Member Info for Jammer1

Based on the Q&A with Leon at the Mineprophets investor show on 19 July, there are potentially four short term issues which might warrant an RNS. 1. Approval for the small scale mining licence for the Kabwe tailings was expected to be transferred from BMR to Jubilee and renewed at the end of July; 2. A solution for the Processing of the DCM PGM enriched tailings was expected to be concluded around now; 3. A new deal for a major chrome ore provider to Windsor is anticipated shortly; and 4 the next big copper deal is also anticipated shortly. Let’s hope we are not waiting too long. Meanwhile the cash should be pouring in for the PGMs at current PGM basket prices. Interesting to see cash went up by £1.7m from end May to end June.

As expected no change in FED position. Loads more money printing, zero or lower interest rates. Gold is reacting higher. Breaking $2000 is really on now.

A 15% surge in SP in two days may well tempt the traders to cash out. Whereas yesterdays increase was probably based on what Leon had to say at the mine prophets on line investor show, I expect today has a lot to do with reinforcement from the surge in precious metals prices. Will the PM prices hold for any length of time. If they do it will be incredibly positive for Jubilee's cash cow South African assets. Will the SP now be reinforced in the short term by an announcement on the 2nd brownfield copper project and/or large chrome ore supply to Windsor and /or the plans to monetise the enriched PGM tailings at DCM? The company has a lot going for it at the moment. Let's hope it lasts.

The recent surge in Cora’s share price will be recognised in Hummingbirds half year accounts and will boost the bottom line profit over the first half of 2020.

As I understand things the permits were transferred from Hummingbird to Cora in exchange for most of the current 12.5% shareholding in Cora. They were considered at the time to be non core assets and would not have been developed. By passing over to Cora the permits are being worked up into a mineral resource and Hummingbird has retained an interest in their value appreciation through their Cora shareholding. It is quite possible if a mine is eventually developed on one or more of the Yanfolina permits, the ore would be processed at Hummingbirds Yanfolina mine.

As a result of his interview with Leon, and the fact that Leon confirmed that just on projects and the copper target now known about, earnings could double from the base amount today within 3 years (i.e to £60m p.a.) TW has bought shares in Jubilee. He has previously been very concerned about the way South Africa was going politically, but the diversification into Zambia and the massive potential growth in tailings dam copper projects in that country has persuaded him to part with some of his money. Will others do so on Monday?

Moneyhawk in the interims a £2.3m gain was booked on the purchase of the Sable refinery. This may well be due to the fact no value was placed on the copper tailings by Glencore. Let’s see if the audited accounts also show this gain which of course goes straight to the pre tax profit bottom line.

Leon mentioned they had been offered feed from Glencore. It seems that might not be necessary as the next brownfield copper project with a 5 month implementation period which seems to be in advanced negotiation , will be all that is required in the short to medium term before the recently announced project elephant starts to come on stream.The copper project to get to 25K tonnes in 4 years seems a real possibility, rather than wishful thinking.

They have nominated as per the BMR contract to take 100% ownership of all assets relating to the Kabwe tailings. This will mean Jubilee will take over ownership of the BMR subsidiary which holds both the small scale and large scale mining licences. Leon confirmed the small scale licence covering the Kabwe tailings needs to be renewed but he was expecting its renewal will be confirmed at the end of July ministerial meeting. He indicated Jubilee was helping Galileo with Zambian authority approval of taking on the large scale mining licence. This would clean out the balance sheet of the BMR subsidiary they are taking over, and of course enable Galileo to explore the Kash itu zinc project as a potential longer term source of high grade zinc ore to the Sable refinery.
Once transfer of all Kabwe tailings assets is complete Jubilee will retain a nominal holding in BMR. Not sure why Leon just said a "nominal" holding as currently they hold just under 30% of BMRs shares. Jubilee then intends to negotiate a complete exit away from BMR. How it will be achieved was not mentioned and only a commitment to provide further details once there is a clearer sight of time lines was made.
The $11m budget indicated to build the zinc circuit covers
(a) a recovery and precipitation circuit to produce a zinc salt, and
(b) a new tailings storage facility to ensure all effluent is captured and sealed.
It seems a lot of work has already been done at the Kabwe tailings site in developing a new water capturing facility. The liquid from the tailings contains heavy metals. Such work is in line with their effluent neutral policy.
Hoping borders will be open by September so they can get back to work on the zinc circuit.

The SA projects are of course the cash cow to help fund the massive expansion in Zambia. I had concerns over their longevity and the potential loss of PGMs at DCM.
(a) Windsor PGM project with Northam
Northam processing may not be available in 2 to 3 years as they develop their mine. Leon indicated an intention to expand the capacity at Inyoni during this period. He reckoned it would be a 10 month project and provide much better margins as the current Northam share on earnings would all be retained by Jubilee.
Intriguingly he said "watch this space" about a potential deal with a large chrome ore producer to feed the Windsor plant over the longer term and properly utilise its capacity.
(b) The DCM enriched PGM tailings
Fine chrome plant already disassembled and starting to be transported to Inyoni.
He emphasised that SAMANCOR was now owner of old Hernic and would assist them in showcasing the fine chrome facility. Did not elaborate on this.( He mentioned as an aside the processing techniques they had developed for fine chrome were being utilised at Kabwe to extract copper from the tailings. It seems Glencore have been amazed at the speed of getting the copper circuit going but even more so the ability to extract the copper from tailings at such good margins.)
He indicated that discussions were well advanced to commence processing the DCM tailings. Whether this will be the method or not, he did not discount the possibility of transporting the enriched tailings to either Inyoni or Windsor. Leon openly expressed his frustration with the bureaucratic delay and institutionalised inertia at a regulatory level regarding the DCM project.

The chat line with Leon was excellent. A wide range of questions and he was very open in his answers. I would recommend you buy a ticket as you can still access everything said on the chat line. I will post bits and pieces over the weekend.

What a transformation is going on. Long term large future earnings now becoming visible through the copper strategy. Growth is the order of the day and every bit of the significant free cash flow from the South African projects will be needed over the next two years at least to partially fund the large capital expenditure. The balance sheet hopefully will support debt funding secured on the additional plant facilities that will be needed to cover the balance, but it would be of no surprise to see large new IIs investing at hopefully a small discount to market price. I cannot possibly see any dividends or share buybacks for two years at least but hopefully good share price growth as the copper strategy unfolds and starts to be delivered.

The reported earnings do not appear to include anything for the copper and cobalt sales. I anticipate they will be used to offset some of the costs of getting the Sable refinery up and running and these items will be capitalised when the year end results are published. I assume it will only be when the report and accounts are published that we will be able to see what the earnings from the copper were in H1 2020.

It looks to me as in effect an agreed reverse takeover is occurring as the ASX shareholders will have in total 49% of the total Pasofino shares on completion of the Pasofino purchase of all ASX shares. By acting in concert the current ASX shareholders would in effect be able to control the Pasofino company so expect to see the ASX management installed to run it. The funds for acquiring the earn in to the Dugbe project will probably be raised through a placing of Pasofino shares. It should be noted Hummingbird will still own the Dugbe project and Pasofino will only be able to earn up to a 49% share of the beneficial interest in it by completing some tough minimum requirements which could cost $30 to 40m over the next couple of years. To me theHummingbirds Dugbe deal with ASX is beginning to look better and better with realistic chances of proceeding on the back of the presumed reverse take over of Pasofino.

Fellowship I think you are totally deluded about what BMRs position was two years ago. They clearly had no effective relationship with the Zambian authorities, nor did they have a processing method that could be commercial. As I understand it, it had been solely developed and tested in a laboratory and excluded the vanadium. Bmr also had no method of upgrading the tailings prior to processing, another necessary requirement for a commercial process. The real test for Jubilee and their own relationship with the authorities will come over the next few months with their request for the small scale licence transfer from BMR and its renewal. We can only wait and see.

Done nothing at Kabwe! Really. They committed to the joint venture with BMR about 2.33 years ago. It was quickly found there was no small scale mining licence for the tailings, and the much vaunted process of extracting the metals from the tailings was an absolute non runner. After being the junior partner they now own virtually the whole project, have a viable process method and a refinery in which to do the processing, and without COVID border controls would have probably started up the zinc processing. I would say that is pretty good in such a short period.As an aside
they have upgraded a copper circuit at the refinery, developed a cobalt circuit and shown they can produce high grade copper from tailings to land a massive copper project. A public commitment has been made by Leon to get on with the zinc circuit as soon as the Border closure is lifted. The Zambian mining authorities now need to play their part by approving the transfer of the small scale mining licence from BMR, renewing it in September on sensible commercial terms. Ideally they also need to grant a small scale mining licence to Galileo so the high grade zinc from the Star Zinc project can be used to upgrade the Kabwe tailings so they can be processed more economically.

At the year end there were $ 93.5m of current liabilities of which $29.8m related to the bank debt. The current assets were $38.2m, so there was a shortfall of assets of around $55m to meet the expected liabilities known to be due in the following 12 months.This meant the suppliers were owed around $24m at the year end. The deficit should be comfortably met by the free cash currently being generated from the operations, but as to what the cash position of the company is at any point of time depends on the dates of payments for the gold against the dates of payment to suppliers. The net debt position shown in presentations only relates to the cash and gold held position compared with the outstanding bank debt. If the gold price is maintained it is quite possible that current assets at the end of 2020 will exceed current liabilities so then the company will genuinely be net cash positive when supplier debts are taken into account as well.

A little too optimistic Northman. They have some significant supplier debts as well, and we don’t know when the trade payables become due and impact the cash position.

TBTT I think the latest Crux investor interview with Leon Coetzer was released after your post. In that interview Leon confirmed the zinc processing unit would be developed once the COVID border restrictions were lifted. Hopefully the small mining licence renewal and transfer to Jubilee due in September will be authorised. This should coincide hopefully with zinc circuit being completed with commissioning at end of year, although that has all to be confirmed by RNS .

Using the share buy back facility will more directly clear the seller!