Member Info for Jammer1

It was pleasing to hear in the webcast that the extraction and dewatering plant was now being commissioned. What was even better was the clarification that part of the material containing chrome was being extracted before being transported. So together with the subsequent dewatering, not only are the transport costs being significantly reduced, but the processing costs are also reduced as the material is already significantly PGM upgraded.Furthermore the material initially removed will be available to recover the fine chrome from it at a later date. Strong hints given that a fine chrome project with Platcro was already being discussed, which would include the material already owned by Jubilee.

Thanks for the summaries of the webcast this morning produced by Jonah58 and mcmac. For me the most important part of the broadcast started about 12.5 minutes in.Leon set out the two approaches that could have been adopted to fund Kabwe. I was very reassured that Jubilee has selected the one of minimising the initial capital outlay and generating revenues as quickly as possible, eventually getting to the ultimate goal of producing zinc and lead metals plus vanadium pentoxide through a phased approach.The early revenues will assist in the funding of the subsequent phases to reach the ultimate goal. it seems if the modified existing refinery can be used, and there was confidence a deal can be done by the year end, it will initially produce three outputs:
1. a zinc concentrate
2. solid lead upgraded discard and
3. a vanadium solution.
Both the zinc concentrate and vanadium solution will be saleable. With about a 4 month upgrade build it seems BOTH zinc concentrate and vanadium solution will be providing revenues from day 1, possibly by late April/early May.More detail was promised by the end of December, but this strategy would both bring forward and significantly increase the early revenues as well, due to the saleable form of vanadium..The strategy would of course minimise the funding costs and debt that would need to be taken on,

Edzi,I have seen nothing official via an RNS, or anything publicly stated by Leon that the Hernic deal has been renegotiated. I believe I may have read something on a bulletin board but something as significant as this should surely be notified by an RNS. As it has not been I can only assume it is not true.

Perhaps you can clarify on what costs are supposed to be repaid by September. September 2019?

Maybe Jubilee are holding off stating Capex needed until the zinc processing option has been fully investigated and negotiated. But I hope when the decision has been taken we see at least the Capex required to get to producing zinc at the 15k tonnage rate per month with a clear statement of their target zinc tonnage per month and the target cost of per tonne of zinc production..It would be even better if we had a clear statement of what each stage of build thereafter would include,and the same info as for the first stage zinc build.I am not confident though. There may be competitive reasons for not having full disclosure of the type above, but this has to be balanced off with proper shareholder information so potential investors can make a sensible assessment of the prospects of the company.

Edzi, Whilst the 30% addition to the capital costs of the Hernic build, will provide approximately an extra £4M cash towards the end of 2019 before the Hernic earnings are expected to be shared, we have no detailed information regarding the additional capital required for the new projects currently being developed through to the end of 2019, and in the case of Kabwe into 2020. We therefore do not know what cash flow will be required from the operations or the additional debt that will be needed and whether equity financing will eventually also be required? We can forecast the cash flow likely to be generated by Hernic on reasonable assumptions (including allowing for the extra 30%) up to the end of 2019 but any other cash flow estimate for the other projects coming into force, including Hernic from 2020 onwards,, is loads of guesswork. So that is why the additional $5m secured loan financing facility that is available, and shown for the first time deep in the notes of the report and accounts, is so important. Together with the improving Hernic earnings plus the $50m project loan finance facility we can see the risk of additional funding from an equity placing being required is significantly reduced. But it cannot be said with certainty it is eliminated altogether, even for the existing projects being developed, based on the information supplied so far by the company.

At the end of June 2017 there was total debt of £3.77m, 2m due to Yorkville and £1.77m due to Riverfort. The higher cost Yorkville loan was completely repaid sometime in early 2018 and the Riverfort debt was increased. At the end of June 2018 the debt was solely with Riverfort, and amounted to £3.07m. So over the full accounting year the debt in sterling terms reduced by £0.7m and as indicated in my earlier posting, the debt at end June 2018 was on much better terms. A real positive.

It was interesting to read the initial comments on the results, and the quite diverse opinions expressed. By just looking at the financial position on one specific date, and particularly the headline figures, one can certainly get a skewed opinion either way. After the initial very bullish comments I welcomed the sobering comments from Visitor last Thursday.But was Visitor being too pessimistic?
The first quarter of 2018 was awful for Jubilee. There was the debacle with initial loss of the Kabwe licence, although with hindsight this event may be seen as very positive for Jubilee. Seizing complete control of the project with the large majority of earnings is a great outcome. Let's hope the Zambian politicians have been kept onside. On top of that there was the initial dam breaking issue at Hernic, which fortunately was not too serious, but then the serious falling apart of the 3rd party feed strategy at DCM, with the resulting decline in earnings from DCM. Both would have negatively impacted the profit and cash position reported .
As I understand things the chromite sales are settled relatively quickly and so are quickly reflected in the cash position, but the PGM concentrate sales take around 3 to 4 months to settle, so there is a lag before they appear in the cash figure.This means as far as Hernic is concerned the cash arising from the PGM earnings from at least the end of March will not appear in the results cash statement. So why was the cash figure better than expected?
Vistor was right to point out it was because of the institutional placing and the increase in debt during the 2nd half. The positive points he did not mention though was the Hernic earnings for at least the 2nd quarter 2018 would not have been included and that the secured loan facility seemed to have been improved significantly during January or February 2018? Why was not that positively reported by Jubilee? It is stated in the notes to the accounts the lending facility which is secured on the Hernic plant has
1. reduced the interest from 18% to 12% a year,
2. spread out the repayment profile so it is more aligned with the build up of earnings from Hernic and the new projects realistically producing positive earnings, and
3. provides an extra $5m drawdown which will support the extra funding the new projects will need.
Together with the possibility of using the $50m project based funding facility, I am now much more hopeful that the risk of a placing, which would be a disaster in the current financial climate,has reduced significantly.
Although the first three months of 2018 were awful, the period since the end of March both financially and project development wise has been really good. Whilst accepting there are still significant risks, particularly political ones,Jubilee appears to be in a good position to at last really deliver in the 2018/19 financial year.

To a large extent the financial figures released today were expected after the release of last quarter's production figures about a month ago. But they are still excellent.

It should be remembered that at present mining is from a high grade vein at Arzo South, which both increases the amount of gold and silver produced but also reduces the cash cost per oz of gold produced.The reassuring news from last month's interview with Keren was that the high grade vein should last for at least another year. The size of the stockpile now means each quarter's results throughout this winter should not be significantly affected by poor weather, so it is reasonable to expect similar excellent financial results for at least the next 4 to 5 quarters. This perfectly aligns with the increasing loan repayment schedule throughout 2019, and maintains reasonable expectations that the monthly loan repayments to ariana can be maintained throughout 2019. The risk of a placing to cover the exploration work in 2019 is also reduced, although clarity of the full extent of the Salanbas exploration work and its funding in 2019 is still required. If the company can fully reassure that the funding of Salanbas work in 2019 will not require a placing then the share price has every chance of rerating.
It also appears that the work on rerouting the road, so the satellite open pit at North Arzu can be opened in about a year's time, is well up to if not ahead of schedule.

Leon has been foregoing a significant portion of his salary/director fees in exchange for company shares over the last couple of years. However, the shares do not yet appear to have been allocated, and it would certainly be a very reassuring message to the market if at least some of the foregone salary was now used for this purpose.

Made a stupid mistake.I forgot the £200K finance costs in the 1st half of the 2017/18 accounting year, so I am now hoping for a very small profit before tax to be reported.

I have only just spotted an interesting table in the last interims (for the period 1 July 2017 to 31 December 2017). It showed that if only the costs directly related to the commercial operations were taken into account, the commercial operations posted a pre tax profit of £900K. Of course it was offset by a pre tax loss of just over £1.3m for all the other costs within the group, but even so with Hernic having only just got underway during the reporting period, the commercial operations were getting close to covering all of the group's costs.
Another interesting figure in the interims was the need to utilise £1.9m of cash for working capital. I am hoping that situation has not got any worse for the 2nd half of the accounting year, as I assume there were significant costs still to be paid for the development and commissioning of Hernic at the beginning of the reporting period when no revenue would have been coming in.
The full year results may be released next week.Being in an optimistic mood they might show a pre tax profit of £1/4 million. The big assumptions are that there will not be any impairments particularly for Tjate, and expenditure on the new projects at Kabwe and Platcro will be capitalised. Hence the new projects' costs will not be included in the P&L account but will of course show up in the cash flow statement. So for me the most interesting part of the accounts will be the cash position and cash flow statements.However these cash figures will only be providing a snapshot of the position over the 12 months up to 30 Jun 2018. It is the escalating project costs for the potential new revenue streams that we really need to know and how these costs will pan out in 2019. And the sooner the company releases those figures or financial figures so we can have a reasonable shot at calculating them, ,the better for current and potential shareholders.
Finally it will be interesting to see if anything is said about the Australian project written off last year.The cynic in me says don't hold your breath!

I couldn't agree more with Kalan. The very scanty financial information we have about the projects currently being developed and due to come into commercial production over the next 12 months or so is a major concern, and fuels speculation about the cash position throughout 2019. Kalan have you written to the company requesting publication of a proper financial plan?

Sumoskier, Perhaps being a little overoptimistic with your calculation and view on private investors. Jubilee's shareholders are of course mainly PIs and are they that forward looking, particularly after the bruising they have had in recent years? Kalan I believe recently posted that he felt the SP would only really start moving once there was hard evidence that the new projects were starting to produce increasing positive earnings, and/or one or two new projects with significant partners were announced. I tend to agree with him. But getting back to your calculation. A key fact missing is that the Hernic earnings will be significantly reduced probably from 2020 onwards, as the initial investment plus 20% interest may well have been covered by then. We have no idea what the share of earnings with Hernic will be after then, but just assume it is 50%. Hernic earnings from 2020 would then just cover the HO cost figure you have.

To finish on a more positive note. If the Hernic operation can be maintained somewhere near to the 2500 Ozs level per month, and the PGM basket price holds the current improvement and hopefully continues to improve, the higher level of cash flow flowing through until the end of 2019 will be very welcome as during this period the capex and any loan funding costs for Kabwe and the PGM plant at DCM should really start to kick in.

Jeffry, I have written to the company about the DCM strategy via their website.I will post any reply I get. Hopefully the points that have been raised on this board over the last couple of days will be dealt with in a RNS fairly soon, especially once the commissioning of the FC plant is underway..

Thank you Jonah58 and Kalan for your thoughts
I can certainly identify with the position set out by Kalan. During the 90's I was working for a start up company, and I was the technical man sweeping up behind the deal making MD to try and make the deals work. My impression is that since the presentation debacles over the 3rd party ore deal and the Kabwe deal, when both Colin and Leon were presenting, and ended up with egg on their faces, Leon on his own is more measured. I feel he now has far more say in the deals to be done, and certainly in South Africa he is the man opening the doors.If he finally brings off the Kabwe project and overcomes the long term licence issue there, his reputation in Zambia will soar in that country as well. Leon is the man who has built the technical team behind him and it is the technical excellence and processing innovation that is this company's USP. What a fantastic example of it is now being shown through the Hernic project.As far as I am concerned I would be bailing out fast if he was to leave the company for any reason.

I believe the ultimate goal at Dilakong is to create a regional hub in the extraction of chrome and PGMs from the chrome mine dumps within commercial trucking distance.Whilst the ultimate goal has not changed, the strategy to achieve it has certainly had a number of twists and turns.Perhaps that should not be a big surprise when new leading edge processes are being developed, and new opportunities suddenly emerge.However the twists and turns have certainly not helped sentiment and at times have even led to loyal shareholders questioning whether the company really knows what it is doing. This has not been helped by the lack of honesty about the risks and difficulties.The escapade with the third party deal announced last year, the incredibly positive presentation of how fantastic it was by Leon and Colin, followed by a postponement of the 3rd party feed almost immediately after investment to help fix the problems with the variable feed, even dented my generally optimistic views about this company.But if the fine chrome development is a commercial success, maybe all will be forgiven.

So assuming the fine chrome processing plant works as management expects,,has anyone got any views or knowledge of the amount of fine chrome that is being targeted. And what is going to happen next at DCM.? The feed material into the fine chrome plant will be the DCM upgraded material. Will that mean the existing chrome processing plant can then be used to restart the 3rd party feed at the same time?

And what about the PGM plant that is currently to be developed once the government permissions can be obtained? Will it now be more financially viable to sell the material after the fine chrome has been extracted and not develop the PGM plant? Remember the original decision to build the Dilakong PGM plant was probably taken before the fine chrome process development was on the table.Certainly without the 3rd party chrome ore feed the ultimate regional hub goal cannot be achieved, but also without 3rd party chrome ore feed is it financial viable to build a PGM plant just for the upgraded chrome feed from DCM? Has anyone got any views on this? . .

Edzi,
As far as I am aware the only official information is that there will be no share of Hernic PGM earnings until the original project capital outlay of just under £13m plus 20% has been covered. I have no idea where the 3 year period you mention has come from..

Edzi,
I was not questioning the strategy adopted to release value from the Platcro dump.It seems eminently sensible, and crucially should produce very good cash flow just when it is needed for the Kabwe project and Dilakong PGM project. On the face of it, the strategy offers a much lower risk approach ( and quite possibly a much more profitable potential outcome) than Jubilee building its own Platcro PGM processing plant, as well as hopefully the start of a valuable commercial relationship with Northam on future projects.It may also open the door at some time next year to switch to cheaper processing of the Hernic PGM output at Northam. If earlier this year it had been decided to build a separate Platcro PGM plant, the cash flows available to Jubilee would have emerged at a much later date and would not have fitted so neatly with the funding requirements of both Kabwe and the Dilaking PGM projects.There would have also been a high borrowing cost for the additional capital needed and a big question mark over what the Platcro PGM processing plant would have been used for say 4/5 years down the line, when the Hernic PGM processing plant should be coming available just down the road.
What I was indicating in Blueberrry's estimates were the reasons for a probable over estimate of PGM earnings emerging for Platcro and Hernic .based on known cost factors for the determined strategic approach for Platcro. The fact that Jubilee is not building its own Platcro PGM plant is irrelevant to these earnings estimates.

Bluebelly,

I accept your figures are guestimates. The problem with Jubilee is very little financial information is available for future projects
Your figures would only be valid for 2020 as
(i) there should be no sharing of Hernic earnings in 2019 as recovery of the original investment will still be ongoing which is good news from a cash flow perspective, but
(ii) Platcro will not be commissioned until probably the end of February 2019 and will take a while to build up to full production.So lucky if Jubilee/Northam gets anywhere near to 6 months full production from this source in 2019.
The figures seem to need adjusting for the following known factors:
(i) the PGM output from Hernic requires further refining by a 3rd party, currently Lonmin I believe, so the value of each PGM ozs needs to be reduced by about $100.
(ii) the costs being borne by Jubilee to purchase the feed material, to dewater and extract it, and then to transport it to Northam. I think Leo mentioned the transport cost was around $3 per tonne, and the purchase cost is just over £3 per tonne. These items will significantly reduce your expected returns from Platcro. What these total Jubilee borne costs will equate to in terms of each Platcro PGM ozs extracted I will leave you to guestimate. It would be extremely useful to know this figure and .I will be writing to Jubilee to see if they are prepared to share what they are assuming.

The change in strategy to find projects to extract metals from waste dumps, adopted by the Board, and probably championed by Leon, towards the end of 2013/early 2014, is now beginning to look as though it can be a viable business model. The first part of the Dilakong chrome project more then broke even and provided a small financial return,but now the much larger Hernic project has not only achieved what appeared to be a very stretching monthly PGM output figure, but even more important is on course to break even financially in about 12 months time, when the total earnings should exceed the approximate £13m invested in it .Evidence is now beginning to emerge that waste to metal projects managed by Jubilee can provide good financial investment returns.So Leon's objective to form a partnership with a mining giant in the not too distant future seems more credible. But in the meantime the existing projects in the pipeline need to be brought on stream and show they too can make significant positive earnings to at last secure financial stability for the Jubilee Metals group.
As is well known, certainly before 2014 a number of projects embarked on, ended up losing a significant amount of shareholder's money, and it is quite possible that further write offs from that period will still be seen in future accounts. Being a bit of a cynic, I hope the release of the very positive news today is not softening us up for a write down of some of the intangible assets linked to Tjate in the full year accounts to be released shortly.
The last two announcements have produced better than expected financial figures for Q3 2018, bearing in mind the low platinum price and virtual close down at Dilakong, and the landmark Hernic production achievement today.Lets hope this trend now continues to help restore some PI confidence. And Leon please do NOT overpromise on time scales and returns as you did at this time last last year, when shareholders were led to believe the 2,500ozs PGM monthly output figure was possible by the end of 2017, and that the 3rd party ore at Dilakong would be processed to provide significant chrome earnings in 2018..We might just then start to see a recovering share price.

Kalan,
Agree with the thrust of your argument, although you are probably over optimistic in your timings. If all goes well the position you have set out might evolve a year later in late 2020.
There is a fair amount of risk with the projects, especially Kabwe, and we have next to no idea what the potential positive earnings are from them as Jubilee has released minimal financial information. We have little idea of the investment required into each new project and exactly where the source of investment is coming from.Yes a debt facility is available but if used, part of the investment will also need to be in cash and high debt interest will need to be funded as well. The cash resources must be fairly tight at the moment,despite the good cash flow now emerging from Hernic, and it is unlikely the PGM plant at Dilakong or the Kabwe project can start to be progressed significantly and quickly until decent earnings start to flow through from Platcro. But these will not start to emerge until the 3rd quarter of 2019 once the time for commissioning and production build up is allowed for.
Personally I will be very pleased to see any positive earnings coming from Kabwe by the end of 2019, and if there are any it will be almost certainly just for the first phase of the.zinc recovery which is likely to be only commissioned by mid 2019..The Kabwe licence issue and its long term renewal in 2020 are major concerns. Jubilee will want to minimise development until the license issue is resolved but in the meantime they have to keep the Zambian authoritiies content enough to grant the long term licence renewal.