Member Info for Jammer1

I have a similar understanding re the relative high cost of acid in the processing of the zinc ore. It is difficult to believe at a current zinc price of around $2000 per tonne, that just processing low grade tailings would be viable, even with Jubilees expected efficiencies in the circuit and the fact that they make their own acid. Colin Bird hinted at this in an interview with his Galileo hat on about 13 months ago. Hence his confidence about Jubilee wanting the high grade Star Zinc ore.And at that time the zinc metal price was a lot higher than at present. With the regulatory issues still outstanding plus the current zinc price, it is no wonder there appears to be little urgency to finish off the zinc circuit. The COVID borders issue regarding delivery of parts could have come at an opportune time. It will not then appear to the Zambian authorities that Jubilee is unnecessarily dragging their feet!

Valid reasons have been given for delay of zinc circuit at Sable. The biggest ones though, which are all regulatory have not.
1. Galileo has not yet secured a small scale mining licence for Star Zinc, nor approval for transferring the existing exploratory licence from BMR. Jubilee needs the high grade ore to make the processing of its low grade tailings ore viable.
2. Galileo has not yet got approval to transfer the existing large scale mining licence, excluding the small scale mining licence covering the Kabwe tailings, from BMR. This needs to happen so Jubilee can gain control of the small scale licence from BMR.Once they do they then need it extended from its current expiry date which is in about 4 months time.
3. Jubilee will also need environmental approval for the way they wish to mine the Kabwe tailings and process them at Sable. There is of course a big issue re the lead content.
Matters seem to be slowly moving forward but spending a lot more capital on the zinc circuit but even more so on the tailing environmental mining issue without these approvals is highly risky.

If there is any thought of buying out Cora, why did Hummingbird not take part in the recent Cora placing and protect their existing share in that company? I imagine Hummingbird would want to see a bankable feasibility study, available perhaps towards the end of this year, before seriously starting any discussions about how they might have some form of commercial interest. Their location, own experience in developing their own mine, and what appear to be good government relations could be very important advantages. But developing the on site and satellite prospects they already have, so as to increase the life of their own mine will surely take priority.

Good point Bald Eagle. My first concern is will the milling be reliable enough? That was the really big problem last year. They should have got all the spare parts they needed to support basic maintenance to resolve standard breakdowns of machinery at the beginning of this year. They have easily enough ROM ore with the stockpile you mentioned to support a minimum of 30 tonnes of ROM ore per month through the mill without any further equipment being delivered. Let's see if that can just be done in H1 to take advantage of the high gold price and favourable currency macros.

The very large CAPEX is for the huge production increase in the long term and should not even be a factor until 3 years time. Provided nothing major operationally occurs ( an extended shutdown for COVID), they should be able to fund all the improvements required over the next 3 years. They will now need to deliver consistently over the next 3 years to have any chance of attracting large funding for the medium to long term so as to achieve the holy grail of 100,000 ozs p.a. But lets just focus on the much shorter time horizon and keep our fingers crossed that by year end they are up to the target 45000t of ore mined, having significantly improved the dilution and milling issues through proper investment in 2020.

I hope you are right nonegsplease, but concern about South Africa trying to release COVID restrictions too early, and in recent days a weakening rhodium price, might also have something to do with the SP fall. Thank goodness this company has a large cash buffer. Implats are openly talking about a prolonged period of disruptions ( to at least the end of 2020).

Excellent results as expected, but the presentation has comprehensively covered the actions being taken, and their financial implications, as a result of COVID 19. They are targeting to have a stronger balance sheet at year end than at end of March. Amazing. Fabulous management team and they have cut their own pay by 25% as a share of the austerity measures being taken to preserve cash. They believe the low oil prices will be with us at least until year end and possibly longer and are planning accordingly. Net cash position expected to be improved on whilst hedge in place, but things will get a lot tougher from end of September when the hedge ceases.

Cash preservation and meeting existing liabilities is the name of the game at present. What will Maari cost now plus the loan repayments to meet. Perhaps find out more tomorrow. Surprised and reassured company still looking to pay dividend. Be even more surprised if any acquisition occurs in next 3 to 6 months. Biggest risk to Jadestone at present is ability of hedgers to keep paying up through to end of September. If they can then Jadestone should be in a strong position to close in on next target acquisition.

Very solid indeed. All project work on schedule. Sets up the next 6/7 months nicely for the major seasonal construction work that needs to take place. As expected additional COVID prevention costs will be incurred for the changes needed to shifts and additional quarantine procedures pre shift changes. Much lower fuel costs to come through to offset. Lets hope supply chains remain resilient so everything can be put in place for Kekura development going into 2021.

Money hawk, I am somewhat on the same wavelength as you on today's news from Galileo. I posted the following on that board.
"Perhaps someone can explain to me what is so new in the announcement today. This arrangement was first hinted at in an RNS of 13 September 2018. In the RNS of 24th June 2019 the acquisition was complete, whatever that meant. And now today an agreement has been reached. So does that mean the legal paperwork has taken nearly ten months to complete. Wow, things have moved along at a snail's pace! What am I missing as the whole thing is still requiring the Zambian authorities permission".
I cannot believe Galileo are going for Ka****u before Star Zinc? They will need the hoped for profits from Star Zinc to get that project moving forward.

Colin has a habit of grossly over selling things and glossing over the detail. Every project has great potential until the detail starts to emerge, so lets hope the zinc projects will deliver. I am afraid I am a little bit more cautious based on a lot of Colin's past experiences. I thought the small scale mining licence application for Star Zinc was submitted a while ago, or was it? Has it just been submitted now this little piece of legal work ( overlooked perhaps, so why did it take 10 months?)has been completed to get to a confirmed position. Where I would agree is that a good step forward has been taken, so I hope for all shareholders the Star Zinc mining licence and this confirmed arrangement can be approved together by the Zambian authorities within the next 3 months. Then perhaps mining can begin at Star Zinc by the end of the 3rdQ 2020. If this confirmed step does what it appears to do, of course JLP will be right behind it. They want to ensure renewal of the Kabwe small scale tailings mining licence later this year, removing BMR's involvement and any potential complications arising with the large scale Kabwe licence. Ideally Jubilee would want the small scale Kabwe licence under their control before starting the processing of the Kabwe tailings, towards the end of Q2 2020. With JLP behind Galileo's now "confirmed" position they will probably provide more effective lobbying power.

Perhaps someone can explain to me what is so new in the announcement today. This arrangement was first hinted at in an RNS of 13 September 2018. In the RNS of 24th June 2019 the acquisition was complete, whatever that meant. And now today an agreement has been reached. So does that mean the legal paperwork has taken nearly ten months to complete. Wow, things have moved along at a snail's pace! What am I missing as the whole thing is still requiring the Zambian aurhorities permission.

In Europe and America will anyone buy a new car in the next few months? Will there be any car manufacturers producing new cars in a few weeks time? So where does that leave PGM prices in the short term? If the rhodium price weakens significantly even Jubilee may be struggling in the short term to make any positive operational earnings. As of today, company share valuations using usual financial metrics are virtually irrelevant. The key issue is can a business survive until normal life returns.

******, so many thanks for your honesty and hard lessons learned.

TBTT, good point about the rhodium market not likely to have hot money speculators. So far the rhodium price has held up. Very important for Jubilee as the value of the rhodium part of the PGM basket is not far off 50% at today’s prices. Because of the rhodium the Jubilee PGM basket price is still significantly greater than it was at the 2019 year end, and most thought that price was good!

TBTT, The only area of Jubilee's current operations that I am really concerned about is the Kabwe Tailings Project. I have always said that to a large extent the chrome operations are a means to an end in supplying the PGM enriched ore. So I am relatively relaxed about the chrome operations, and to say they are in a complete mess because of an extended and very harsh pricing environment, which no one could foresee as a result of a world wide virus, is a bit over the top.
The Kabwe tailings project is a different matter, and the lack of detail in any operational update is of concern. You will be aware from the BMR board what I think are the significant regulatory hurdles still to be overcome, but we of course have no idea if the tailings can be profitably processed in the current low price lead, zinc vanadium environment. The cost of the Zambian venture has actually only ramped up significantly since the purchase of the Sable refinery. If for some reason the Kabwe tailings project did not proceed, and by the way I think it will, would the refinery be profitable just dealing with 3rd party copper and zinc feed?
Jubilee committed to their Zambian Kabwe venture in the early part of 2018. Copper revenues from our own tailings, which management decided not to tell us about for some reason, have started just 2 years later. Despite all of the huge hurdles to be overcome, not of Jubilee's making, the zinc revenues are on course to start in another 3 to 4 months time. After just being initially the minority partner, Jubilee now completely controls the tailings project for about 90% of the profits. Personally I think the operational progress to date has been amazing. I might be very critical though should the tailings project not proceed or if it does and is not profitable.

The chrome price recovery expected has been derailed probably for at least 6 months by an event that no one could have predicted. Now that China is getting back into production it will be interesting to see if the chrome price hardens.. However, despite the virus not all is currently doom and gloom on the chrome side, when the complete picture is taken into account..
Inyoni,
1. I am willing to bet that we would not have got the PGM rights without the chrome rights option being included in the deal. The two must be looked at as a whole. Having both metals rights means Jubilee has complete control on the rate of feed to suit market conditions. We have massively underpaid for the PGM side and arguably overpaid a bit on the chrome side. As a previous contributor has highlighted, Jubilee was already processing the chrome extraction so as to be able to efficiently extract the PGMs. All the coarse chrome revenue bar some minor additional costs is positive cash flow. It does not all go to the bottom line though as a significant part of the purchase price for the chrome rights has to be gradually deducted from the coarse chrome revenues over about a 3 year period. Even at today's ridiculously chrome prices the Inyoni coarse chrome should be profitable. The fine chrome is still available should we build a plant to extract it. Hopefully we are not committed to this plant currently. Don't forget the 1m tonnes of other material that came with purchase to go through Windsor. Does that have any coarse chrome in it to be extracted? Or is it only fine chrome?
DCM Fine Chrome
Maybe with hindsight the plant was built at the wrong time. However, Jubilee is building a valuable high grade PGM ore stockpile by taking out the fine chrome, as well as presumably proving to potential future 3rd party partners that in a sensible chrome price environment the fine chrome extraction will be profitable, and enhance overall chrome returns.
Windsor Chrome.
On reflection the coarse chrome plant may have been bought at the wrong time. But it cemented the strategic deal with Northam and enabled Jubilee to have full control over the rate of feed through to Northam, which is now paying big dividends with a massive ramp up in the PGM ore feed rate. At current PGM prices this ramp up is currently producing earnings way in excess of the chrome losses at Windsor. Fine chrome is still available at some future date, but Jubilee may have already committed to building the fine chrome plant before the virus became evident.

Spot on Isphahan. At the time of writing the PGM basket price is very strong and around $450 to $500 more than at the 2019 year end, when it was deemed to be strong then. The correction in the PGM prices today has just basically reversed those that occurred after the Amplats smelter explosion news on Friday. But that news will help to underpin PGM prices for the next 3 months at least, along with the existing deficit in palladium and rhodium.Despite the chrome price problems, Jubilee should have already had larger earnings in 2020 than in the whole of H2 2019.

TBTT. In my opinion this is what is going on. The small scale licence which enables the recovery of metals from the Kabwe tailings is held by Enviro Processing Ltd, a Zambian registered company (EPL). Jubilee holds an option, at its sole election, to acquire 100% of the issued shares of Enviro Mining Limited (“EML”), a subsidiary of BMR and the company that owns BMR’s Enviro Processing Limited (“EPL”). I believe the large scale licence is also held by EPL. Jubilee do not want anything to do with the large scale licence as it carries requirements to meet the environment regulations, particularly when it comes to the decommissioning of the site at the end of the licence, which I believe is 2033. In BMRs accounts at end of 2018 there was a provision for decommissioning of over £300,000. Whether that was adequate enough is a complete unknown, but the environmental regulations are likely to become tougher so it would be no surprise if it was an underestimate. Jubilee will not want such a growing provision liability in their own accounts. The only way Jubilee can definitely avoid this to ensure Galileo have taken it on before they exercise their option.
Jubilee will not want to overcommit to the tailings project before the conditions of the small scale licence renewal from October have been determined and it can be put under their control (through the exercise their option). Jubilee will not want to be effectively having to keep BMR afloat any longer, which they have in effect done through the liquidity of their 30% investment to maintain the small scale licence in existence. Once again the environmental requirements for decommissioning and returning the tailings land to alternate use of a renewed small scale licence are probably still under negotiation. It appears Jubilee has minimised risk should they need to pull out of the tailings project. So far they appear to have only 100% committed to the zinc processing facility which will be within the Sable refinery and available for 3rd party ore processing. They appear to be leaving the development of the facility to enhance the metal grade in the tailings before transporting the material to Sable as late as possible. This facility will be a turn key building which probably can easily be taken down and reassembled on another site should the worst happen. They have probably already started work on the tailings to improve safety and reduce environment hazard when they start to move the tailings. Costs associated with this could be lost. So my expectation is that by June Jubilee will be in a position to start commissioning the zinc circuit with the tailings and able to say to the Zambian authorities they have met their side of the deal, but now over to them regarding the renewal of the small scale licence on acceptable commercial terms if they really want the toxic Kabwe tailings dump sorted.

The PGM concentrate at Inyoni goes to Sibanye (formerly Lonmin). The Windsor PGM concentrate is smelted through Northam’s own smelter.