Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Yes you are right Gotreal. I used the wrong term payback I was just looking at it purely from a project point of view and didn't articulate that correctly. I didn't mean to misrepresent it. There is no actual money to payback apart from their portion of the shareholders loan and as you say the timescale is irrelevant.
But actually, Gray, from JLP's perspective how long the period for the loan to be paid back is irrelevant..... The figure overall of estimated 42% to JLP has been quoted in the past, the 12% being fees for planning, running and managing the operation.
Fair comment guys I was just using a normal payback synopsis for capital outlay. The IRH agreement is different to this as you say there will be shareholders loan to payback and how long that takes is yet to be determined.
Jonah, I agree on your payback synopsis. I would also think that development costs prior to the SPV being formed will be chargeable.
I am not sure what you mean by payback time, Gray. Yes, the SPV will need to payback the shareholder loan but that will come out of SPV earnings. The capex for this project from Jubilee's point of view is zero if my understanding of the original RNS is correct. So, from a Jubilee perspective, the payback time can be measured in microseconds!. As soon as the SPV goes into production, we will be earning our 30% (more, actually, as we will be paid a fee for operating the project too). The payback time for IRH will depend on the precise details of the arrangement Seis pasted from the RNS but it is clear that the SPV will continue to bank some earnings during the payback period and 70% of the loan repayments will, in reality, be IRH paying itself.
Quote from Dec 12 JLP RNS:
The waste rock resource was formed over 60 years' of mining where the overburden material and ore regarded as too low grade at the time, was discarded onto the waste rock dump in favour of processing higher grade copper ore.
Quote from their site:
he OB1 site is a significant tailings dump accumulated from 60 years of spoil from the Nchanga Open pit ( NOP) of Konkola Copper Mines (KCM) measuring approximately 4Km X 2Km X 80m (640m sqm) KCM is one of the top three Copper producers in Zambia.
That’s the same location I was looking at, the old KCM open pit just outside Chingola. I guess they must be the party that we are purchasing the dumps from.
Is this the same OB1?
zumran.com/ob1-operational-site/
If it is, maybe the area SP06 mentioned @ 13mt is the target for the 4 modules? About 5 years work.
I was reading that yesterday and thought it was vague myself Seisnav. You are right without more detail difficult to draw any conclusions regarding repayments.
The repayments may qualify for tax relief but just guessing without more info.
"The funding provided by IRH to the SPV will take the form of a shareholder loan. Repayment by the SPV of the shareholder loan is contingent upon the SPV first achieving a threshold cumulative net earnings with the SPV's repayment of the shareholder loan limited to a maximum percentage of net earnings, ensuring that the majority of earnings are distributed to the equity holders of the SPV."
Some more detail on the above would be good. It might be quite a while before any re-payment happens, depending on the earnings threshold, and it would be good to have an idea what that maximum percentage of net earnings actually is.
I know gotreal and I take your point but until they start doing it I will stick to my conservative 1%. If they beat it no one will be more pleased than I am. The payback is still very good even at 1%. My old boss was delighted if we got it to 18 months
There is a huge pile of material and the percentage will vary. Saying 1.5% (even though they have tested some of it) and doing it consistently are two different things when it comes to JLP and copper. Look how pgms varies.
Not being negative I am happy with what I posted.
underpromise/overdeliver
Copper percentage is 1.5% on average..... I acknowledge you say your 1% is conservative, but 1.5% has been consistently quoted.
However in a previous RNS JLP said they could get all 4 modules done in 12months. Whether Leon was in one of his more optimistic moods when that was stated I don't know.
Payback time Mikie rough calculation:
50k/month module at 1 % of copper in rocks processed with a gross margin @ $4k is $2 mill 30% to JLP is $0.6 mill per month net of around $0.5 mill/ month ish (my 1% is conservative).
Depending how you want to work it out on gross profit just over 10 months, net profit just over 12 months.
Any payback of capital 2 yrs is usually the benchmark. That was the criteria I always worked on. The above payback is very good and could be quicker (or slower) depending on margins and what the percentage of copper in the rocks being processed turns out to be.
Https://x.com/FinInsightZam/status/1786331473672347846
This might be worth a watch if you can find it anywhere. I know that Ricus was interviewed for this. Hopefully it makes it onto the internet eventually.
It’ll also be good That JLP are providing more SA employment opportunities and could do for a few years yet!
Seis, i think Leon & Co, have stated they are sourcing more and more manufacturing in South Africa, so i would think its very likely there will be several manufacturers going forward. Lockdown was a big lesson here.
Assuming all goes to plan with the initial modules the only thing throttling back expansion (apart from funding) is the speed at which the modules can be rolled out. The raw material is almost endless. I'd like to see the manufacturer looking to expand capacity at some point.
Thanks for your responses Gray1 and SeisNav much appreciated
@ Seis, Gray & Hoke, with the almost immediate return achieved from a module. Once production has started, the ability to multiply, will ramp up significantly. The chrome business is now completely self funding and its not going to be long before copper is self funding. With far greater profits in copper and what appears to be a very supportive market, wheres the ceiling here over the next few years?
Also with economies of scale they believe they can get costs down to under $4K/ton with the IRH modules.
I think we nailed it between us Seisnav:)
Any modules built to process artisan miner material will have different costs as they have to pay the miners a fee and thereby increasing costs to a max of $6k/ton.
My understanding of it Hoke is:
1 50k/month processing capacity about $6mill, 20k/month cheaper.
2. Delivery period to production about 6 months.
3 Will depend on grade of copper 1% will deliver 500 tons/month. 4 modules 20k/annum with the IRH modules at 30% gross margin after costs to JLP.
That is how I understand it Hoke this is purely for the modules build with IRH.
From the website:
Innovative Modular Technology – 2,000 tonnes per annum of copper per 20,000 tonnes per month copper processing module (assuming feed of 1.5% copper grade), as depicted in the diagram for Project M Copper unit cost per tonne US$5,281 in FY23 Estimated capital for 50,000 tonnes per month copper processing module = US$6.5 million. The estimated capital for a 20,000 tonnes per month copper processing module would be approximately US$3 million Modules targeted as part of Roan upgrade with additional modules considered under current long-term RoM agreements
Modules from order start of build to ramp up is something like 4-6 months from memory. Have a listen to recent Roast podcasts where that is discussed.
Good morning All
Please can someone help with the costing on the above.
I am looking for info on:
1. Cost per module
2. Delivery period
3. Annual copper equivalent production per annum
If exact info is not available a good thumbsuck will do
Thanks for your help