Jubilee Metals Group PLC (JLP) Earnings Call Transcript
August 19, 2025
Earnings Call Speaker Segments
Good morning, and welcome to the Jubilee Metals Group PLC Corporate Update. [Operator Instructions] I'd now like to hand you over to CEO, Leon Coetzer. Good morning, sir.
Good morning, and thank you, and welcome to everybody that has signed into this very important discussion that holds the potential to set our company on a copper dedicated course. Good morning to our U.K. listeners, and good afternoon to our South African listeners who have dialed in. This morning, what we have planned is to run through a very brief presentation and then really get into the meat of the discussion, and that is the questions, and thank you for the numerous questions we've received prior to today, specifically targeting on the transaction that we'll be discussing, what does it offer us, what's the potential we're pursuing in Zambia? And of course, how does the valuation of our business in South Africa, how is it influenced and what factors have been considered in determining that offer value? I'm joined this morning by Jonny, our FD as well, who will be assisting with some of the questions and also addressing some of the presentation area. Without further ado, let's jump straight into the very brief quick overview and what we thought of structuring the presentation is, first and foremost, just first correcting and establishing what it is that we are pursuing in Zambia in our copper business. Working through those -- on the content side, as we said, we'll very briefly touch on the transaction summary, give a bit of an overview on the strategy, dive into a bit more detail, specifically relating to some of the questions as well around Roan and Sable, our mining operations that we are establishing and of course, the decision we took to monetize some of our non-core assets, and that process is well on its way. If we therefore look at the first slide, which speaks to our transactional summary. I'm going to hand over to Jonny just to talk us through the key highlights, some of the financial numbers that really influence the decision to support this proposal.
Thank you, Leon. The page you can see at the moment is just a distillation of the facts and figures, which are set out in the circular and the RNS that went out with the circular. There's nothing new added there. It's all pretty self-explanatory. I don't propose to go through line by line. But I do want just to pick up a couple of items now, which might just save some of the time on the Q&A session at the end. The first one is, I think it's 1, 2, 3, 4 -- the sixth one down, this says it's -- the enterprise value is $146 million, and that's a 6x multiple on the EBITDA. Now I've had a lot of questions over the last couple of weeks where people were not sure what we were actually selling. We are selling and have given a guarantee to the potential buyers that the net assets Sable will acquire will be at least $90 million. In addition to that $90 million, there is a number of trade loans. They are very short term in nature, 3 months is the norm, and they totaled $40.5 million, plus a revolving credit facility from a bank of $16 million odd, which is moving across. That gives us net assets of $90 million plus loans and trade finance of another $56 million, which gives us an enterprise value of $146 million. So that's how that number is calculated. There's been a lot of confusion on what the actual loans going across are. Now the vast majority of those, as I say, $40.5 million are trade finance. That's our working capital finance because it takes a long time to buy ROM, process ROM, sell ROM and get paid for the end product, the concentrate. So that's why we've got quite a lot of trade finance. Some people have suggested that -- bizarrely that we've never reported this loan before, it's not under bank loan, it's under -- it's in debtors, which is probably why people can't find it. But that hopefully just tidied up where those numbers come from. And the other item I'd just like to pick up on here is the item above that is that what we are looking to do is potentially look at dividends and/or share buybacks. Because this was -- this transaction came very quickly at us, we haven't had enough time to go and talk to our shareholders to see what they really want. We've spoken to a few of the larger shareholders, and they've suggested that a share buyback is what they would prefer. However, we haven't spoken to enough retail investors and smaller investors to see what their views are. So this will be work in progress, which we can start as soon as we know whether shareholders are going to vote in favor or against this proposal. And the other thing which I'd just like to point out is that this was an unsolicited offer. It was made to us. We had a friendly relationship with the potential buyer, but it came to us at a very short notice. And therefore, we've had to act very quickly. So the fact we haven't thought things completely through and hadn't the time and effort and luxury to talk to all the shareholders about where we're going to go with the future, we can only apologize for, but it has been full on work for at least the best part of 2 months now. But that's basically where we are. Shall we move on, Leon, into Zambia?
Absolutely. Thank you, Jonny, for that brief overview of the transaction. As we said, of course, the circular contains a lot of detail around these numbers and to also try and project impacts of metal prices, et cetera. But if we really delve back into Zambia, the key topic, and what Zambia is and of course, many, many lessons learned and very expensive and challenging lessons learned in Zambia during our time there. I think when you look at Zambia, what it is today and what our copper business is today, it comprises 3 very independent businesses. These 3 businesses, we've restructured to ensure that the reliance on one another is minimized. This restructuring and refocusing of the business was driven by the various challenges and no more so than power and electricity and infrastructure challenges that we faced in Zambia and which is quite well publicized in Zambia, where our original focus was one of centralizing processing, centralizing operations with diverse assets and resources that are upgraded and brought into a central location. What this dependency highlighted was our exposure to a stable infrastructure and power supply in all of the components of the business. To break up that interdependency, we've restructured our operations and invested into operations to become self-sufficient, and meaning -- self-sufficient, meaning non-interdependent between our processes. And that's why today, if you look at our operations, we have our first business, which is our Roan facility. Our Roan operations is a business that very much mimics what we've done in South Africa, where it buys in material from other parties, third-party materials. It processes this material and produces a product that it then sells into the market. During this initial interim phase, some of the product that Roan produces is then also refined at Sable. Separate to that, our second business driver is an integrated value chain. It is one where we pursue a business that is both mining all the way through to metal production, a true mine to metals operation, mimicking a traditional copper company, where you have your resources, which you mine, you upgrade these resources and you refine them to cathode. We have, and we'll go into some details of that. We've secured two mining opportunities. When we say mining, we're speaking of resources that are particularly shallow, start at a very shallow depth, and we are operating them as open pit operations. A third component of our business, again, independently being developed is that where we couple a very large surface resource, and we couple that to a processing facility. And that is our large waste project, which is our highest priority. It is an extremely large waste heap estimated to be more than 240 million tonnes at surface. It's the size of a mining operation on surface. And it will be complemented with various modules, processing modules, which we've become so renowned for implementing in South Africa. We've rolled out 10 and nowadays nearly 12 of these modules already. These projects -- this project will seek to implement these modules where we upgrade the material from its current state into what is more traditionally recognized by the copper market. This upgraded material can then either be refined further by ourselves or sold into the market as an early cash flow generator. As part of that strategy, as we've told the market, we hold a vast portfolio of surface assets. Some of them have shown through the research and development work to be less attractive, either to be very remote as well, and therefore, the capital required to unlock these opportunities are quite high. And these assets we've classed and those assets that do not fall within our immediate or medium-term scope, we seek to sell. We've had some success already with the strategy, which we'll touch on a bit later. Of course, key to this 3-pronged business approach, which gives us diversity across Zambia. Each of these businesses are in separate areas of Zambia, in fact, in separate provinces of Zambia. It, therefore, has a diverse footprint rather than a single reliance within a single centralized footprint. We're driving a sustainable and increasing copper production drive at the moment already as we've shown in June and July, our numbers are stepping up, and we're producing well above what we previously have produced in copper as we roll this out. Of course, with Jonny and his team, capital allocation is an extreme disciplined approach that we apply into Zambia and into the growth of these 3 businesses. As we discussed, Roan and Sable, which is a processing footprint that has a different supply arrangement. Roan's production is supplied via third-party materials. The typical contract style of these third-party materials are very similar to what we've implemented in South Africa on our own chrome as we call it, rather than our toll processing agreements, where we purchase ROM, we purchased the rights to that material. We process that material and we sell it into the market. When we purchase that material, we've negotiated a fixed dollar per tonne rate qualified by the copper grade in that material that we bring to our facilities. We complement our run-of-mine acquisition with waste or tailings material that is processed simultaneously at Roan. The ratio between these two groups, be it waste and be it ROM, is driven by the content of this ROM as well as the type of waste we bring in to allow us to maximize the combination of copper sulfide concentrate we produce, which is sold directly into the market, and copper oxide material, which is refined further at Roan -- at Sable refinery. As we discussed and announced earlier, we are targeting to add a leaching circuit at Roan. Roan, as you can see on the map on the right, is quite distant from Sable. And by adding a leaching circuit at Roan, it allows us to take that copper oxide fraction and upgrade that significantly into a high-value product that can be sold directly into the market or, if necessary, transported down to Sable to be refined further into metal and at that high-value level that we reach, the distance of travel doesn't have a material impact on the actual cost structure of the copper units. Sable Refining, which sits in the central province as it's shown there on the right. Sable Refining, what we're targeting for Sable Refining is to become independently fed from its own mining resources. It becomes a dedicated mines to metals business in that area. And that drives the Sable expansion, the need for more capacity at Sable to take up the potential from these mining operations. We've given our guidance in our previous announcement where we're guiding to just north of 5,000 copper units being produced from Roan and Sable over the next 12-month period. That, of course, is taking into account bringing into operation our mining operations, bringing down, as we discussed, Munkoyo as we expand our Munkoyo operation and bringing it back up into operation. It does not include any of our current capital projects that we are targeting to implement both at Roan, Sable and our Large Waste Project. Just want to go back because that seemed to have jumped. Excellent. So when we then look at our mining operations itself that we're targeting, what we call the hub-and-spoke method, what that speaks to is Munkoyo, which was our first acquisition of a mining right in Zambia. We paid -- roughly invested $1.7 million to acquire this right from the initial testing of Munkoyo, it indicated the enormous potential to acquire further rights around Munkoyo to give it further scale. And with that scale, it allows us the opportunity to bring a processing facility dedicated to the Munkoyo district. The processing facility is function -- primary function is to upgrade the ROM prior to transporting it to our refinery for refining. It's not at the scale of investment that a Roan full facility is. It is purely targeting upgrading facilities to upgrade the ROM to north of roughly about 5.5% to 6% copper before it is transported for refining in our refinery. We have, as we discussed and indicated and alluded to in our announcements, we have taken up various options on further exploration ground surrounding Munkoyo to allow us to scale that operation. The initial drilling happening at Munkoyo has already indicated the potential of scale. It is the reason why we, instead of running what they call satellite pits, we instead look to implement a continuous large pit for Munkoyo, driven by those early results from the ongoing drilling program. Our second mining right or we have acquired is what we call Project G. It is within the same district area around Sable to look to feed directly into Sable. Again, a very similar model, upgrading of ROM, ROM is upgraded and then transport direct to the refining circuit. We have engaged a strategic partnership discussions with established exploration and mining companies to accelerate the drilling of the resource and to implement the mining operations at these opportunities, which we then become the processor within that strategic partnership. It addresses the key risks we identified in our South African operations where our company is not anchored by a resource. But instead, in South Africa, we are fully reliant on third-party supply of material. Under the Zambian strategy, this business, this integrated, mine-to-metals business is anchored by resources owned by Jubilee, and therefore, secures your long-term supply, your life-of-mine supply into your operations, and it ensures that you enjoy a larger exposure and margin to your copper prices and copper market. The monetization of our non-core assets we've discussed. That's an area that Jonny had driven quite hard in our company because we sat with assets on the balance sheet that had showed no real opportunity to, within the medium term, monetize some of these assets or bring them to value. And as we alluded to in our update in the market, we've already implemented two transactions in this space, one valuing roughly $2.3 million. And the second was an initial trade within this large waste rock dump of 240 million tonnes, where it allowed us to sell a component, a very small fraction of this material, but gave us access to all of the grade analysis processing data that this material generates. It's like a paid-for exploration program that we could launch on this particular material. And we have identified 3 further potential assets that we could look at trading or selling from our current balance sheet. This allows us to monetize assets earlier. It allows us to turn that money into value by capitalizing the projects we've alluded to. And of course, it ensures a non-dilutive style funding program that we pursue to our shareholders. As we then look at the capital projects we pursue. And maybe, Jonny, if I can hand this over to you, this is an area that you and the team are managing very strictly in our group. And maybe I can hand this slide over to you, Jonny.
Yes. Being the new boy to the team, one of the first things I did was to look at what we've had over the years. And the disposal of non-core assets was quite high on my list of priorities. I mean we wanted to really see what we needed and where -- what we needed was and the tailings dumps, which we're not going to blend with ROM. Some of them were quite a long way away from anywhere. And I don't think they will be easy to sell. But all the ones, the smaller ones, which are closer to facilities, I think will be sold within a year, which is very good news. But what I wanted to do was to turn those assets which have been sitting on our balance sheet, earning nothing, in fact, costing us money every year, not a large amount of money admittedly. But what I wanted to do is just release that cash back into the balance sheet so that it can pick up some of the slack on CapEx problems or even OpEx if we needed it, but it was just a better use of our capital rather than having assets on the balance sheet doing nothing. I think when we look at the Large Waste Project, the idea of selling 10 million tonnes was something I'd suggested to Leon just to see if we can get a value. And I wasn't really expecting Leon to get his marching boots on and sell it so quickly. But I think the fact that Leon was able to do that shows how much demand there is for copper projects in Zambia that it's almost a land grab, in my opinion. There's a lot of companies looking for copper assets. So even waste and tailings, there is a pretty good chance of being able to sell them at the moment. When Leon sold 10 million tonnes at $6.75 million, that gave an implied value if you could sell them all of those 240 million tonnes of $170-odd million, which is fantastic, but it would take a long time to sell that because it is a very large area. You need to get access and there'll be lots of lorries on the roads coming in and out all the time. So it doesn't lend itself to just being sold with no value add. So therefore, to look to go into production seems like a sensible thing to do if it can be done cheaply, effectively and without sort of disturbing any other parts of our business. I think that's a good idea. Strategic partnerships -- sorry.
No, just fully agree with you saying no, Jonny.
Sorry, there's a bit of an echo. I think the idea of using the value from the waste projects and using the value of our mines to bring in joint venture partners allows us to focus on what we're good at. We're good at processing. We're not miners. And I think if we bring in people who actually know how to mine properly, then we start to look like a proper mining to metals business. We're not set up. I mean, at the moment, our artisanal mining is just advanced gardening. It's not a great deal than just digging down, but it needs to be done properly, it needs to be planned. And I hope that when we get the full results back from the drilling that we have a life of mine, a mine plan, and we're actually going to produce from it like a proper mining company would. We know that if we can get the product to our processing plants, we'll process it properly. But we just don't know that with the assets and the people we've got at the moment, whether we can mine it properly. So that's why we're looking to bring in the expertise. And hopefully, they'll bring in some capital as well if and where we need it. And all that should be non-dilutive to shareholders, which is a good thing. And we're very keen to look at not asking shareholders for any more money. I mean the sale of South African assets should get us right the way through our capital expenditure programs in Zambia that we've got lined up, and they go out nearly 5 years. So I think we're in very good shape.
Thanks, Jonny. Thank you for that review. I think with that, we conclude on the specific topic of Zambia. And really, I wanted to make sure that we've secured enough time to answer the many questions that has been sent through and engage on them so that we can just get to some of the detail and also some of the views that have been shared and maybe educate on some of the numbers. To delve right into them. And what we'll be doing is try and answer them per groups on a particular because there were some repetition. And when necessary between Jonny and I, we'll address them as best we can.
So if we jump into the -- one of the first questions that came in, and Jonny alluded to it in the last slide was the question on partnerships, specifically to Zambia. And I know it doesn't speak specifically to the transaction of South Africa, but the question really was based around partnership and why pursue partnerships in our projects if they are that potentially lucrative to the group? And the answer, Jonny, as you discussed, are quite often driven by 3 different main pressure areas. One is, who is the expert that can add true value into that activity, being mining, processing or refining? As Jonny alluded to on the mining side, there's great value in bringing in a true exploration mining company to ensure the implementation of that project is accelerated and their skill is brought into that project while we focus on what we are so renowned for, and that's the processing of materials quite often overlooked by industry or regarded by industry as too complicated. Classic example is the Roan Concentrator. The type of material being processed at Roan is nontraditional. These are not ores that are typically processed by copper companies. They are transitional reefs, which means they have a combination and varying combination of oxides and sulfides. It's why the concentrate and cathode production ratio shifts regularly, and we try and offset that by blending in certain waste material into that company, equally on the Large Waste Project. Partnership on the Large Waste Project offers us the opportunity to scale faster. It also offers us the opportunity to significantly reduce the capital for that project. For example, if we were to partner with a company with an existing copper refinery within the region, it means that for us to upgrade the material to a certain level, it offers us that opportunity to sell that directly on to a partner for improved terms, offering them a position in the project they buy for cash into that project. So there's tremendous areas of value in Zambia where you can leverage off partners who have already overcome infrastructure challenges, who have secured their power allocation for their operations. And that's the rationale behind finding a partner and critically a partner that shares the same strategic focus of that project. The second group of questions speak very much around the valuation of the South African business. And there's a huge focus on the current PGM prices that have escalated as we referred to in the circular, where the question really centers around have we taken into account the PGM price appreciation within the negotiations of settling or agreeing to a valuation of our South African business. And maybe to answer that question, first and foremost, is to explain, well, what is the South African business, and that drives its valuation. Because when you look at the South African business, what you look at is a processing company. It's why our balance sheet is made up of plant and equipment and know-how, intangible know-how. It is not supported by a very large resource-based asset. It's why its evaluation very much centers around its current asset value and the fact that you enter into short- and medium-term processing agreements, your ability to negotiate on earnings future multiples becomes challenging. And that's the focus of when you look at our company. If you look at unpacking our balance sheet, it's dominated by, of course, plant and equipment. But your intangible net asset value, nearly 23% of that is made up of know-how. Maybe, Jonny, you want to add to that discussion?
No, I think you've hit the nail squarely on the head there, Leon. It's our know-how, $21 million out of $90-odd million of net assets, and we're getting paid for that in full. It's great to see it. Now if you think we've got tolling contracts, our tolling contracts are actually quite short. They traditionally, over the last few years, have been 2- or 3-year contracts and they roll -- don't all roll at the same time. So you think our valuation on those would only be the life of those contracts. But we're looking at an EBITDA multiple of 6. And if we look at profit after tax compared to net assets, it's a multiple of mid-teens. Now that's a very good multiple. It's knowing what to look at. When you haven't got any resource, you've got to look at your earnings and how you're getting them. And it's great when things are going well. But what we've seen recently is when things don't go well, unfortunately. And at the back end of last year, when chrome went from over $300 down to about $185, I think it's worse, that drop in the chrome price was immediate. So when we were selling something, it went immediately to the lowest price. However, because we don't have our own resource, we have to buy in chrome ROM. Now the price decrease of chrome ROM didn't follow the pricing of chrome. There's a lag, and that lag was months. And when we were still buying chrome ROM at a higher price because the market in chrome ROM doesn't follow exactly, we're squeezed at that end. We're also squeezed by the purchases because they don't want to pay up if they can see the price going down. So without your own resource and the ability to turn things off and on, you'll get squeezed, and that's not a happy place to be.
Quite correct, Jonny. I mean you made one critical point there as well that maybe just to make sure that our shareholders are truly educated on what is the material that really drives our South African business. We often speak of run-of-mine. And in our case and in the industry we are in, our run-of-mine is predominantly chrome ore. And therefore, the viability of our third-party suppliers are dependent on the chrome market. The chrome market determines their viability. The traces of PGMs, or platinum group metals, in that reef does not drive their viability because if you look at the physical content of chrome versus the PGMs in that reef, it's very large weighted towards chrome. And therefore, the chrome viability is extremely important for the operations. And yes, PGM prices have appreciated. But equally, chrome prices have depreciated over this period. Chrome remains at $260 to $270 a tonne, well off its highs over the past. And one must not confuse chrome ores with platinum group metal ores, which your traditional platinum producers mine. That's very different. That reef type is dominated by the PGM value package it brings. It is a multiple more PGMs in that ore than in chrome ore. It is why their dependency is very much on the platinum group metals. And one must draw that distinction. We are a -- we recover platinum group metals out of the traces in chrome ore. We do not recover platinum group metals out of a traditional platinum group metal reef. On the questions on how did the increase in PGM prices impact the valuation of the company. I think it's one of the main drivers why the team was able to secure full value for our net asset value, was able to secure full recognized value even of our intangible know-how within the group in that evaluation. The next group of questions that we look at really spoke to the valuation of the PGM tailings material, the existing historical PGM tailings material we already own. It is a stockpile of material we acquired a couple of years back and secured those rights of the PGMs within that tailings dam and how that impacts. Of course, on that valuation, the PGM tails is within our balance sheet. It is recognized within the balance sheet. And again, just to be clear that, that amount of material that is there, as we allude to in the circular, it's not material you can pick up and come and process as is within our facilities. It contains particular elements that first requires us to remove those elements before we can bring that material into our facilities. It therefore means that those dams require capital to remove those elements first before bringing it into our facilities to try and make a salable product. It's not something that is immediately available to be picked up. Also, that material, when you look at the recoverability of the PGMs over that material, you're looking at a far lower recoverability of PGMs than getting it out of fresh ore that hasn't been weathered or exposed to the atmosphere. Unlike copper, when PGMs oxidize, it becomes extremely difficult to recover those elements through the traditional processes we deploy. So it's incorrect to make extrapolations we've seen in some of the questions on in situ value of PGMs and use the full basket value of PGMs to try and derive a valuation. No PGM company works that way. We only secure roughly, as our results shows, 77% of a basket value in our revenue for the concentrate we produce. We don't produce platinum metal, we produce a concentrate. That concentrate because it stems from chrome-rich ores are penalized for its remaining chrome content by the PGM refineries we sell to. And therefore, the valuation of that PGM material as much as it's valuable is not the kind of numbers that I've seen in the questions that come through. One has to take into account the capital, the time of implementing that capital and the recoverability of those PGMs. Our JV partners that we've used in the past with the appreciation of PGM prices, of course, squeezes out capacity available to this type of low-grade material, which is the opportunity presented to us at the time when PGM prices were a lot lower.
Leon, I did a quick calculation looking at the PGM mountain. And I think with the carbon content and everything else, if we were to process that rather than what we're processing at the moment, we'd only be doing about 2,000 ounces a month. It's 1/3 lower than what we're producing.
Absolutely correct. It's a very simple calculation for those who want to do it on the calculators because you'll process more tonnes to make 1 ounce and your capacity of your facility is dictated by how many tonnes you can process because of the low grade.
And we wouldn't want to do it when we could process higher earning PGM stock anyway.
No. No, it wouldn't be a very -- it wouldn't be a correct decision at all. Absolutely. And then, of course, the view on PGM prices going forward, there are many views out there. We have had detailed research done, and there are many varying views, some more positive than others. Yes, of course, there's a view that the hybrid vehicles are becoming more in demand in the world as originally expected electrical pure EV or pure electrical vehicles would be the flavor. But just take into account that one has to look at overall growth of the internal combustion engine. Because where we come from is a pure internal combustion engine, which meant that all of the exhausts of these motor vehicles required some form of platinum group metals in their catalyst. So when you take a view on PGM demand going forward and the sustained demand, one has to compare what was the demand for internal combustion engines, what do you expect that demand to be going forward? And therefore, if all of EV cars are replaced by hybrids, it means that all of motor vehicles will have some form of internal combustion engine is where we used to be in the automobile area. The next group of questions speaks about practical costs. How would it impact if this transaction goes forward? How will it impact overheads, head office costs within the group because we are letting go a very large portion of the company? And what would that impact be on the group? And what our results show and what you'll see in our results is that we've been quite proactive. Our overhead costs are actively being reduced. We've downsized our Board in the company already. And of course, something Jubilee has always done very well is keep a very firm grip on costs, and we'll continue to reduce those costs already, as you'll see in our results that overhead costs are, in fact, coming down in the group, and we expect that trend to continue going forward. Also to just be clear is that all of our current central group employees are being retained. All employees associated with the South African operations will go with the transaction, and therefore, a very small core team remains as our group employed employees. The next group is really around -- centers around who is this company? Who is this company that made this unsolicited approach? Do we know them? There's some strange theories about whether they are related in some way to us or to some of our current toll processing companies and somehow whether there's some related party component within this transaction, all of that, of course, if that was a case, it would have been disclosed. But who this company really is, it is a conglomerate that's been formed from various groups that have come together. Some of these companies already have partnered with Jubilee or we've partnered with them as discussed. This company took the strategic decision to form a fully integrated chrome company from mines to metals to trade all the way through. And in doing so, their mining -- chrome mining operations looked to secure a processing arm, and they had come to the conclusion that it would be faster to acquire a processing capacity than construct their own. It is a trend at the moment that is counter to what is seen in the chrome industry where more and more of the Eastern money coming into chrome prefers in-sourcing chrome processing, owning processing within the value chain rather than outsourcing it to a company like Jubilee as it's just a strategic decision taken. It is an example of why our OBB contract was not renewed as it was brought into the company as part of the strategic integration of the value chain that we see a trend where the resource owner is trying to secure more margin for themselves to protect them from the fluctuating chrome prices, especially the downward pressure that's been on the chrome price over the past 4, 5 months in chrome. So it's quite an opposite trend to seeing someone step in and acquire a processing company. In fact, it's a very difficult peer group to be in because there is no other company like us where we are a pure processor. And it's quite uncommon to find a resource company acquiring a pure processing company. The next group of questions speaks to the payment terms. And Jonny, this is something I'll pass across to you just to answer maybe in more detail, but really ask the question around if we are receiving money over a period, how secure are these payments? What drives the time line of these payments? And that's a question that has come across -- has come to us from a few shareholders.
Yes. If I tackle the first part of that as we go. The way the structure is set up is that as and when we receive monies, we release a percentage of the shares in the companies that are being sold to the acquirer. So for example, if the acquirer pays 20% in one slug, we release 20% of the shares. So it's -- what they pay is what they get. However, towards the end of the transaction, once they get down to 25% plus 1 share, anything they don't pay after that, we retain 25.1% shares right until we receive the very last payment. So therefore, we have more control relative to what we've received in cash. So in theory, we could have received $80 million out of the $90 million, but we'd still own 25% of the shares. And that's just to make sure we don't end up with a very small rump of shares, just say, 10%, where we would have no control. What we would have at 25% plus 1 share is that we can block special resolutions, and we have some other controls in -- which have been negotiated. So that's a positive step. We've also, in the discussions and the structuring of the deal, have worked out a series of payment deadlines. Now there's a minimum deadline is when they have to have been paid, and that works out at about 6 years. But every stage after the first year, there are accelerators. Now we would get paid earlier if the price of metals, chrome and PGMs, and the exchange rate between U.S. dollars and the rand are favorable, we get accelerated payments. Now we've modeled these looking at as far as we can on the prices of chrome and PGMs. Now unfortunately, there are no forward curves for either of those metals, which go out more than weeks. So we can't get a price of chrome a year out or 2 years out or 3 years out. But we've got a lot of research, and we've worked on averages of those. And we think, having modeled it, we should have been paid out in full within 3 and a bit years. Now that's -- we've made some assumptions there on the market information. We haven't made up numbers. We've taken numbers from other people who are better at these things than we are. We're very good at processing. We're not very good at looking at the market prices 3 years forward. So we've taken other people's numbers, reflected on them, and we think we'll get paid out in 3 and a bit years. However, if we're not and the world moves in a different direction, then we get paid out up to 6 years.
Thank you, Jonny. The next group of questions that is there is around the fact that we're going -- as we're going into Zambia, we, of course, are very much exposed to processing of material, processing of nontraditional material and therefore, still reliant on that expertise we've established and that is so widely recognized and so many companies approach us for that service is how is that retained within Zambia going forward? And maybe just to clarify, in Zambia, it's got its dedicated technical team. Our key lead engineer that leads that technical team is the longest-serving technical engineer in Jubilee, being here from the start when we received our first contract back then from Mitsubishi for our first waste processing and is the lead of that group. So that knowledge is very much retained and secured and being driven into Zambia alongside the very many key lessons learned in how the business structured in South Africa and the weakness and the strength in that business is adjusted in Zambia. And so really on the structuring side, what -- where we're going to is very much we have been preparing, as we separate the group, independently staffing the group, ensuring that the group is serviced independently by its own dedicated teams, running a central effort that is diluted between South Africa and Zambia simply did not yield the results as you always are drawn to the biggest crisis or the biggest requirement and never have the continuity of focus. So that's something we have changed a couple of months back already for the Zambian operations. The next group of questions speaks to, so where do we go to from here? What is our vision? What are the opportunities? Are we a Zambian-focused company, or are we a copper-focused company going forward? And I think the answer to that is, initially, we have a duty to deliver on Zambia. We have had many stumblings. We have had many challenges to overcome in Zambia. What we have to do now and foremost as our key, key focus is delivering on the copper in Zambia. We have a company that is capitalized. We have a Roan operation that is unique in its ability, fully capitalized in having its front end that is able to take various run-of-mine sources. It's got its back end that's able to process waste alongside the run-of-mine material and it's producing its copper at the moment. And we need to bring in back that belief from our shareholders and to demonstrate to our shareholders to recreate our success in South Africa, how well on track we now are in Zambia to do that on the back of the investment that's gone into Zambia. Equally in Zambia, we are offered with such opportunities of growth, both in our mining sector, where the Munkoyo style of resources that we have now shown its potential value. Just the material that's sitting on surface in our stockpiles are valued higher than the acquisition value of Munkoyo. And those opportunities that are offered to us to expand that through the various options we have on the exploration surfaces offers us a great opportunity to now simply repeat and expand what we have in Zambia, coupled to the fact that we hold such vast surface resources. Yes, of course, we are looking and we are being asked by certain even copper producers to look further afield than just simply Zambia, whether we're looking into more traditional copper jurisdictions like South America or we looking into newer copper regions such as Namibia and Botswana. Of course, we are looking and in discussions with these companies, but our main focus right now is to deliver on what has been capitalized, what has been built and what is now operational in Zambia. And as we said before, our installed capacities in both Roan and Sable far exceeds our guidance given for the financial year ahead for 2025. In fact, if you look at our installed capacity, we are nearly 3x the installed capacity than our guidance. So that's the opportunity to take up that capacity through our mining operations, our third-party supplies into these facilities. And the clarity on that capacity, the clarity on that business will come through the fact that we are now focused in our reporting on copper and copper alone. The next group of questions that's come through, it really, again, centers on, are we selling a stable, low-risk business, making cash flow in South Africa to invest that cash flow or that cash that's so released into a higher risk asset group? And what are those associated risk? How would the company be valued? How would our company valuation look if we're selling the majority of our current earnings for a company to invest into a company which currently holds far lower earnings? And I think to start off that question, I'll hand over to Jonny to part answer that as well is if you look at that evaluation of our group, you are correct that the South African earnings are currently higher than that in Zambia. But if you're basing our company's evaluation on earnings alone, we're missing the most fundamental part that we're bringing into our company going forward. And that's where the evaluation is based on our asset class, on our resources as well as our earnings. And that's the opportunity that our copper focus brings to the market. Maybe, Jonny, you want to add to that?
It is a truism that copper is a much better metal for us in many ways. It trades on major exchanges. You can take physical delivery of it. You can hedge forward 2, 3 years in some places. It gives you many options. Chrome doesn't give you any options at all. I think with the availability of hedging, better financing terms on copper, you've got much more methods available to you to protect the downside. In PGMs and chrome, protecting the downside is very, very difficult, if not even possible at times. So some of it is a defensive move to get away from the risks of a contracting chrome market in a jurisdiction like South Africa, which is caught between Trump and China. It's a very difficult jurisdiction, whereas bizarrely, Zambia is in a better place for mining, I think, at the moment in the short term, in general, and specifically in copper. It's a huge producer in terms of the GDP of Zambia. So therefore, it's much more important to get, and easier for us to get the government's attention if we need help.
Quite correct. No, quite correct. I mean at Zambia, they are leading in quite nicely into the next group of questions, and that's comparative between the jurisdictions, South Africa, Zambia, do we see that one is more riskier than the other? I think both are classed as emerging. Both have their own risks. Jonny has elaborated on the business structure risk in South Africa. South Africa, of course, has got its own risks through its cost escalation coming through, power escalation costs being a major driver at the moment in South Africa. It's got its own political risk in South Africa. But you touched on something in Zambia, and that is the fact that Zambia's reliance on the mining industry is so far greater because of the size of the economy. And therefore, the approach, the recognition of an investor coming into Zambia is far greater and also the associated protection of that investor offered in Zambia is far, far greater. Yes, it has its challenges. It has its infrastructure challenges, absolutely, and we've been faced with that. There were questions around how the power and where does the power come from in Zambia. But that's a classic example of how quickly Zambia for a government reacted to a power crisis to adjust the legal framework to address power. Today, in Zambia, power is now traded through a private platform. You are able to secure your power through a private trading company rather than necessarily going to a specific generator of power. It means that your power agreement is based on a distributed power supply as these private power traders acquire capacity from a variety of power supplies within the country and outside of its borders to then supply your electricity via their distributed access. It is why, yes, you are correct that in Zambia, there is still ongoing power outages for many small businesses and private citizens because the industries like ourselves have been able to secure power from the private traded platforms or private companies to get a priority allocation of power to our industry. Is it failsafe? Probably nothing in life is, but it certainly was a very rapid reaction from the authorities to address a crisis that really threatened not just us, but many other companies. In fact, many companies today no longer are even existing because they could not withstand those blows of that infrastructure challenges that came to us. There's then a generic question. It's a tough question, but it's a generic question. And again, I'm going to ask Jonny to come in as well as the newbie as you called yourself. There's a question that speaks to the shareholder -- the share price. The share price has come off sharply. What are those catalysts that the share price will react to again? But maybe give your views, Jonny, we were 16p not so long ago. We're down to breaking 3p at a shockingly low level. Maybe just to give some of your views and then I can add to that.
Well, I think we are processors and a little bit of mining, and we're not market commentators. So we might be talking outside of our area of expertise, but it strikes me that over the last handful plus years, we've had a problem with execution of strategy. And the strategy has changed, perhaps too often, which doesn't help. I think we've really worked hard, and in the presentation, we've made it very clear what the strategies are. There's no misunderstanding of what we're trying to achieve. We've done it on an asset-by-asset basis, where in the past, it would be much more generic. And I think the message in the past has not always been well delivered. I think if we were to mark our scorecard telling the market what we're going to do and how we're going to do it, we'd probably average. We wouldn't be in the top echelons of the class. We can do better, and we've been trying to do better, but not by reinventing the wheel, just by telling the story a bit better, tightening up on controls, tightening up on processes, just making sure that what we've got is what we want, making sure that what we've got actually works. And these are all fundamental things. But having a very northern chat like me that likes to say no when anybody asks for money is sometimes a good thing. Because if people just don't get things done quickly because they have to explain it to me. And I don't apologize for taking my time to making sure that shareholders' money is well spent. And I think that helps. I come from a very corporate background. And Jubilee has been very entrepreneurial. It's been very focused on processing and not necessarily on the PLC elements of existence. And that's -- it's a comment. It's not a criticism. It's my view, and I'm a new boy, so I may have got it wrong. But I think we're heading in the right direction. The team is really, really focused on what's good for shareholders. It's not what's good for Jubilee management, it's what's good for shareholders. And we have to put our hands up where we've got things not so well, where we've got things wrong. We have to take it on the chin. We don't get everything right, but we have to own our mistakes. And we have to say where we are now is a lot better. It's thought through, it's joined up, it's adult and it's sensible. Now lots of things could happen, which are within our control. And if they are within our control, they will be controlled, believe me. I control things to death. Things outside our control, we can do the best that anybody can. But what you don't know, you don't know. So I think there's been -- the share price has depreciated probably because we're in a peer group of one. We don't compare with anybody that makes it difficult. I think it's difficult being in Zambia and in South Africa. We're in chrome, and especially in the U.K., you ask anybody what the price of chrome is, the chances are they've got no clue. I mean it's not on anybody's mind. Everybody wants -- everybody will know the price of gold or even copper ahead of chrome and PGMs. They're obscure compared to the main mining companies and mining stocks. I don't think that helps. And the last thing I'll just throw in, and it's not meant as anything other than truism. But if I was a potential investor, a retail investor coming into Jubilee, I'd look at the chat rooms. And in the chat rooms, some of them are very helpful, and they try to explain difficult concepts to those shareholders that don't understand. But there's also a lot of venomous comments. There's a lot of biles, a lot of hatred in there. And if I was a new investor wanted to come in, why would I want to be associated with people like that. I think that's probably got some degree of causation on the share price. But that's my thoughts.
No, thanks, Jonny, for that. I mean I think also adding to that is people ask about catalysts, and that ties into what we discussed earlier in some of the many questions around resource definition. There's a lot of shareholders that understand and buying into the concept that when you move into copper, a resource definition has become a critical anchor for valuation and especially compared to peer groups as well. And of course, on the time line side, we are driving that really hard. We'll bring out that news flow rapidly as fast as we can on the drilling program for Munkoyo, on the drilling program for Project G as we drill out that resource, not just that resource, but also the additional exploration properties we are targeting surrounding Munkoyo. Yes, and of course, there's questions, do we -- are we looking at such similar opportunities around our Roan Concentrator up in the more northern part of the central province? The short answer is yes, absolutely, we are looking for that as well as we look to complement both third party and our own run-of-mine. There's a question, how do you get Roan to its full capacity? Well, you bring in your own run-of-mine alongside that of third party because the third-party ROM is less traditional, and therefore, when you measure capacity of a plant, it's a mechanical process, and therefore, it's defined by how many tonnes flow through it. And the more copper units that are recoverable in that tonne automatically increases your production rate of copper through that plant or through that process. There's a question that came up on a number of occasions and some of the questions that's brought up, I think there's just a pure interpretation mistake on how -- what value of assets are sold versus the valuation of the assets. I think some people have just maybe misread the balance sheet as when you look at the asset value versus net asset value of the South African operations, net asset value, which is your asset value minus your liabilities, we have secured the full value of that asset in the sale price, quite uncommon to be able to secure your full value of your investment into a business plus your intangible know-how investment that's gone into that business. So maybe if there are people that really want to better understand that, maybe direct an e-mail to me or to Jonny, so we can just better understand your interpretation or your comment you make on the valuation and what part of your balance sheet you are receiving through the structure. On the payment cycle of this transaction, if it takes the full period for the royalty component to only be paid after 5 years, well, then we've done an exceptional transaction that if the metal prices do not exceed that minimum barrier for 5 years, the company acquiring us will be suffering quite badly on their earnings. If the metal prices remain depressed for that period, it speaks absolutely against the view that PGM prices might find its current level for a longer period because as per the terms of the contract, as soon as that metal prices are exceeded, the royalty component is immediately payable. And that's why we insisted that the majority of the royalty is in any event guaranteed irrespective of metal prices. It's only the time line in which it is paid, which is linked to the metal price itself. And as Jonny alluded because I saw some questions maybe they didn't quite get Jonny's answer around we have security over a very large portion of the shares in that company. We have a right to a Board position observing that company during this period to ensure that the decisions taken in that company isn't detrimental to that company until the full payment is made to our company -- to Jubilee going forward. The next group of questions maybe, which is quite, I think, structured quite well was a question around how does the evaluation compare if we were to look at multiples, as Jonny referenced earlier to what we say the last financial period might have delivered, and what we are assuming current metal prices and current conditions remain the same, what we extrapolated for the next period? But if we were to look back when PGM prices were higher, how do the multiples then compared? And I think fundamentally, what is different and what's interesting to come out of that multiple is, of course, all tax -- all losses in our South African company has been used up by its profits made. So going forward, as our results have shown, taxes become payable, which is a big component of your earnings after tax that has reduced significantly for the company. But even with that, in place, our multiples going back 3 years in the group is still 3 to 4x earnings on the multiple while we had our tax losses in place. So before and after-tax earnings were basically the same number for the group.
Can I just add that the Zambian business has still got tax losses available to us.
No, of course, that's a very big positive within Zambia that it has those tax losses in the group. And then there was a question asked about if we are selling non-core assets in Zambia, which are complex, difficult, remote. If we can't do it, why can someone else do it if we claim with such great processes of copper? The kind of companies we targeted for the sale of these non-core assets are companies who have invested into a process. It's built. It's not the optimal process by no means. Capital has sunk and written off, and therefore, they have capacity that are not utilized. They do not want to go into a toll structure of an agreement, but they are desperate to secure material to take up this capacity. That's the type of companies we've pursued to try and pair that capacity with a particular asset, non-core asset in the group. And then if we look at the last group of questions that we structured, again, that looks at an area, but Jonny has addressed that in his discussions, and that is this perception that the South African operation is risk-free and stable. Yes, it's stable. As you can see in our results, we have pushed really hard. Back in 2014 when we secured our first contract, it was on pure tails. And to migrate that business from pure tails on to run-of-mine of third-party material, to bring third-party material into our processes, to educate the industry on third-party material that was thought to be value listed. In fact, we can recover that material, and therefore, we can make their mines viable on our techniques. But as Jonny explained, being a pure processor in South Africa beyond the regional geopolitical risk within South Africa and a pure business level, being a pure processor means that you are an acceptor of price of run-of-mine as you purchase that coming into your business. You are faced with an offtake of your product in a physically traded market, which is manipulated by the major offtakers of that material in an industry that's migrating to in-source processing more to capture more of that value. So the risk of the South African business is a constant squeeze on margin, coupled to the availability of third-party run-of-mine. Because as we've discussed, the third-party run-of-mine is not dependent on a PGM price and your view on PGM price. It's dependent on the chrome mine being viable, to mine that material for a processor like us to pursue those trace PGMs in that material. And therefore, it's inconceivable to have a separate entity, a PGM stand-alone company and a chrome stand-alone company because your chrome company will have periods where it's completely not viable and operating at a loss, where currently our PGM operation subsidizes the chrome operations to ensure that the chrome run-of-mine is delivered to our processes to make profit. And maybe that's valid.
There's another point, if I may, just say at this stage is that when the process is getting squeezed and it's got increasing costs, you can't actually put those increasing costs on the end product because the product is defined by the market. The other thing is that when you've got a squeeze on your price from your ROM sellers, we have to do more and more to the product to get more and more out of it to pay for the squeeze. So for example, we started off just on the chrome ROM, and we just took out what we took out. And then we took out the fines, then the ultra fines, and then we have to find more and more ways of getting ultra, ultra fines, the powder out. And it's that increasing excellence in getting more out of the product, which has actually kept the business going. Because if we just kept without the ultra fines and the powder, we'd be really, really squeezed. Now there's only so much -- I mean, the powder in the chrome ROM, you can only just feel it. I mean it's very, very fine. And I don't think we're going to have, going forward, the same sort of technological advances to get more and more out of the reef. We're just not.
Quite correct, Jonny. I mean, it's fundamental to our company, right? It's why we've seen the breakthroughs in processing as we've shown in the industry. It's driven by an absolute fundamental need that our margin is dependent on improving and setting new efficiency standards in the industry in ores that are either regarded as just something not recoverable, exactly what Roan is demonstrating at the moment in copper, processing copper ores that a third party wouldn't just sell to us if they had thought it was simple to process for themselves. But in fact, sees no other option but to have us purchase that material to process that run-of-mine material through our facilities in Roan. And it is exactly the rationale why a leach component is being added to Roan to target yet another component of copper that is discarded at the moment by most in that reef. I think then in conclusion, we've tried to address as many questions as we can. We've overrun our time allocation. And again, please feel free to send more questions if there are any particular specific understandings that are needed around the numbers to either me or Jonny, and we can attempt to address those. There are questions around forward looking statements. We cannot be making forward-looking statements. But certainly, going forward as a pure copper company, it allows our analysts, it allows research notes to be far more focused around Jubilee and more accurate around Jubilee because the business simplification into our 3 pillars in Zambia becomes so much more simpler to understand and model going forward. So with that, I think we -- I will hand it back to the organizers.
That's great. Well, Leon and Jonathan, thank you very much for updating investors today. [Operator Instructions] On behalf of the management team of Jubilee Metals Group PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.
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