Member Info for Jammer1

Sorry for BMR shareholders, as after Jubilee had bought their 29% share in BMR , the delisting must have come as a huge surprise. I would be amazed if Jubilee now pull the rug out from ABs feet, although at face value it might be the best thing for BMR shareholders. Surely AB and Jubilee have agreed what is going to happen to him post Friday in exchange for their support. Jubilee could have removed him if they had wanted to a while ago. at an EGM.Jubilee probably also had a good legal case against him for concealing the letter about the potential removal of the licence when they invested in BMR. In my opinion it appears he has been a useful puppet for them.

He will be! The Jubilee holding will surely ensure all of the resolutions go through. It will be a huge surprise if they do not. Could be good theatre at the AGM.

A little speculation, but would it really be a surprise if CB is made the new CEO and Chairman at BMR shortly after Friday. After all is he not effectively running BMR? He would be far more credible than AB, who must be living on borrowed time. Their main asset is now totally controlled by Jubilee where he is the chairman and the potential new copper project for BMR is obviously obtained through his connections. . Is BMR as it is named now being lined up as his copper/gold company largely based in Chile, similar to what is happening with XTR company in Zambia.

XTR and Galileo which are also Bird companies are also beginning to look like the copper concentrate and zinc ore supply companies for Sable Zinc. It could be that all will be revealed over the next 3 or 4 months. First Galileo with a processing agreement for Star Zinc that might have a funding sweetener for Galileo, and then how about a deal with XTR for the copper processing at Kalengwa with the resulting copper concentrate being trucked to Sable Zinc refinery? A long way, but who knows it might be commercially feasible? Who else could possibly be looking at the tailings there, other than Jubilee?

Wouldn't it be good if for once Jubilee explained what they now intend to do with a shareholders' asset, namely the current 29% holding in BMR. Presumably they will be voting at this Friday's AGM in support of the BMR resolutions so they can apply for a listing. But why? The Jubilee holding is going to be diluted enormously through a placing on relisting and the royalty when it is available will be used as an asset to help fund a risky copper venture in Chile. An asset acquired by the way from another company our own Colin Bird is a director of! I hope the Jubilee Board has not been unduly influenced! Why would it not be better to just liquidate BMR at the appropriate time, after its direct interests in Zambia have ceased. Wouldn't Jubilee get a better return eventually? On relisting it will have little chance to sell its holding unless it is prepared to accept a massive discount to the very likely much reduced market price (at the time of suspension) AND an II or very wealthy investor is prepared to buy.

Quite right Moneyhawk. Jubilee has not yet exercised its option to purchase Enviro Mining Ltd (EM) EM has a wholly owned subsidiary Enviro Processing Ltd(EPL), which owns both the large scale and small scale mining licences. The Zambian authorities first need to approve the transfer of the large scale mining licence from EPL to Galileo, who want it to develop the Ka****u zinc prospect. Jubilee has no interest in the large scale licence, but would acquire it with all of its obligations if they proceeded with their option before everything has been sorted out with Galileo. Once Galileo's transaction is complete Jubilee can then exercise their option. BMR will then have no direct further interest in Zambia, They will only have the beneficial interest in Kabwe through the royalty.
Another issue that is no doubt being discussed with the Zambian authorities is that both of the existing licences run out in 2020.Hopefully this issue will be resolved at the same time as the licence transfers.

Thank you TotalTrader and 34DegSth for your comments. Absolutely right Total Trader. There are at present far too many unknowns to determine if there is currently a mix of TP and international sales business at Windsor Chrome, and if there is what that mix is. Maybe we will find out more from the annual report. It goes back to the lack of clarity and openness in the last RNS. The total lack of proper explanation for the big drop in chrome earnings quarter to quarter was a red flag for me I am afraid.

Your other points TotalTrader are of interest and coincide with my own.

Agreed but a long way still to go. But if it happens the zinc production from this ore source would of course be additional to the Kabwe target figures released, and would significantly reduce the unit cost of processing the ore to get to a zinc concentrate.

Sorry silly mistake, the gross margin would be 45%, and probably coming under pressure.

34DegS, the two sources of chromite concentrate production were DCM fine chrome and Windsor coarse chrome. DCM FC was from the tailings at DCM and the revenue was the value of the chromite concentrate. It is very likely the Windsor earnings are just Jubilee's toll processing charges through the existing 3rd party contracts.

Without boring everyone by going into the calcs and assumptions made, I concluded from my model Jubilee earned in the last 6 months about £35 per tonne of concentrate produced at Windsor, and the cost of production for each concentrate tonne was £19. These figures ignore an assumed £1m provision set against the recently released earnings figures and seem to be consistent with just toll processing. The cost figure seems very reasonable since as 1 tonne of concentrate comes from about 3 tonnes of ROM ore, the cost per tonne of ROM ore processed is just over £6. In a broadcast on 12th September 2017, Leon indicated that the cost per tonne of ore processed at DCM was £9 at a production rate of 22500 tonnes per month reducing to £7 per tonne at a production rate of 45000 tonnes per month. So £6 per tonne for 75000 tonnes per month would seem to be in the right ballpark.

If I am right in my model assumptions the gross margin ignoring any impairment was around 90%, but it will surely come under pressure in the low price chromite concentrate environment.

A good summary of the transformation of Jubilee over the last few years and its positive prospects despite the low cost commodity price environment it has had to operate in.

Thanks for the detailed thoughts 34DegSth.
The strategic reason for the purchase of Platcro Chrome ( now Windsor Chrome) in my view is little to do with the chrome per se, but far more to do with securing a viable long term source of material to be able to extract the PGMs. To succeed Jubilee have got to try and contractually tie down the local chrome mines to supply their ore whatever the chrome price. To achieve this they will need to
(a) be able to achieve very efficient chromite concentrate levels from the ROM chrome ore, and
(b) secure the remaining upgraded PGM material.
At present it seems the third party contracts do not do this, and this is high risk for Jubilee. At times of low prices as of now, there must also be a concern about the economics of chrome ore mining, so Jubilee may well have to accept very low margins in their toll processing of the chrome ore. The toll processing (TP) charges will be coming under pressure. Jubilee may well have to sacrifice TP revenue to achieve profit further down the line through the PGMs.

Building a fine chrome plant would enable Jubilee to make a far better offering to the third party ore providers and may well be necessary in a low price environment to help keep the third parties in business. It will also be very beneficial in a higher price chrome environment as Jubilee would have more capability to compete with the increased returns the third party suppliers seem to be able to get by just selling their ore without any processing. But here is the dilemma. It is more than likely investing in a fine chrome plant will not make much economic sense in the current chrome price environment, if the return on chrome alone is taken into account. Some of the return on the PGM side may well have to be taken into account as well. This is why I suspect we have just seen what appears to be a provision ( negative stock value adjustment) in the recent operation results . In the current low price chrome environment at the accounting year end of 30 June 2019 there will probably be an impairment against that part of the Platcro (Windsor) Chrome purchase price that was deemed to be set against the chrome value in the tailings on site, as at present it may not be economic to extract the (fine) chrome from them. I suspect Jubilee will need to be sure the Windsor PGM project is working really well , and probably Kabwe is as well, before committing to building the fine chrome plant more for strategic PGM reasons than pure commercial chrome reasons.

You are spot on positive14. Whoever wrote the last RNS should be shot. It was stark staring obvious that when any comparison with the 1st Q 2019 result were made, what issues would arise, particularly in the chrome results. Instead of being open and honest with their shareholders and seperate the project results, they bundle projects together and do not properly explain anything that has led to the results being significantly worse than expected.
It is for this reason I am willing to bet why the share price has fallen since the half year figures were released. As soon as I saw the results I sold over a third of my holding, mainly because of the total lack of explanation. It was only the projects coming through that stopped me from selling the whole lot.
Going back to the chrome figures. I briefly thought the ore processing volume had fallen off a cliff in the 2nd Q 2019. I am now more willing to bet the statement on their website under the Windsor Chrome project is incorrect. Perhaps a simple typo. Convert the the 2 in the 25000 to a 7 in the ore tonnes processed and everything would be consistent with statements made earlier this year. By just extracting the 1st and 2nd Q chromite concentrate figures you arrive at revenue of £3117K in the first Q and £3482K in the 2nd Q. So the revenue figures indicate ore processing volumes have not fallen off a cliff.
A similar extraction arrives at attributable earnings for chrome of 1309K in Q1 and just 267K in Q2. So why the huge difference when the revenue figures were consistent between the two halves? We have to look at note 2 in the chrome section which states the attributable earnings take account of plant and equipment expenditure and negative stock value adjustments. That is all that is said to explain a £1m quarter on quarter reduction. Such a lack of explanation is appalling. No wonder I am not the only Pi who has been selling.

The only significant development asset is of course the Kabwe tailings project. The remaining 12.5% has a present value of around £9.6m, based on conservative assumptions., according to the accounts. But the present value appears not to have allowed anything for the vanadium which is expected be produced from the end of 2019. Even at today’s much reduced prices it is likely to be worth more than the return from the lead and zinc combined? Does anyone from BMR Watch know why the present value of the Kabwe tailings development asset has appears to have been significantly undervalued, assuming the vanadium value has not been taken into account?

34DegSth, there are as you have indicated some apparent massive discrepancies in the chrome figures. Why is the 2ndQ of 2019 so bad when compared to the 1stQ 2019. Surely it is not solely down to the drop in the chrome prices? One reason might be that the volumes of ores processed dropped off a cliff! At the beginning of the year and during the 1st Q we were being told about 75K tonnes a month were being processed. On the just updated website it states in the2Nd Q 2019 just 25K tonnes a month were processed. What has happened. I will be writing to the company to seek some explanation, but based on past experience I am afraid not expecting a reply.

Just had a quick look at the BMR accounts to see what value was being placed on their remaining interest in the Kabwe project and what key assumptions were being made to obtain its value. The assumptions exclude any value coming from Vanadium! It only takes into account value arising from zinc and lead. It is clear from the wording in today’s RNS and earlier RNSs that Jubilee alone own Sable Refinery and the Kabwe tailings project is just one project that will be utilising the refinery. Could it be the agreement with the Kabwe Operations company is such that it is paying solely for the extraction of the lead and zinc, and that Jubilee then retain the right to extract the Vanadium as a by product for themselves? It certainly appears to be that way. It should be remembered when Jubilee took on the Kabwe Tailings project BMR had no solution to extract the Vanadium. So why should they be entitled to anything now?

In about 3 weeks time BMR will be seeking permission from their shareholders to pursue a high risk exploration project which will inevitably dilute them significantly . This is part of the strategy to try and get them relisted on an unknown exchange. Jubilee are the dominant shareholder and presumably have gone along with this. Can anyone explain why? It does not seem to be in Jubilee’s shareholders interests. I hope the Jubilee BOD are not being unduly influenced by Colin Bird who has interests in both BMR and the proposed copper exploration project in Chile.

Eddie, you only need look at the 3rd Q figures for the chrome earnings and you will see that in the 4th Q Jubilee just about achieved positive operational earnings on their two chrome projects. Although the ramp up of the fine chrome project at DCM seems to be going well now, although it is running 3 months behind schedule, in the 4th Q it would have surely had negative operational earnings. There was a major reduction in operational earnings from the Windsor chrome project as well, suggesting the margins in that operation are not that large. When the depreciation and loan interest costs are taken into account the chrome operations would have been significantly loss making in the 4Th Q. The fine chrome project is as of yet far from proven from a commercial perspective.

For me today’s RNS was very disappointing. Where was the detail we were promised for half yearly revenues and earnings. The two key disappointments pointed out by others had no clear explanation. You had to read the small print to find the major reason for the significant hike in the cost per PGM ozs . And there was absolutely no explanation for the disasterous 4th Q chrome earnings.

This potential project has in fact two parts. First Part is processing the copper tailings and the second part is to investigate the feasibility of reopening and expanding the open pit mine. They come as a package. Jubilee would have no interest in the mining part other than to process the run of mine ore. So XTR will deal with that part and sub contract the rest to Jubilee. Who else has Colin Bird got in mind to deal with the tailings and processing? Yes a little faraway but there is probably a rail link to transfer either beneficiated ore or concentrate to Sable.

The carving out of the Kabwe Residual Rights by Galileo is probably the start of the legal process to ensure that BMR will have no future interest in either the Kabwe large scale or small scale mining licences. The large scale licence transfers across to Galileo as part of the Kabwe Residual Rights acquisition.
Whilst BMR have any legal interest in either licence, it is unlikely the Zambian authorities will extend the licences when they come up for renewal in 2020. By acquiring the Kabwe Residual Rights, Galileo now owns everything at Kabwe which Jubilee has no interest in. This legal tidying up smooths the way for Jubilee to acquire what remains at Kabwe, including control of the small scale licence, so just leaving BMR with a royalty from the Kabwe Project.