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Hi Moneyhawk.
The only reason I look into this particular bb is to listen to a few posters including your contributions.
I would not be happy putting 100% of my thesis on a public bb for a couple of different reasons, including circles being completed and sources compromised even though 99% of the info is freely available.
I agree that one needs to be wary of false claims and ridiculous assertions, however their is also a degree of naivety in thinking that months of research can be blurted out on an open bb
I would be happy to put out bits and pieces for people to do their own research and develop their own conclusions, which may be contrary to mine. I welcome any informed argument , discussion and feedback on information provided, however the lowest possible denominator usually predominates. Usually in the form of worthless one liner put downs, by ignorant contributors.
There is no single magic bullet to the theory, however there are a number of different strings and back links which provide a degree of triangulation to the theory that Tjate will be bought by a large Far Eastern entity. Based on this info there is a balance of probability that this will happen this calender year, however Jubilee is a small company and the Tjate sale will be going to a state backed mining organisation in conjunction with the sale of another massive PGM resource close by in SA, so the timing will never be within Jubilee's control and could be extended.
I'm not here to make friends or influence people. I'm here to make money, however a degree of cooperation is valuable , even within the limits of a public forum, for mutual profit.
Regards
HG
Yes completely agree it'd be good to have more transparency on the capex coming up and how it'll be funded. Although I don't feel there's any intention to deceive here, playing his cards close to his chest is just how LC seems to operate, most probably so he can keep all his options open without committing to one particular course.
And directors buying shares doesn't always mean private shareholders are more protected from dilution and/or falling SPs. I can think of plenty of examples where the opposite has happened. At the end of the day, the directors role is to ensure the company is viable and can fund all its commitments, not to protect their own investment. An example very close to home, where someone on our board holds nearly 10% of that company, saw its SP sink from 10p to less than 0.5p within 3 years. (mentioning no names otherwise we'll have a load of posts about placings or some other sort of doom and gloom, but I'm sure most will know what I'm referring to)
Thanks Jammer - quite correct £1.7m, I was going from memory - never a good idea !!
I always find it very difficult to work out JLP's actual margin on the PGM's the numbers change quite dramatically from Q to Q - as in the costs per Oz and revenue per Oz. I have a spreadsheet that should calculate the profit for me and even have a variance built in for the 3 exchange rates but even so it never quite works. I put a lot of that down to the volume changes that have occurred within Windsor & Inyoni and within that the profit share that has affected the numbers, although of course that should not change the unit costs apart from knowing that Windsor is 24% more expensive.
In reality I think the variances come down to the timing of costs and revenue - costs are pretty much within the quarter they occur whereas revenues not necessarily so because of the way smelters work so there is an ongoing correction factor.
In essence it is very easy to get bogged down in the detail. In general I am value investor that uses Graham's methodologies and only invest in AIM as a gamble - a bit of fun. JLP has ceased to be that and now fits in with value investing although not in its purest form. One of the keys is do you trust the management or not and I think in LC we have a very valuable asset who will push the company forward in a controlled manner so the exact numbers or cashflow do not matter so much - we know we are producing plenty of cash, we just don't know if it is enough in the short term but we have a great balance sheet to fund the growth - LC will definitely know the answer to this.
The question often comes us as to whether LC is truely committed because he has not purchased shares and thus has no skin in the game. If memory serves me correctly (again not a good idea !) but I believe he has 23m options on the table that start to expire from next year. That is 23m reasons to try and keep dilution to an absolute minimum - every dilution affects him more than it affects us.
Hi Total Trader, thanks a lot for sharing your broad assumptions about the CAPEX requirement based on recent announcements., which in general seem to be quite reasonable. One of the biggest complaints I have had about Jubilee is they do not publish their annual target CAPEX and how it is expected to be funded. Hopefully this will change in this year's annual report and accounts.
Leon has of course already indicated the need for loan finance by utilising the strong balance sheet in addition to the operational cash flow that can be allocated for CAPEX. Of course it is right to be cautious about how much operational cash flow will be available and the quite significant changes in precious metal prices that can occur, reinforces caution.However saying that I am somewhat more optimistic than you are about the amount of operational cash flow that could be available to fund CAPEX. If at current PGM prices and assuming we are producing 5000PGM ozs a month as has been indicated, we should be easily in excess of $2.4m operational cash flow a month available for CAPEX, assuming nothing from copper or chrome.. Maintaining that level of operational cash flow though is another matter.
As things stand I am comfortable that Jubilee should be realistically able to fund the significant CAPEX already announced without resort to shareholders. But if the additional two copper deals Leon is talking about materialise with the need to extend the Sable refinery, and/or the extension to Inyoni is required within your 18 month window, which it may well be, then Jubilee will need a lot more debt and possibly funding via institutional shareholders to bring all of the "trains into the station at the same time".
Just a small correction. The increase in reported cash from presumably the end of May to the end of June in the RNSs was near to £1.7m so just over $2.1m. But of course one month's cash figures are open to loads of questions without the current assets and current liabilities figures as well!
Its hardly a secret that LC/CB would be open to offers for Tjate, and it would not be surprising if they are currently trying to drum up interest in it. Its perfect territory for CB, a large resource that he can say has a $1b+ valuation and for something that is just starting to come back to investors attention with the rise across the board for precious metals.
However, Tjate is most likely only viable at the moment with Palladium prices riding high, and even then its uncertain if Tjate would be viable. An updated NPV for Tjate was actually buried in the 2018 accounts, which gave an NPV of 1.4B ZAR. Currently that's about £60m. Not much profit for a 20 year + mine that will cost 100's millions (or more) to develop. Sable is worth more to us than Tjate, and for a lot less cost. (page 64-65 of the 2018 annual report if anyone's interested)
There also has to be doubt as to whether Palladium can sustain the high price in the long term. So as Platinum is the main PGM at Tjate, its still Platinum prices that are key. Previous NPV assessments for the $1B NPV were based on a Platinum price of $1,200oz I believe, and we're still some way off that, even for a temporary short term price spike. Until we get to the point where its looking like the long term price for platinum will stay comfortably above $1,200oz I very much doubt there'll be serious interest from anyone with deep enough pockets. Maybe we'll be able to flog it to a Borelli led company (or similar AIM venture) who can use it as a gravy train for a few years. But that's about it in my opinion, and until the PGM market improves significantly
So thanks for the compliment Highlygeared, but comments that suggest the information is out there to prove a deal is imminent, and its not worthwhile to give lesser mortals even a clue as where that source of information is, needs to be treated with a pinch of salt. Maybe it is true, I don't know, but these kind of posts are often made by people that want others to the leg work for them in a wild goose chase to find some 'evidence' to support a theory. If there is any information out there to suggest the contrary, I'd suggest sharing it so the many knowledgeable posters on here can give an opinion.
Hi Jammer - this is how I see it, but as always the timing of the payments is not known so it is purely an estimate and of course my opinion.
Elephant - $25m - $4.4m equity, call it $20m for simplicity. In terms of timing we only know that the concentrator needs to be built within 15 months. I have allocated $15m over the next 18 months with the remainder following in phase 2.
ROAN - $15m over the next 12 months.
Kabwe Zinc & Pb circuits - it is unclear how much we have spent since the last update on the capital costs on this so I have estimated $10m still to come.
Fine Chrome Relocation and set-up $3m, my estimate.
It is very easy to add $10-$15m to this number or to subtract $10m due to the timing of payments. Whilst the numbers are significant I think the most important point that i am raising here is that JLP will need to use it's balance sheet to fund the projects unless a windfall arises - personally i think an unlikely windfall because the desires of the 2 parties negotiating on Tjate are different but LC may have a very different view and may view that a much smaller bird in the hand is useful at this stage of JLP development.
The other point is that whilst projects may get signed in the near future I would be surprised if JLP would spread themselves too thin on the cash flow front by committing to projects that need Capex in the short term. I believe it was your comment a while ago on $1.7m cash generation within a month which I agree with but I am not sure if that is a sustainable amount in the next few months or a one off. Once Copper ramps up next year (and I see it later than the WH Ireland projection) then we should easily pass the $2m a month mark and move on from there.
Total trader, thank you for your detailed thoughts. Could you please elaborate a little on how you have arrived at the monthly cash burn figure of $2.4m per month.
I don't think it is really anything new that JLP are negotiating with its major neighbours as well as other corporations about the sale of Tjate. A deal could be done tomorrow and would be in the interests of all. However, there in lies the problem. JLP don't want it and could do with some extra cash over the coming 18 months , whilst the purchaser would like to buy it based mainly upon a future royalty with a small token payment upfront.
My estimates show JLP to have a capital cash burn averaging $2.4m a month over the next 18 months and currently they do not generate $2.4m per month, however they will within the next 18 months. So an extra cash influx would be useful but not essential - I totally agree with LC that JLP can easily fund off their balance sheet and $10-20m would not be a problem.
The purchaser would like it as a future asset but would certainly be cautious about the PGM demand & pricing in 5-10 years time so a royalty payment would suit them. We know the Tjate mine is expensive to develop as a standalone mine but we have no numbers on what the development costs are for say Impala to mine it as an extension of their current operations. This is the due diligence that they will be undertaking - if that number turns out to be lower than expected then JLP would be able to negotiate a higher than expected upfront purchase price but also the flip side scenario is true. Personally I would forget the thoughts of many tens of millions of $'s - a deal in the range of $10-20m would be an exceptional result for JLP and allow them to move on and away from Tjate to concentrate on what they are good at.
As for future JLP announcements - LC stated in his last interview that a deal was close to process DCM tailings at either Inyoni or Windsor - he expected the announcement in July.
I think we will see other projects announced in the next 6 months on both copper and PGM's but with the current cash burn I would not expect to see anything that will cost capital within the next 12-18 months.
In my view JLP now have a full plate - they have some work to do on their PGM strategy around Inyoni, Windsor and DCM, 2 copper projects to undertake plus fine tuning work on the copper and cobalt circuits at Sable, a fine chrome plant to install possibly followed by others and they will have to get the Zinc circuit sorted to be able to clean up the Lead at Kabwe.