Member Info for Jammer1

A forlorn hope but it would be good if Jubilee could qualify for some of that AID for the additional developments needed to mine, move and then subsequently store the lead polluted mine tailings safely without further impacting the environment. Clearing up the Kabwe tailings site over the next 10 years and restoring the remaining tailings in a modern safe way will go a long way to helping this dreadfully polluted town.

The AGM is tomorrow (26 June 2020)starting at 10am!

It looks like Horizon sold all of their 95m shares from copper deal for 3.4p and they were then purchased in 3 separate lots by institutional investors. Good news as there is now no overhang from their shares.

Yes the large copper project announced by Jubilee will not be producing copper plate for about 2.5 years from the new large concentrator that will need to be built. Some small scale copper concentrate will be produced before then, possibly from the test plant they built whilst negotiating the contract.
But high quality copper plate is already being produced at Sable refinery from Jubilee's own tailings which were bought from Glencore as part of the refinery transaction. They are also sourcing copper tailings/ROM ore from regional mines. The precise details of these other sources have not been released, probably for commercial reasons. So the copper production is already beginning to be ramped up.
As Datacheck has already said, Jubilee and Galileo seem to be joined at the hip as far as the future zinc production goes. Depending on border restrictions it looks as though the zinc circuit will not be ready to commission until late Q4 2020 and then hopefully commercial production can start in early Q1 2021 including Star Zinc.

Very good news for Galileo indeed as Leon publicly committed to developing the zinc circuit at the Sable refinery. It comes with a fair old price tag of $11m for Jubilee, although I suspect that includes some hefty costs for ensuring Jubilee can safely deal with the lead toxicity in the Kabwe tailings. Now both Jubilee and Galileo have got to sort out their respective licences with the Zambian authorities, Jubilee for the one to mine the Kabwe tailings ( transfer of small scale mining licence from BMR and renewal due in Autumn) and Galileo for their Star Zinc project. I suspect Jubilee will have little option to get on with the zinc circuit development as they have made a commitment to the Zambian authorities about cleaning up the Kabwe tailings and they are the last people they want to fall out with if their huge copper plans are to become reality in Zambia.

There are at least two regulatory hurdles to overcome before the Kabwe tailings can be processed for the zinc content. The first is the transfer of the small scale mining licence from BMR to a nominated subsidiary of Jubilee, and its renewal due this Autumn. The terms of the renewal will be interesting as I am sure Jubilee will be given the hurry up. There may be a special permit required as well that approves the method of dealing with the lead toxicity when the tailings start to be mined and processed. Second , Jubilee seems to be primarily pinning hopes of high grade zinc ore to come from Star Zinc. Galileo has not yet got the small scale mining licence for that project. Without high grade zinc ore to improve the tailings grade it is doubtful the zinc can be extracted profitably from the tailings, certainly at current zinc prices, which fortunately have ticked up a bit recently. The COVID border delay of the zinc processing equipment may have come at the right time.

Very little cash will be invested in the new copper deal for the first 9 to 12 months. It will be only after the copper concentrator starts to be ordered and built over 12 months from now that the cash commitment will start to kick in.
In the first 5 months of the year the operations probably generated $7m to 8m cash, when allowing for other costs in the business other than the two significant payments Jubilee reported. Other than Inyoni chrome the other chrome operations were probably negative cash due to the very low chrome concentrate prices prior to lockdown, operation restrictions from COVID regulations in late April and May, and don’t forget the customers for the concentrate would have probably had to slow down their own payments to Jubilee due to the COVID impact on their own business. The COVID implications would have of course impacted the PGM side as well. Furthermore cash does not materialise for about 4.5 months on average after the PGM concentrate is delivered to the refiner.So the cash received would have been for production during the last 4 months or so of 2019 which was not at peak Windsor PGM production. Personally to be so cash positive through the first 5 months which covered the worst of the COVID period in late March to end of April was very reassuring to me.

Moneyhawk, As I understand matters there are separate circuits for copper and zinc processing.
Based on the RNS of 23 Aug 2019, there are two electrowinning circuits, which I believe extracts the metal out of the concentrate. Initially only a saleable zinc concentrate is being produced so neither electrowinning circuit will be used, leaving both available for the copper production. It seems the two electrowinning circuits can be interchanged between zinc and copper metal production depending on market conditions. Back in August 2019, the plan seemed to be to use one of the electrowinning circuits for zinc metal production at the time the lead concentrate circuit came on stream in 2022. But that may well have changed so that more copper metal can be produced by using both electrowinning circuits for that metal only.

Sorry got my £ and $ sign mixed up. I meant $20m and around £16m for H! 2020 earnings. This assumes very limited restrictions on chrome and PGM production since restarting due to social distancing measures. It could be more, but I have no idea how to estimate the copper and cobalt earnings properly.

Since restarting after lockdown there has been some significant price increases for copper and chrome. The PGM basket price has also held up to at least the same favourable level as at the half year end, with a huge windfall in January, February and early March. Despite losing 4 weeks production in South Africa for the lockdòwn it is quite possible earnîngs in the first six months of 2020 will be around £20m.

It would appear that all the work for the new mine during the first 9 months is expected to be funded through free cash flow out of Yanfolila. The bank funding will only be for the new mine build and infrastructure. It would help if the budget for the pre development phase was released. This should then take away any concerns about a rights issue being needed to fund any part of this phase. Personally I am amazed at the lack of positivity so far about the prospect of doubling production on presumed margins similar to those at present within two years. Yes there are a number of hurdles to jump, particularly over the next 9 months but I am still surprised at the early lacklustre reception to this announcement.

As far as I am concerned you have summarised the situation perfectly Juxtapose.

Thanks visitor. Should have checked.

Otho, thank you for your well thought out and balanced post. My immediate reaction is the proposed arrangement is an excellent start to monetising the $72m of intangible assets on the balance sheet at little if any risk to Hummingbird. Keeping the majority stake in the venture as well is better still. Of course this is just the start of a long journey with no certainties of eventually a large operating gold mine at Dugbe. Your final point about the current lack of public plans for the capital allocation of the current operating free cash flow is well made.

To my mind when 20% of the company is being put on the line, together with a substantial drilling requirement to prove up the mineral resource, with no guarantee of success and as yet no indication of how much it will all cost, then the project is high risk The resource is in the lowest JORC classification of inferred. I would imagine that before trying to sell it on, far more geological confidence in the resource will be required and it will need to be moved up through the indicated category up to the measured category. At that point the highest risk part of the exploration is over, and the economic viability of a mine can then be properly established. Listen to CB speaking to Tom Winnifrith in a recent interview for ************* and you will understand why the majors let the small exploration company shareholders take the high exploration risk whilst they monitor from the side and step in with an offer when the resource has largely been proved up.

As far as I can see Xtract has very little cash. It has relatively small amounts coming in each quarter from the alluvial, but not a lot more until the hard rose gold project is fully up and running. After commissioning that may well not be until 2nd Q next year. Meanwhile over the next 9 to 12 months funding is required for all of the copper projects. It doesn’t take a genius as to where it has got to come from! This is why I am not invested currently despite the significant potential here, and may explain some of the current price action. It may also be for some that the new high risk but high potential of the Australian copper project is a risk too far until the near term revenue projects are much nearer to up and running.

The issue between CB and TW re Galileo placing was not the placing itself. It was the fact that the placing was not available to existing shareholders and other PIs as well. TW has campaigned for some time about loyal existing PI shareholders not only being shafted by heavily discounted placings to bucket shops, whose inside connections probably pre sale, but also PIs being excluded from them. Primary Bid now provides a cheap method of enabling PIs to take place in a discounted placing. TW had written to CB and a large number of other Chief Executives about this, and if CB does not adhere to this approach in future, he will no longer feature any of his companies on *************.

As I have previously stated there are a number of regulatory issues affecting both Galileo and Jubilee that hopefully will all come together over the next 3 to 4 months. From Jubilees perspective they have recently requested a transfer of the small scale mining licence from BMR to one of their own subsidiaries. This licence also needs to be renewed and extended this September otherwise they cannot mine the Kabwe tailings. If they can’t do that then they will have a decision on whether to finish the build of the zinc processing circuit, although they are probably too far advanced with that particular part of the project to pull back now. They may also need some environmental permit before the zinc tailings can be mined because of the high lead content. Jubilee of course want high grade zinc from Star Zinc to mix with their own tailings to process them more economically. From Jubilees perspective the earliest they will need the Star Zinc tailings is probably at the beginning of 2021.

As far as Galileo is concerned they need a small scale mining licence for Star Zinc. They have dealt with the legal requirements to ensure all rights to Star Zinc are in effect transferred out of BMRs control but this issue has still to be ratified by the Zambian authorities. They appear now to be on top of the environment permitting side so fingers crossed the small scale mining licence for Star Zinc will be granted within the next four months.

CB always underplays the time it takes to get all the permits in place for his projects.

Well with Galileo and now here, Colin has been a busy boy. The sheer potential size of the inferred copper is eye watering but it comes with a fair cost. The purchase seems a big risk, but maybe in 3 or 4 years very high reward. In effect a placing of around 15% of the company at 1.25p is proposed to purchase the asset. It will then need a lot of drilling to prove up, but fortunately the exploration commitment in the first 12 months as a condition of purchase is not too high. I hope CBS mega copper bull instincts are not leading to over commitment here. The near term cash projects certainly need to deliver to help fund this and Eureka.

This company now seems to have excellent prospects. I have been seriously considering investing in it over the weekend, but the placing over at Galileo this morning has made me hold off for a while. CB is a mega copper bull and believes he has about a two to three year window to acquire good copper exploration asset, and to prove them up to a level at which he can then sell on to a larger mining company. This strategy is now being played out over his other companies of Bezant and Galileo, as well as here with the Eureka project, which could be a company maker if CB is right about how good a prospect it appears to be particularly after the recent drilling results. But the proving up will need quite a bit more money and it will need to be found well before the hoped for revenue from the hard rock gold project ( starting early next year) starts to flow in. Extra money might also be needed to get the copper dump project underway as well.