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JUBILEE METALS GROUP PLC - Kabwe update and live interactive webcast

Release Date: 06/08/2018 11:45
Code(s): JBL     PDF:  
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Kabwe update and live interactive webcast

Jubilee Metals Group PLC
Registration number (4459850)
AltX share code: JBL
AIM share code: JLP
ISIN: GB0031852162
("Jubilee" or "the Company")

Jubilee gains full control of the Kabwe Project

Jubilee Live Interactive Webcast

Project Highlights

   -   Jubilee gains full control of the Kabwe Project increasing its interest to 87,5%
   -   Option to acquire 100% of the Kabwe Project while BMR retains a maximum of
       12,5% of generated earnings
   -   Jubilee retains its 29,01% shareholding in BMR and therefore a total effective
       beneficial interest of approximate 91,5% in the Kabwe Project

Leon Coetzer, Chief Executive Officer, says: “

I am delighted by the execution of the updated shareholders’ and operating agreements
with BMR. The agreements ensure that Jubilee takes full control of the funding
requirements and execution of the Kabwe Project.

We have been able to ensure that the success of the Kabwe Project remains independent of
the financial position of BMR with the option to acquire 100% of the Kabwe Project.

The expertise of our technical and project execution teams have led to the development of
an enhanced process flowsheet for the recovery of both zinc and lead. As previously
discussed, the enhanced flowsheet allows us to implement the zinc recovery circuit
independently of the lead recovery circuit which provides our technical team with the
opportunity to continue refining the lead circuit design without delaying the construction of
the zinc circuit.

I am confident that the team will conclude the enhanced circuit design and project financial
parameters by the end of Q3 2018. “

Kabwe zinc, lead and vanadium project overview (Zambia)

The initial detailed technical and engineering review by Jubilee of the Kabwe Project
(“Project”) highlighted certain short comings in the process methodology as originally
presented by BMR. Our process development teams have been able to determine a more
suitable process solution for the recovery of lead and zinc in the surface material than the
originally contemplated acid and brine solution. The enhanced process flowsheet offers the
potential to both improved capital efficiency as well as reduced circuit complexity.

The enhanced process flowsheet targets the recovery of the zinc ahead and independent of
the lead recovery circuit. The construction of the zinc recovery circuit has been prioritised
and is expected to commission well in advance of the lead recovery circuit. This approach
allows the continued construction of the zinc recovery circuit to progress while the
development and design of the lead and vanadium recovery circuits are further refined.

The recovery circuit’s development by Jubilee’s research and development teams includes
work to evaluate the optimal product purity specifications to improve the capital efficiency
of the Project. It is anticipated that the process flowsheet design will be completed during
Q3 2018 targeting commissioning of the zinc recovery circuit by mid-2019.

The current shareholders’ and operating agreements for the Project have been updated
(“Updated Agreements”) to better align with Jubilee’s role to deliver a successful project.
The Updated Agreements will place Jubilee in full control of the execution methodology and
funding requirements to bring the project to account. In return Jubilee will hold a minimum
of 87,5% shareholding in Kabwe Operations Limited, a company incorporated as a Joint
Venture Company (“Kabwe Operations”) assigned with all intellectual property developed
for the execution of the Project as well as the right to fund and execute the Project.

Jubilee will hold a further option, at its sole election, to acquire 100% of the issued shares of
Enviro Mining Limited (“EML”), a subsidiary of BMR and the company that owns the Project
through BMR’s Zambian based Enviro Processing Limited (“EPL”). BMR will hold either the
remaining 12,5% shareholding in Kabwe Operations or should Jubilee acquire EML outright
a 12,5% share of earnings generated by the Project (“Royalty”). Such Royalty payments will
only be due and payable by the Project once Jubilee has secured a minimum of a 20% return
on the investment made into the Project and only once EPL or Kabwe Operations have
received all generated earnings in cash.

Salient terms of Updated Agreements

In terms of the Updated Agreements, Jubilee has been appointed as the sole operator of
the Project giving it full control of the Project execution methodology. BMR has further
agreed to grant to Jubilee an effective 87,5% fully paid-up shareholding in Kabwe
Operations, with all the rights, entitlements and/or interests associated with such a
shareholding, including majority voting rights.

In return Jubilee has agreed that, with effect from the effective date of the Updated
Agreements, Jubilee shall fund the Project by way of debt finance to the extent that Jubilee
deems it necessary without dilution of BMR’s 12.5% shareholding. Should the total capital
investment of Jubilee to fully execute Project exceed US$15 million BMR’s shareholding
shall immediately dilute to a fixed 11% shareholding.

In terms of the Updated Agreements Jubilee is further granted, for a period of 24 months
from the effective date of the Updated Agreements, an irrevocable free option to acquire
100% of the issued Shares in EML (the “Acquisition”). Following the Acquisition Jubilee’s
equity interest in Kabwe Operations and EML will increase to 100%.

The implementation of the Acquisition following such option being exercised by Jubilee will
be subject to the following key conditions:

   (a) receipt of all regulatory consents required in Zambia for the change of control of the
   (b) payment by Jubilee of all relevant taxes in Zambia in relation to the Acquisition.

In the event that the Acquisition is implemented, BMR will be granted a 12.5% Royalty
interest in the distributable earnings generated by the Project, but only after Jubilee has
secured at minimum a 20% return on its investment into the Project and all costs, taxes,
liabilities and depreciation of the Project have been accounted for, save that the
aforementioned Royalty shall be reduced to 11% of earnings in the event that Jubilee’s
capital investment into the Project exceeds US$ 15 million.

Apart from an agreed initial 5% Royalty on distributable earnings, BMR will only be entitled
to a Royalty payment once:

  (a) the Project is fully operational and has generated distributable earnings;
  (b) Jubilee (or its nominee) has been repaid in full its capital investment and its agreed
      capital rate of return of 30% on the first GBP 2,3 million invested and 20% on any
      further capital invested.

The information communicated in this announcement contains inside information for the
purposes of Article 7 of Regulation 596/2014.

Jubilee Live interactive webcast

The Jubilee Board also invites shareholders to participate in a LIVE interactive webcast,
scheduled to commence at 09:00am UK time (10:00am SA time), on Tuesday 7 August 2018.

The webcast offers Jubilee shareholders the opportunity to engage with the Jubilee board
for an update on its projects. To participate, please follow the link provided:

United Kingdom

6 August 2018

Jubilee Metals Group PLC

Colin Bird/Leon Coetzer
Tel +44 (0) 20 7584 2155 / Tel +27 (0) 11 465 1913

Nominated Adviser

SPARK Advisory Partners Limited
Mark Brady/Andrew Emmott
Tel: +44 (0) 203 368 3555


Shard Capital Partners LLP
Damon Heath/Erik Woolgar
Tel +44 (0) 20 7 186 9900

JSE Sponsor

Sasfin Capital (a member of the Sasfin group)

Sharon Owens
Tel +27 (0) 11 809 7500

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