrate to be processed initially at Mufulira smelter by Mopani. However, Jubilee also has a small pilot plant to learn how to leach the sulphide concentrates. If this pilot plant is successful, it could revolutionise Jubilee's plans in Zambia.

Northern strategy (Leopard refinery at Nkana)

• To produce 12kt-15kt/year of copper cathode
• Copper oxide concentrates and upgrade tailings to be supplied from the Lechwe plant (processing tailings in Luanshya) and the Elephant plant (processing tailings in Kitwe).
• Lechwe and Elephant plants will also produce conventional copper sulphide concentrates, which will be sent and treated by Mopani at the Mufulira Smelter. This will produce in the order of 9kt/year contained copper.
• To produce cobalt - probably in the form of a hydroxide - a valuable by-product revenue credit. Details yet to be finalised.
• The Leopard refinery will be reconditioned to produce up to 17kt/year copper cathode - this is half of its rated capacity. Jubilee has also tied up a deal with Mopani for tailings at Mufulira. We expect a new processing plant to treat these tailings to be announced in due course. It will produce copper oxides, which we expect to be

WHIreland

5