Member Info for 34DegSth

Compliments of the season to all!

The ultimate, would be for MCM to be bought out – VASTE coal resources (high percentage as HCC), of which should be massively attractive to a company with enough liquid assets to develop – of which unfortunately MCM do not CURRENTLY have - Perhaps ties in with two directors leaving the last month or so – and current tick-up in SP on JSE (to 700 [38p])

Using Supplied H1 2019 numbers, two Simultaneous Equations can be written and solved, to determine the Number of Tons of CrConc Produced over this period - re.:

1) FC @ DCM (given);
2) CC @ Windsor from JLP Tailings, and
3) CC @ Windsor from 3rd Party ROM

Equations:
102X + 35Y = (51)(164936) from H1 2019 Revenue
X + Y = 164936 from H1 2019 Production (assuming Prod=Sales)

Results:
1) 15,663t @ DCM FC (given)
2) 23,725t @ Windsor from JLP Tailings
3) 125,548t @ Windsor 3rd Party ROM Material

From above numbers, at Windsor, IT’S CLEAR that JLPs FOCUS was more on 3rd Party Material – ie. CrConc Tolling Revenue merely covered their Costs, BUT hopefully JLP Retained (s) all/majority of the PGM Earnings – where PGM Earnings far Exceed CrConc Earnings. With JLP now also owning Hernic (Inyoni), the same could apply. And hopefully soon at DCM!

JLP Owning both the PGM and Cr sides, should give JLP far more bargaining power, in this regard!!

TT, P14 - If only a Concentrate is to be Produced from the Windsor PGM material by Northam’s/Eland, then the Earnings to JMs should be Less than that re. JMs Hernic PGMs, BUT the Profit Could be very Similar to that of Hernic

Re. Hernic’s PGM Earnings H1 Earnings were ~ $870/oz Less the Unit Cost (varies between Say $310/oz to $415/oz)
Hernic’s PGM Profit = Earnings Less Depreciation, and a few Other HO Costs

Re. Windsor PGM: Earnings be say ~ $870/oz (Concentrate Price) Less Elands UnitCost/oz (probably similar to Hernics) Less Notham’s Earnings Share
There’ll be no Depreciation, as JMs have no Capital Cost re Building a Plant; so Profit = Earnings Less minimal HO Costs (with NO Depreciation included), thus Could be Similar to that of Hernic’s Profit?

A Real Kicker – will be IF Both Hernic and Windsor/Elands can have Reach their Targeted Production Levels 2500oz/pm! – especially on rising PGM Prices (Rh now $3925/oz and rising fast https://www.metalsdaily.com/live-prices/pgms/ - hoping that both Hernic & Windsor have Rh content of ~ 8% each)

P14, and a few seconds later from 2.54: '...within this month (ie. Aug19), we'll start Producing Saleable Platinum 'CONCENTRATES', Doubling our Pt 'Capacity' (note Leon doesn't state Doubling 'Earnings'!) ...' even though, as you state, Leon refers to the Eland 'Refinery' earlier!

PH, Northam's Elands & Zondereinde are 120km apart! The quantity of PGM material pre. Smelting & Refining cant be that waste, so a 240km round trip may work? JMs use Lonmin to Smelt/Refine, of which is only 15kms away from Hernic

Leon always states that JMs Windsor PGMs will Double JMs PGM Production (as opposed to Doubling Earnings) - and he also talks of PGM Concentrate, so still have my doubts

MH, P14

will Northam's be producing the PGM Metals (ie. also Refining and Smelting), or merely PGM Concentrate (as is the case with Hernic, that use Lonmin to do the R&S at a cost to JMs of ~ $345/oz)? Big difference re. Earnings to JMs!

Re. Cu at Kabwe - my take is that this material will come from a few small neighbouring miners - hoping that the Cu material is Sulpher based, such that the valuable S (to JMs) can be used to produce H2SO4 at Kabwe (with S being the highest cost element) - JMs have the Acid plant and H2SO4 used to leach other Kabwe Tailings metals (ie. V ..). V Miners have a Unit cost of ~ $5/lb to produce V2O5. JMs are certainly not incurring Mining costs, and they have their own existing Sable Acid Plant with say 'free' S from the Cu processing, so their Unit Costs should be far lower than $5/lb. Current V2O5 prices are $9.40/lb (China), and shipping costs should be negligable - so should have vg Earnings re. V2O5

Jammer1 - You’ve misread/misunderstood the CRUX of my Posting!

For H1 2019, JMs had 2 PAYMENT Avenues:
- Int’l Sales of CrConc (from JMs Tailings at both DCM FC & Windsor CC) – to China (nett $102/t Sales Price [165 MarketPrice – 63 (Shipping)] and
- re. Toll Processing of 3rd Party ROM only at Windsor (Tolling Price paid is Unknown)

Using 2018’s DCM figures (DCM CC was exactly breaking-even in 2018, with Revenue = Costs) – such that the 2018 DCM CC Unit-Costs way higher than what you’re indicating. The current DCM FC costs are unknown. H1 2019 DCM FC would have been Loss Making until the Overall Total Production Break-even level reached – ie. most/all of H1

The Big Unknown is therefore the H1 2019 Windsor Coarse Chrome Production Mix.
H1 2019 Windsor Production was 149,273t (164,936 less DCMs 15,663) – Sales are a Mix of Int’l Sales (@ nett $102/t) and via Toll Processing ($/t paid unknown)
Thus X (Combined DCM FC & Windsor CC Int’l Sales of CrConc from Tailings @ $102/t) + Y (Windsor Toll Processing Tons Payment @$?/t) = Average of $51/t
Two Conclusions re. Windsor Toll Processing that can be made is that:
- Toll Processing tons (ie. at Windsor) >> JMs Tailings Tons Processed
- The Windsor Toll Processing relative to the Processing of JMs own Tailings was a lot Higher in Q2 than Q1 (using both Q1 and H1 figures) – hence the Steep Earnings drop-off in Q2!

Agreed Jammer1

With some more Research/Thinking Re. H1 CrConc Revenue, JMs two CrConc H1 2019 Revenue streams were*,
- Processing of JMs own Windsor Tailings, then Exported – (Revenue = Avg Mkt Price ($165/t) less Shipping ($63/t) = $102/t);
- Toll Processing (Revenue/t unknown)
with H1 2019 Avg Revenue = $51/t:

from this, one can then Deduce:
- Tons Sold < Tons Produced
- Tons Produced from Toll Processing >> Tons Produced from JMs own Windsor Tailings
- Perhaps the Nature of the PlatCro Sale (to JMs), is Forcing JMs to Honour Prior Toll Processing Contracts – probably Expiring shortly, such that JMs can re-negotiate in JMs favour

What H1 2019 Does Show us, is:
- JMs Windsor CrConc Processing Ability at 149,273t for 6 months was quite impressive
- The Unit Cost/t (< $40/t) is pretty good – probably lower, as Overall Costs included Impairment costs etc (DCM’s 2018 Processing Costs were much much higher)
- The Introduction of Fine Chrome, could reduce this Unit Cost/t further

If H1 was only Tailings with all Sold Int’ly, and all Tons Produced were Sold, then H1 Cr Conc Revenue would have been $13.4m!!!! and even Higher if say a portion were sold Locally (Revenue = $165/t less Local Transport of say only $15/t = $150/t)! Tharisa sell ~ 20% locally
Or
If H1 was only Toll Processing (of Virgin ROM ore), with this Revenue merely Covering JMs Costs, JMs CrConc Earnings would be 0, BUT JMs would have Retained say 315,000t of resulting PGM Bearing waste Tailings (assuming that Virgin ROM has a 45% yield), of which would probably yield say over 13,000oz of PGMs (via Northam’s – and using JMs Northams PGM numbers) - also assuming that JMs own this material post TP

In reality will hopefully be a favourable mix re. the above

RNS of 10 Dec’2018 – JMs £8.6m PlatCro Cr Acquisition included the then 1.8mt of Surface Tailings – and Access to Additional 3rd Party Ore (ie. via Toll Processing?).

Leon made a Very Interesting Comment during This Week’s Proactive-Investors Interview – ie. ‘‘Chrome Miners with no processing capacity of their own, tend to export/sell all of their chrome ore, when Cr prices are high’

H1’s 164,936t of CrConc Produced is a Mountain of material!! – of which would have been INSANE to Ramp-up so Dramatically and Produce So Much from their Own Tailings, if the Revenue/Earnings Generated was so Paltry! However 164,936t produced by way of a MIX of Toll Processing (TP) of 3rd Party ROM material & JLPs own PlatCro/Windsor Tailings, makes Perfect Sense!!! And the H1 Revenue numbers do Suggest this Mix.

My take is that JMs TP of this 3rd Party ROM, would be such that JMs Break-Even/make Minimal Earnings on the TP CrConc Processing, BUT Retain the lions-share re. the PGM bearing enriched waste. Unit Costs/t should also Reduce as the Processed Volumes Increase. This would also Extend the Life of Feed of the remaining PGM bearing material to Elands/Northam

Re. H1, the Overall CrConc Processing Costs are ~ $41/t (their prior DCM Coarse Chrome costs were far higher). There’ll shortly be Fine Chrome (FC) processing Too at Windsor, of which Should Further Reduce the Unit Costs/t! In addition, the 3rd Party ROM will be Virgin ROM (not Tailings), and as such the Coarse Chrome Yield (1t per 2t?) would be far Higher than that of Previously Processed (CC) Tailings (1t from 4.5t)! The FC Yields re. ROM and Tailings will be the same (hopefully similar to the 1t from 3.2t that JMs are getting at DCM

This Approach would give JLP a lot of flexibility - ie. allow JLP to increase the amount of TP when CrConc prices drop, and process JLP’s majority-owned material when CrConc prices are high!

JMs FC Processing Numbers are starting to look very good – ie. July at ~6300t/pm with Efficiency/Output still increasing (approaching 8000t/pm target), with the Throughput of 25,000t/pm remaining constant – excited to see a Windsor FC plant (especially at the Volumes possible there) – ON THE PROVISO that JLP only process the majority of their own material at higher/profitable CrConc prices – Else, ALL WOULD BE FOR NOUGHT!!!

JMs Updates Don’t Carry enough Detail (Purposely?), such that us Mortals are Unable to Derive a Full and Clear Picture! In this case, the calculated £40/t ($50/t) in H1 2019 CrConc Revenue (£6.599m/164,936t) is far, far from the avg CrConc H1 2019 Market Price of $165/t WHY????????

WHY is JLPs Revenue, that it Realised from the Sale of its Produced H1 2019 CrConc Material, SO DISPARATE From the Average H1 2019 Market Related CrConc Prices?

The Average H1 2019 CrConc Market Price was ~$165/t. JLPs H1 2019 CrConc Revenue equates to only £40/t ($50/t)! – this figure is inclusive of the Shipping Cost (~ $20/t from SA to China), so the Sales Price was ~ say $70/t (ie. $50/t + $20/t) (165 >> [50 + 20])? What happened to the Delta of $95/t?

Is it because:
- The H1 2019 Revenue Accrued was actually (a Combination of Toll Processing of 3rd Party Material & the Processing of its own JLP material), or
- H1 2019 CrConc Tons SOLD was Far Less than the Tons of CrConc PRODUCED, or
- The JLP Sold/Exported CrConc End-Product Requires Further Processing (in China say) to meet export 40%-42% CrConc standards, or
- Other reason?

TT
1) the delta (ie. $1300 less [£671 x 1.25]) is what JLP pay Lonmin re. Smelting/Refining

2) I have the same question - unless what JLP Produced is not Sold - I hope!!! Sales Prices of ~ $150/t less say ~ $20/t re. Shipment nowhere near the Calculated £40.01/t!!!!!

Based on Leon’s past statements, one can calculate Hernic’s PGM mix as: 57% Pt, 33% Pd; 10% Rh (using a simple 3E model – probably 4E, so say 8% Rh and 2% other) – gives Hernic PGM basket price of say ~$1350/oz, even with Pt and Pd having come-off the last 24hrs!

IF (BIG IF) JLP can attain their much stated targets of 30,000oz at both Hernic and PlatCro via Notham’s (big IF as Leon still has to reach this frequently stated Hernic target!!! – could surprise us with Q2??), then that would result in handsome Earnings

Hernic PGM costs are: ~ $315/oz (Ops) & ~$345/oz re. Lonmin’s Refining/Smelting Costs, so nett Hernic Earnings to JLP are ~ $690/oz!

Re. PlatCro: - Unit Ops Costs should also be ~ $315/oz, there’s Transport Costs (~ 30km round trip); and Northam’s Costs to JLP are unknown (Leon has said that JLP retain the ‘Lions-Share’) - hoping that they’re similar to what JLP pay Lonmin, so Nett Earnings/oz should be similar/slightly lower than Hernic – BUT there’ll be no Depreciation of Capital, so the PROFIT (Earnings less Depr & Other costs) to JLP COULD be higher than re. Hernic

PS. A nice Uptick today re. the Vanadium Price – from $8.30/lb to $8.70/lb (China prices) – there’s a Supply Deficit; should have increasing Demand re. Rebar/other; and Ignoring the ridiculous past spikes; the price COULD (???) be quite favourable to JLP come Dec (or Mar!) when JLP start Producing/Selling!!!

Hi Bozmo

is there a link to this Mirabaud Research, or is this info restricted?

TBTT

One can calculate the Hernic PGM Mix as per Leon’s prior statements as per when Pd was $1400/oz and made up 40% of the Revenue – ie. 57% Pt; 33% Pd; 10% Rh, using a simple 3E PGM mix (in reality its probably 4E or 6E) - Hernic PGM Basket Price now $1326/oz (or $234/oz Higher than Q4/2018!) I also have Rh at $3400/oz - https://www.metalsdaily.com/live-prices/pgms/ Hoping that Q2 Hernic Production is now a little higher than Q4 levels, especially with these now elevated prices

Agree with TTs Assessment below - hence why the Cr Conc (Cr2O5) is sold as either 40% or 42% Conc, regardless of its initial ROM origin

Separately, really hoping that JMs can reach its DCM FC Design Target of 8000t/pm. If > 3800t for May; ~ 5000t for June, and reaching Full Prod Target in July is questionable (my take is that 8000t/pm would only be achievable by say Aug/Sep, based on the extrapolation of the figures that they provided) ! - also unsure as per what amount of material is being Input to achieve these figures - their Design Target is 8000t/pm from 25000t/pm, which would be REMARKABLE if achieved!! DCM Coarse Chrome (CC), in its Peak Production, was only Producing ~15,000t Per QUARTER, from about 50,000+ t, and this was only achieved for 1 or 2 Quarters!

I can see JMs PlatCro FC Plant Producing more FC than the PlatCro CC plant (say 2.5X - 3X DCM FC's Prod), with Earnings (100% to JMs - excluding ALL of the Other 3rd-Party ROM at PlatCro from Neighbouring Cr Miners) probably around £10m/pa

Now that JMs has PROVEN the FC to be Successful, and Probably Highly Profitable (with Break-even levels at probably under 2000t/pm), I'd Imagine that the SA Chrome Producers are Now VERY AWARE thereof, and Knocking at JMs Door!!!

Using the Jan/Feb Update ; the Q1 Update; and Yesterday’s Update, one is Able to Derive a Lot More Detail re. DCM Fine Chrome (FC) and PlatCro Coarse Chrome (CC)

The Provided Detail is:
- Jan/Feb PlatCro CC Earnings = £0.9m
- Q1 (PlatCro CC + DCM FC) Earnings = £1.309m
- Q1 (PlatCro CC + DCM FC) Revenue = £3.117m
- DCM FC Production: May > 3800t; and Ramping-up; with June ~ 5000t
- DCM FC Derived/Assumed Production: Apr ~ 2750t; Mar ~ 1750t; Feb ~ 1000t; Jan ~ 400t Therefore Q1 = 2150t
- Q1 CrConc Sales Price of ~ £110/t (incl say £15/t for Transport/Shipping) - (Q1 prices from Mining-Bulletin site)

Derived/Calculated Detail:
- From the Q3 and Q4 Updates, one can Calculate the DCM CC Q’ly Running Costs = ~ £850k/Q, with ~ 3000t/Q being the Breakeven level for DCM CC Q’ly to be Profitable
- I’m Assuming that the FC Running Costs are Less than the CC Running Costs (Smaller Plant), and the FC Running Costs will Ramp-up as Production Increase
- Assuming that PlatCro CC Mar Earnings > PlatCro Feb Earnings > PlatCro Jan Earnings. Jan+Feb=£0.9m (given), with Jan7-30=£0.35m; Feb=£0.55m; and Mar=£0.65m, thus PlatCro Q1 CC Earnings =£1.55m
- But Q1 (PlatCro CC + DCM FC) Earnings = £1.309m (Given),
- So Q1 DCM FC therefore ran at a Loss for Q1 of ~ -£0.241m - as Production for Q1 was Below the Breakeven levels for Positive Earnings
- If FC has Lower Running Costs than CC, then the Break-Even level of Production for Profitability would be say 2000t/pm
- PlatCro CC Production of ~ 25,000t for Q1 can be thus be Calculated
- If DCM FC can get to the Design Figure of 8000t/pm (from 25kt/pm input), then DCM FC Production (24000t/Q) will be Comparable in Production with the Far Larger (size of Plant) PlatCro CC Production (25,000t/Q)!!

Based on the Above, One can Deduce a Lot More

Re. CrConc Prices - sites are quite restricted, and for members only - you can use: http://www.mining-bulletin.com/index.php/product_2.html which is free - use Pg1 for last 18 mths - CrConc Prices fluctuate wildly - Pg1 for last 18 mths shows prices peaking at $250/t, with low of $140/t - with last 12 months being roughly $150t

Re. JMs CrConc Revenue, u need to subtract say $20/t re. shipping/transport - which comes to MHs figure of £100 /t - did peak to say £120t in early Q1/2019

Re. DCM 3rd Party ROM: Leon - WebCast (30 Nov'2018) - from 51m10s: re. DCM '...we have not Entered the Run of 3rd Party ROM at this stage - we first want to get the FC Stabilised at this stage and Going Out before we Re-enter the 3rd Party ROM Processing ...'

At DCM, JMs Earn 50% re. all CRConc Produced, REGARDLESS of Source - the 3rd Party ROM will have a far Higher Coarse Cr Yield than Tailings, but Similar FC Yields to the Tails, of which IF JM can Achieve 8kt from 25kt pm, will be UNBELIEVABLE

I'd also expect an Announcement [say once Output has reached say the 5kt/pm mark - later this month??)) re. the Build of the FC Plant at PlatCro (where JMs will accrue 100% of the Earnings, with the Plant 2X - 3X the size of the DCM FC Plant) - I'd imagine that they are fully busy with this Plant Design at the moment!!!

Leon has indicated that they have No Plans on Developing Tjate

PGM Prices normally follow Long Price Cycles, with most Mining Houses making the mistake of Purchasing and Developing these Tjate-type Assets, at the Peak of the PGM Price Cycle – the Problem with this approach, is that these assets take 10 or so years to develop, at which time the PGM Prices are approaching the Trough of their long price cycles, and these Mining Houses suddenly find themselves in a LOT OF TROUBLE

Both Northam & Sibanye from Recently ‘Bucked-the-above-Trend’, and Both instead Purchased similar un-developed assets to Tjate, whilst the PGM prices were on the low end of this deep Price Cycle – at lower prices than they are now

Both Pd & Rh, have recently experienced sharp increases in Price, as per recent supply shortages, with increased demand – Pt COULD follow suit, as its Supply/Demand characteristics appear to be similar to Pd, but quite a few months behind

Thus, with rising PGM Prices, and a few of the Larger Mining Houses already having bucked the purchase trend of similar Tjate type assets – Tjate could surprise us all with some near-term interest – who knows – a sale would be a massive plus, whilst holding it, carries no cost, as its value is already ZERO on the Balance Sheet (no fear of an Impairment), with JMs having Many a Project that WILL instead Deliver very well in the near-term

Agreed MH

the £10m/pa for H/O Expenses, and £2m/pa re. Other Costs (ie. Interest Pd) more than covers this, with quite a bit of Fat built in. JMs outstanding Debt must be close to zero - does anyone have a current figure?

The one concern that I do have is re. 'IMPAIRMENTS' (under 'Other Costs [also H/O])'- the only Impairment of late was £804k in 6 mths to June 2018. BUT there was a Mammoth £18.57m in Year to June 2017! Does anyone know what this was attributable to? Impairment of Australia Ni Tailings possibly? I also think that they 'threw this large number in', such that they could ramp-up the Available 'Tax-Losses' - was £42.7m as per 2018 June year-end - so Zero SA Tax to be paid as per my example

Based on JMs business of late, I doubt that there will be such large Impairments as per their current business/focus

So, very comfortable as per my initial Example, on the Assumption that JMs current projects realise the Targets as stated

Cheers
34DS