Proposed Directors of Tirupati Graphite explain why they have requisitioned an GM. Watch the video here.
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I’ve updated my spreadsheets for H2 2021 and H1 2022, tweaking the PGM split so that the estimated basket price better fits with the reported number from H2 2021. The Rhodium % has been slightly increased to reflect the higher Rhodium content from the Eastern Limb and Palladium decreased by the same amount.
H2 2021: https://tinyurl.com/msdcfxd9
H1 2022: https://tinyurl.com/37p5v2wy
Some interesting things jump out:
From H2 2021, it looks like the 6000 ‘in-process’ ounces were sold off pretty much at cost, with all of the earnings coming from the fully processed ounces. To me that makes the performance more impressive than it might have seemed at the time. The extra ounces were there essentially just to make up the numbers.
From H1 2022, I applied the same revised PGM split and just updated the average PGM prices. You can see that there is a large discrepancy between estimated and reported earnings, of almost US$11.5 million. As I mentioned previously, I believe this might be due to more ‘in-process’ ounces being sold off during the Inyoni ramp up. Can anyone think of another explaination? If this is the case then we should expect much improved numbers in future.
Also, based on the cobalt revenue and price at the time, I estimate they must have sold approximately 7 tonnes… not bad considering this was just from testing.
Another thing to note, I believe the transport costs are ‘per ounce’, ie, they should be applied to all ounces, not just a percentage coming from the Eastern Limb. If you take total transport cost and divide that by the quoted Cost / ounce the number is slightly larger than the total PGM ounces produced.
It's a strange one Sais. You'd think that rather than sell semi processed stock at cost we would put more volume through the JV. We only put 1000 Oz in H2 compared with almost 6000 Oz in H1. It's certainly worth a question but I'm assuming we'll learn more in the auditored accounts.
I guess that with the system already fully in production when it was shut down, whatever was in the pipeline had to be removed in it’s part processed state. Maybe it made more sense to sell it off rather than re-process it later.
SeisNav
The possible reasons for your large discrepancy between estimated and reported earnings are:
- Profit share on Eastern limb tailings: I just posted about that.
- Maybe higher smelting costs.
- You can't use JLP's costs to estimate Windsor/Eland.
Don't expect much improved numbers unless the PGM basket price moves.
Yes, transport costs are split across all ounces so JLP is paying a lot to transport the Eastern limb tailings. Unless Rhodium prices improve, the Eastern limb tailings (combined with profit split) will continue to be a drag on PGM earnings per ounce.
What are the profit sharing details of the Eastern Limb, homey
Sadly every share has it’s ‘Homey’ all dedicated to trying to convince shareholders or potential shareholders that black is white. He pops up every time results are released and tries to paint the most negative picture of things he can… all allegedly to give ‘balance’ to the discussion. I’ve filtered him so I’m not tempted to respond.
DRB83
As per usual with JLP, the share split is an Agatha Christie, full of mystery. As per the original RNS for the Eastern limb expansion:
"The PGM Supply Agreement offers a minority earnings participation to the Chrome Mine partner allowing them exposure to the PGM values which also enhances their earnings potential."
Minority means anything up to 49.9%.
SeisNav, feel free to keep scratching your head as to why your numbers don't up then or just keep your head buried in the sand. Instead of thanking me for pointing out what should be an obvious input into earnings estimates, I get accused of all things negative. Ah, its good to be back.
Homey, another question that needs answering. How much is the minority stake.
I don't think a drop of almost $400 per Oz can be all attributed to the EL JV.
An RNS states that the supply agreement for EL is for upto 14500 Oz per annum. So let's say we maxed up on that in H2 and got 7500 Oz from EL. Leaving 13500 from WL. Let's also assume the minority interest is 49.99%.
13500 @ $2k per Oz = $27m
7500 @ $1k per Oz = $7.5m
$34.5m / 21000oz = $1643.
We obtained $1586. It's close but that would suggest we have signed a pretty **** JV deal for the EL ounces. We'd be making no money.
Processing costs of $584
Transport = $3.12m/7500oz = $416
Total cost $1000
So our revenue from the JV would be $1000 and the costs would be $1000. That's a coincidence by the way. There's no way we'd sign that off whilst the JV party gets $1000 for nothing.
In summary, there must be another reason for the reduced basket price. The sale of the 6000oz of part processed foods made sense for H1 but I would expect that to have been a one off at the beginning of the works so not repeat itself in H2.
Over to you Leon. What's going on with the basket price?
I very much doubt they had exactly 6000 ounces of 'in-process' material to sell after the shutdown. More likely they split it so that they had something to cover the period when Inyoni was ramping up again. See what I mean about Homey... always looking for the most negative possibility, no matter how unlikely it might be.
Seis, good point. Keep some in reserve to ensure H2 sales limits can be achieved. The auditored accounts will hopefully confirm this soon.
So in a nutshell, going into H1 2023 I'm expecting
Increased PGM, Copper and Cobalt volumes
Increased PGM basket price
News on Northern Strategy
News on East Limb hub
News on international strategy in Cyprus.
Hold and wait.
DRB83
You will not get an answer that question regarding the profit share split. The only way JLP will give you that information is when they use it as justification for the capital expansion at the Eastern limb (most likely with a capital raise attached).
As for your figure of $400 per oz, it is really hard to say. Anyway I am not looking into that topic as its a rabbit hole. Best to use past 12 month gap between PGM basket price and PGM revenue per oz and just hope the gap shrinks this FY.
From WHI, Dec '21:
"Old tailings at Windsor can be sent to Northam Platinum’s Eland plant where Jubilee has
an earnings share agreement post Northam- and Jubilee-specific costs – with an earnings
split of 60:40 in Jubilee’s favour. We understand this JV to be flexible and for Jubilee to
use it to make sure it produces at 55koz/year – although it could send more at its
discretion."