Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Tobin
It is an excellent question and of great significance when attempting to estimate long term earnings. Unfortunately, JLP's reporting doesn't include these figures and I doubt the market can figure it out. Back in the good old days, i.e. just 6 months ago, JLP was reporting attributable earnings and project earnings, allowing investors to get a glimpse into the profit share with JV partners. For some reason JLP discontinued attributable earnings in this week's RNS. You can still attempt to derive a rough approximation of attributable earnings by looking at the gap between average PGM basket price and PGM earnings per ounce (allowing for smelting costs). Prior to CY H1-2021, it was under $500. In the most recent results, it has doubled to at least $1,000.
Going forward, investors should remember that even though the expanded Inyoni reduces the reliance on the Eland JV, a higher portion of the material being processed is not owned by JLP and thus attributable PGM earnings should be estimated accordingly.
Dorfan
Fair enough, I think I have said enough on the topic to make my point.
Yes JLP has a bright-ish future but if management continues in this manner that bright future gets a shade dimmer.
I am not selling but I am repeatedly dialing back my expectations and I am itching to get out. I am sure there are bigger fish with the same intention.
DRB83
If you think the chrome process wouldn't exist without the PGM process you are again being misled. The chrome is extracted before the PGM extraction process, so it is the other way around.
As for standard way of accounting for by-products, so I assume JLP have been doing it wrong since Day 1 and have only just realized their mistake this FY. How convenient.
I have stated my case clearly. Feel free to interpret the results as you wish. Just don't be surprised when the FY21/22 results are published and the EPS tumbles.
DRB83
When you quote and believe statements like "Early results from the new Inyoni operations have outperformed expectations with a 34% reduction in PGM unit cost compared with the six-month period ending December 2021" you have been sucked into the ever-so convenient change in the costing calculation. If you look at the figures yourself you will see that the PGM costs have not reduced by 34%.
DEC-21
Processing cost: $680
Transportation cost: $75
Total: $755
JUN-22
Processing cost: $584
Transportation cost: $147
Total: $731
This equates to a cost reduction of 3.2%.
If you look at the newfangled "Total operating cost per PGM ounce":
DEC-21: $2,583
JUN-22: $2,860
Do you see a 34% reduction in unit cost anywhere?
In addition, JLP either deliberately or incompetently omitted the explanations for Notes #1 and #2 to explain Unit costs and Unit earnings.
Edzi
Just look at the past 2-3 years worth of half-yearly updates. The PGM unit costs are in a table in each update.
https://www.lse.co.uk/rns/JLP/six-month-operations-update-h2-2021-ihlyyucdokmtlre.html
https://www.lse.co.uk/rns/JLP/six-month-operations-update-h1-2021-h7lgsso1ppkjkgt.html
https://www.lse.co.uk/rns/JLP/six-month-operations-update-h2-2020-3a6b25i9noxx9t4.html
https://www.lse.co.uk/rns/JLP/six-month-operations-update-vtdnuqe2sf4ilsr.html
Step aside Willy Wonka, Leon is the new master of fudge. Leon has the gall to claim JLP had a record low PGM cost when in fact the unit cost has seen a significant increase over the past 12 months. The chrome offset is just a deceptive method of trying to make the PGM unit cost appear lower.
Yesterday was the first time JLP stated chrome as a by-product. All previous statements referred to chrome as a precursor to PGM production. Leon might be a smart fellow but he tripped himself shortly after claiming record low PGM costs. Leon states that JLP will be generating earnings from chrome, PGMs, copper and cobalt. So magically we have chrome revenue and our PGM unit cost is reduced by chrome offsets. Sorry Mr Wonka, you can't have your fudge and eat it too. The simple fact is that PGM costs have increased dramatically and JLP are doing there best to hide the fact.
Leon also states that the market is missing the point that more PGM production is now done inhouse at Inyoni as opposed to the "very large portion" being produced by JVs. Funny how we only hear about the "very large portion" now rather than 3 years ago when the JV started.
For those who closely monitor the comparatives you may have noticed in yesterday's RNS this statement
"In Zambia, Copper production increased 14% to 1 388 tonnes, over the previous six-month period".
If you look at the previous 6 monthly update:
"In Zambia, copper production during the period increased to 1 314 tonnes of copper (H1 CY2021: 774 tonnes)"
So in reality, copper production increased by 5.6%. The 14% uplift relates to copper sales, not production. I have no problem with such a small incremental production increase given the phase it was reported in. I do have a problem with a consistent obfuscation of JLP's reporting.
SeisNav
I haven't sold my shares. I am invested because PGM tailings treatment is a good business to be in. I believe (if managed correctly) that JLP can achieve a higher valuation. My exit price is repeatedly lowered and my exit timing is repeatedly extended, partly due to poor management decisions.
Think of it like this, I might like the country I live in but I have the right to point out the blatant missteps of the individuals running the country.
SeisNav
I have stated previously that I am not invested in JLP for the management, but the PGM exposure. I have also said before that I would vote to demote Leon to CTO and install somebody who knows how to set expectations and keeps the market informed of any deviations for whatever reason. If Leon and co were a bit more honest and transparent I wouldn't be so bitter towards them and their actions.
Stukey
Stick around long enough to see for yourself, another disappointment is always just around the corner on JLP street. After 30 years of investing, you come to know who the dodgy players are.
Sumo
So your rationale is that a person can't critique another unless they the same experience. So I suppose every football fan must have played football before criticizing a football player, every movie critic must have made a movie and nobody can comment on politicians unless they have been a politician themselves. Are you starting to see the stupidity of your comment yet?
StukeyBlue
There are many examples of which unbiased long-term holders can attest to. I would be here all day if I had to list them all. Today's examples are:
- A set of half-year results that used 6-month comparatives and deliberately omitted the standard yearly comparatives. A deliberate attempt to hide the considerable drop in PGM production and earnings.
- The use of chrome as a by-product offset to lower the PGM unit cost when we all know that chrome extraction is a precursor to the PGM production and has always been reported separately. Another shifty move to obfuscate the considerable rise in PGM costs.
Sumo
Why would I need to cut anybody any slack, according to Leon, JLP always delivers on time, right?
I suppose I should also be so happy that PGM unit costs have reduced by the miraculous wonder of chrome credits.
You obviously don't know when somebody is walking you up the garden path.
That interview had more waffle than a pancake parlor. Leon talks about growth but fails to mention he is using the train wreck results of H2 CY 2021 as the reference. As for delivering projects on time, I might have to buy him a calendar. Each and every copper production estimate JLP has given has been missed so far. Leon probably thinks he and the board deserve some fat pay increases too on all the "good" news.
SeisNav
What is there is to address? Of course I used the lower PGM prices as an input for my estimates. The point is that my September 2021 prediction was met with responses like "having an agenda", "shorter", "negative bias". I suppose you were the only one to agree with my prediction back then.
As we have seen today, the lower FY21/22 PGM earnings is not just a result of lower PGM prices. PGM production is down year-on-year, unit cost is considerably higher and worse of all PGM production estimates going forward have been lowered.
Don't let a dose of reality deter you from overly optimistic estimates going forward.
SeisNav, WH Ireland were still forecasting an EPS of GBX 1.9 for FY21/22 earlier this year. If you recall, my views of a much lower EPS was in the minority on this board. Now it seems the lower EPS was obvious, yeah right!
As to your prediction of $150M FY22/23 operating profit, you may want to reconsider those numbers to well under $100M.
As I predicted back in Sep 2021, the FY21/22 results would be considerably lower and today's results were even worse than I expected. After reviewing the RNS I have many concerns but I will no longer be sharing my estimates and analysis here. I will just let the cheerleaders continue to post there wildly optimistic and unsubstantiated views and will chuckle quietly in the shadows.
SeisNav
Thanks for clearing that up.
Dorfan
Read my original post, it was related to PGM prices, not revenue or earnings estimates.
As for the PGM basket split, I have never seen JLP publish a split, so the WH Ireland is the closest thing we have and it works quite well.
I got my CPA accreditation over 20 years ago but I doubt that is of much relevance.
Mikiesunday
I added you to my ignore list. Your posts are consistent cheerleading nonsense and lack any informative content.