Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
After holding TCM for 8 years, I am happy to have sold my entire holdings today with a nice profit. IOT companies like Telit, Sierra Wireless, u-blox seem like exciting growth stocks but in reality they never lived up to the hype. Whilst these IOT companies will most likely generate profits in the future, a lot of those profits will get re-invested into R&D and maintaining market share in a competitive market. If you are considering holding on or opting to take up the alternate offer, you have to ask yourself, what will Telit achieve in the next 10 years that it didn't manage to achieve in the last 10 years.
Highlygeared
Behind the curve? I have mentioned several times that Eland production had a finite life and posted links to Northam operational updates that mentioned Eland. Instead of making stupid comments, why don't you make a useful contribution to this forum?
I posted about Eland today because there seems to be an impression that bringing the PGM production in house will somehow produce better or the same PGM earnings. It will not.
gshivers
The key word is "benefits". I did not see the word "improved" or "increased". If you do the maths, you will see that an Inyoni expansion of 1,000 pgm oz/month, even at a lower cost of production will not make up for the lost earnings derived from the higher-cost production at Eland.
NorthernShark
I did say earnings/profit of GBP 1,500/oz. I did not mention price.
There are no official timelines for Eland but it is clear that Eland wants to process their own material rather than JLPs. WH Ireland note today adds weight to my theory.
As expected, the Eland contribution to PGM production is diminishing to either zero or a substantially lower level. The Inyoni expansion is estimated to add an extra 1,000 pgm oz / month which will not compensate for the Eland pgm oz lost (2,500 - 3,000 pgm oz / month). The lower production cost at Inyoni will not compensate for the lost PGM earnings at Eland. I would assume most investors would have been aware of the limited life at Eland but when it is confirmed in a future operations update it will still hurt.
Rhodium prices can't seem to get past $30,000/oz and will not stay at these levels forever so we are probably at the peak PGM basket price. I am expecting the PGM production earnings for the JAN-21 to JUN-21 period to be the best figures reported by JLP. Subsequent reporting periods will show declines due to reduced production and probably a lower basket price.
I would lower expected PGM production to 40K-50K oz per annum going forward. As for an earnings per oz estimate, I think GBP1,500/oz is fair for JAN-21 to JUN-21. After JUN-21, it would be prudent to lower the expected PGM basket price.
If the above is proven correct, copper earnings are then critical to maintaining and hopefully growing JLP earnings going forward.
How about a disruption at Inyoni due to expansion activities?
gshivers
Like most shareholders, I would love to see 6,000 pgm oz per month but I am basing my estimates on what JLP has said, i.e. straight from the horses mouth. Future production at Eland is not certain but it is safe to assume that as the Eland mine is ramped up, Northam will have less capacity/desire for processing JLP material. We also don't know much JLP material is left for processing at Eland or if the stockpile intended for Eland is being replenished.
gshivers
6,000 pgms oz per month is wishful thinking. The targeted annual production is 50-55K oz has been mentioned several times. The expansion at Inyoni will hopefully counter the eventual/current decline at Eland.
https://www.northam.co.za/investors-and-media/announcements/2021#trading-statement-and-trading-update-h1-fy2021
A bit of info on the Eland operation.
I have 2 reasons that could be holding the share price at this price:
1. ACAM shares are still being sold or more are expected to be issued before the loan is fully paid.
2. Concern regarding future Eland mine output. At some point, Northam will not be processing JLP's tailings or will do so at a reduced rate.
I don't have sufficient detail to estimate the potential impact of the above 2 reasons.
https://www.betaville.co.uk/betaville-intelligence/rare-alert-lantronix-said-to/ explains the rise. Credit to chris2020 over at adfvn.
Chaiselongue
Regarding Point #6. The PE ratio is correct as JLP posted 0.94 EPS for the FY19/20 financial year. The EPS is expected to double for FY20/21 and the last operational update validates that estimate.
Happydays
Refer to Page 7 https://jubileemetalsgroup.com/wp-content/uploads/2020/07/FN-JLP-080720.pdf
I can't comment on the accuracy of the split, but it can be used as a guide.
HighlyGeared
I think most would welcome your thoughts/clues on Tjate. Of course there is always the chance of a sale but you are already aware that the common consensus is that the chances are low. So you will understand most are skeptical on a potential divestment.
Please share your theory so we can commence with some constructive discussion.
HighlyGeared
I fully understand and agree with your comments about the quality of posts on this forum. The quality is somewhat better than ADVFN but still below my expectations. Anyway, it is what it is so let's move on.
All JLP shareholders would welcome a Tjate deal but it would be a pleasant surprise if it were to happen. Current average PGM basket prices in ZAR for calendar year 2020 are high (27K+) and are close to all-time ZAR highs. So from a price perspective it is definitely a good year to be a PGM producer. The problem/risk I see is where will the ZAR price be tomorrow or in 5 years. Platinum demand has not recovered from dieselgate and the expected palladium substitution doesn't appear to be happening. The USDZAR exchange rate is also difficult to predict. I don't see any catalyst for the price of platinum to go significantly higher over the long term. So is there a miner out there willing to commit the capital investment based on the uncertainty? Even if a miner makes an offer for Tjate, they will most likely throw us peanuts for it with the bulk of the revenue in the form of royalties on production. I hope for a Tjate deal but I don't expect it.
As for JLP in general, the PGM earnings should give the company a decent profit this calendar year. As I have said before, I expect EPS of 0.7 pence for calendar 2020. If copper can stay above USD$2.60/lb then we can expect another step up in earnings in 2021. As for chrome, it hasn't done much for JLP in the past and I doubt it will until we see another significant price increase.
HighlyGeared
What makes you think a Tjate deal will be done by the end of year? Given the ease in which you criticize others for their opinions I assume you have something of substance to back up your third claim.
To estimate profit for the 2020 calendar year, i would exclude all revenue streams other than PGMs. Project earnings should come in around GBP 25 - 30 million. Subtract 10 million for corporate costs and you are left with GBP 15-20 million in profit before tax. i am estimating an EPS of 0.7 pence for 2020.
I was curious to calculate the impact of the increased PGM prices for Jubilee so here are my numbers. All figures are approximates and based on a PGM basket composition of 63% platinum, 30% palladium, 5% Rhodium and 2% Gold.
H2-2019 revenue was USD$997 on a H2-2019 6 month average PGM basket price of $1,377. The H1-2020 average PGM basket price so far is $1,877. If we assume that Jubilee will see an increase revenue per oz of just $300 in H1-2020 and we assume the PGM production will be a conservative 30,000 oz for H1-2020 then you can assume the PGM net earnings will increase from H2-2019 of GBP 8 million to GBP 15 million.
That could be just enough for any potential loss on the chrome operations, Kabwe ramp up, corporate costs and debt repayments.
Welloil
So are you saying the September Windsor PGMs are included in the £ 3.38 million Q3-2019 earnings or not?
I would think the very next statement in the RNS
" This jump in earnings reflects only one full month of production at the Windsor PGM Operations..." makes it clear that the Windsor PGMs are included.
Anybody concerned about "...operational earnings to £ 3.38 million delivered for the three month period July to September 2019..."
Why is figure so low when:
- If Hernic/Inyoni made GBP1.4 million just in September.
- Windsor PGMs delivered 5 337 PGM ounces for the month of September 2019.
Either something is wrong somewhere or the Windsor PGMs are not included in the Q3-2019 earnings.