The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Jammer1
Thank you for this explanation, was your father one of the Marx Brothers?.. The party of the first part will hereby be known in this contract as the Party of the first part....... no I don't like that!!
gotreal, Leon can be a little bullish in interviews! But what CEO isn't!? What he is probably thinking is there will be earnings coming through for copper for the first time , but how much will depend on how quick the ramp up of the local 3rd party supply occurs throughout the 4th quarter and whether figures for any production in the 3rd quarter are included rather than being capitalised. Remember the front end upgrade facility at Sable was not even commissioned until last week. It is quite possible there will also be an increase in the chrome production and earnings as the full impact of the revised contract and extra volume flows from Windsor and Windsor 8 in particular come through. Leon may also be aware of additional efficiencies coming through for the PGMs, producing more output. The original 2nd half of 2020 target was 6000 PGMs ozs per month whilst 5000 per month was achieved in the 3rd quarter. There may be some extra chrome from Inyoni as well. But above all his statement is assuming at a minimum the buoyant PGM prices for August and September are maintained through to the year end, and even then the large PGM sales adjustment that I believe was included in the earnings for Q3 will be far less in Q4. .
Thanks Mogli and Jammer. That all makes sense. My slightly lower basket price probably reflects the small retreat in the price of rhodium.
But if I recall, Leon said in the interview that the next quarters earnings would be at least as much as Q3.
Interesting discussion on effectively the difference in the PGM operational earnings reported and what it might actually prove to be when the cash is received. I have similar estimates of the basket price as mogli. Totally agree Sylvania's explanation of what is actually going on in their quarterly reports is excellent and their chairman also provided an excellent explanation of the situation in his statement in their last annual report.
You might need a cold towel for what follows: The 3rd Q calendar year 2020 figures just released for Jubilee show £13.9m earnings with 15000 PGM ozs produced. My understanding is the earnings figures for each month are made up as follows: (the PGM ozs produced for that month multiplied by the PGM basket price at the end of that month)+(the number of PGM ozs produced in the month 3 months earlier multiplied by the difference in the basket price at the end of the current month to that 3 months earlier). So the 3rd quarter would have been the earnings calculated for each month's production within the 3rd quarter plus an adjustment for each month's production earnings calculated during the 2nd quarter. For example for the month of September the earnings for that month would have been the production during that month multiplied by the PGM price at the end of September plus a sales adjustment for the earning of the production during the month of June calculated originally on the price at the end of June. An adjustment is positive if the PGM price basket price is higher 3 months later but negative if it is lower. We were blessed with rapidly increasing PGM prices in the 3rd quarter particularly in August and September, so there was a large positive adjustment for the 3rd quarter. I estimated it to be £2.75m for Q3 which means the earnings for the 15000ozs was set at £11.15m . The £11.15m earnings is the best estimate of the cash Jubilee will receive during the 4th quarter for the 3rd quarter's PGM production. The cash actually received in the 3rd quarter would have been the amount calculated for the earnings for the months of the 2nd quarter plus the sales adjustment of £2.75m.
Jonah, I tried to calculate this a few days back and had $1,923 as a basket price and then $1,557 as a smelter price (i.e. what we are paid)
In terms of the 3 month delay, I'm lead to believe that the price we are paid reflects the current market price. For example if we sold concentrate in March, we would be paid in June at whatever the price was in June.
If you have a look at SLP accounts (much more detailed and informative) you can see this clearly as a sales adjustment coming in for one 1/4 where the price has changed dramatically from the previous one.
I understand that there is a 3 month gap between delivery and payment for our PGM. Concentrate
So that makes our basket price on current valuations about $1700 per oz before processing costs which, I believe, are about 20% of the PGM price. ie, as a very approximate estimate, we should be earning about $1350 per oz. There is also a considerable delay in being paid, so what we receive today reflects the basket price in the past. Is that right?
That's my 'go to' reference for whenever I want to calculate the price we actually receive.
I think this is the first time we have ever been told the full breakdown of PGMs and the % split on the concentrates.
Don’t forget we produce a concentrate for PGMs not the final metal so there is a slight discount in regards to this
Happydays
Refer to Page 7 https://jubileemetalsgroup.com/wp-content/uploads/2020/07/FN-JLP-080720.pdf
I can't comment on the accuracy of the split, but it can be used as a guide.
Rhodium hitting all time highs again..
Anyone know how to work out Jubilee's basket price of pgms?
Thanks