Member Info for Jammer1

None of the country options have been discussed as far as I am aware.

Shiner I see one or two have replied to your query about future growth and whether (processing) capacity is fully utilised. Stating the obvious, from what we know the major part of the growth in the next 2/3 years will come from the Zambian projects. There are 4 of them
Kabwe project-copper/zinc lead and probably Vanadium-copper part is believed to have commenced with feed from 3rd party local miners. Zinc circuit with feed from Kabwe tailings to come on stream in early Q2 2021.
Project Roan-copper ROM ore and tailings commencing late Q1 2021
Project Elephant-copper tailings, construction starting in Q3 2021 and commissioning 9 to 12 months later.
Project Kitwe-copper tailings, no timetable stated other than it will be after Project Elephant.
The 25K tonnes of copper units are expected to come from the first 3 projects. It would seem the concentrators for the four projects will be fully utilised and so will the Sable refinery, with additional refining capacity now being sought.
The South Africa chrome and PGMs business is consolidating into a mature efficient operation. It appears to be consolidating around the production of 50 to 60K PGM ozs a year. with the aim of having visibility of chrome ore tailings feed for as long as possible (currently about 8/9 years). The visibility of chrome ore tailings feed has been dramatically improved with the signing during the late summer of a number of deals to manage the processing of 3rd parties ROM chrome ore with the beneficial rights to the chrome ore tailings being retained by Jubilee .
The chrome ore deals will also increase the number of chrome ore plants that Jubilee manage, the new ones being Windsor 8, currently being ramped up, and the refitted chrome ore plant owned by Samancor just across the road from the Inyoni plant site, scheduled for commissioning early in Q2 2021. The two additional plants plus the ultra fine chrome ore plant transferred from DCM and now at Inyoni should increase the chrome operational earnings.
Jubilee should also see some significant improvement reflected in the cost of producing a PGM oz. The Inyoni extended PGM plant also due for commissioning in early Q2 2021 targeting around 1000PGM ozs a month, but its production is expected to replace the equivalent attributable PGM ozs currently coming from the JV with Northam. The benefit though will be significantly less feed required to produce the same PGM ozs and consequently they will be produced at a much lower cost. The quality of the feed into the PGM processing plants should also improve as the bulk of it will come from ROM chrome ore, which will have only been processed once by Jubilee alone, and so should produce more PGM ozs per tonne of feed into the PGM processing plant, so reducing costs.

Johnson Matthey are currently quoting a price of $18500 oz for Rhodium in New York. Amazing.

JLPPositive, how about a deal with the Zambian government for all the nationalised mine dumps?

Northern, the earnings figure will also be adjusted because of the difference in the basket price when first booked as revenue 3 months earlier to what is finally received. Since the Q2 PGM basket price is on average higher than the average in Q1 this will result in both a positive adjustment to both revenue and the reported operational figure. This adjustment should be at least +£3M. I would also be surprised but delighted if 15K ozs of PGMs was achieved in Q2 taking into account the Xmas hols shutdown. Having said that I also have forecasted operational earnings in the same ballpark as you.

The psychology of investing. Badly damaged in the past thus makes the share a bad investment now! Take the blinkers off and forget the past. The company had no way to raise funds other than placings to a large or lesser extent until now. Leon has effectively guaranteed no placings needed for the current known projects. The company is a totally different proposition to lets say 12 months ago. That is why significant fund managers are really getting involved. This is not just a PIs trading share anymore, as most aim shares are. It is a proper company with an amazing future.

If the BHP deal genuinely came back on the table, then it should be remembered about 2 or 3 years ago, Jubilee had a net £12m impairment when that deal went sour. Its resurrection would probably get off to a very good start as far as the accounts were concerned if that impairment could be reversed. But a huge amount of distrust needs to be repaired I would have thought. Still a water tight contract restricting BHPs option to pull out this time would help. Interesting speculation as a way in to Australia and a different battery metal, but there is a lot of opportunity still left in Zambia. The speed that cash is currently being generated though could bring forward the next country opportunity, if the company has the non money resources and capabilities to deal with it.

The only place I have seen a split of the PGM basket is in Table 4 page 7 of the house broker note of 8 July 2020. You can find this note on Jubilees website. I think this is a very good broker note but it now needs updating.

Thanks to both NorthernShark and Mikiesunday for the good points made. Mikiesunday you are certainly a half glass full person.

There is of course an awful lot we don't know yet to be able to estimate the copper/cobalt production and margins with any degree of accuracy. We know it should be a big number and may well match or exceed the PGM/chrome earnings in 2 to 3 years time as Leon has indicated. And yes if the PGM basket and base metal prices at least hold where they are today, then we could see some amazing profit figures. Furthermore as has been previously stated if Jubilee is given a better PE than in the past, as it should be, there could be some further rapid SP growth in the short term as well.

But I am afraid I am going to put a bit of a dampener on some of the profit estimates that have been projected over the last few days. First of all a PE is I believe the SP divided by the earnings per share which is calculated from after tax profits. So e 28% should be taken off the pre tax profit figures. It also seems that operational earnings figure estimates are being used for the pre tax profit figures. The operational earnings figures need to be reduced for depreciation and amortisation , finance costs and other HO overheads. Knock off say £25M off your operational earnings figs in a couple of year's time to get to the profit before tax figs estimate at that time. This will allow for the build up to a significantly higher depreciation charge figure than today as a result of the large capital investment programme in plant and equipmen over the next two years.
I hope you are right about the speed of build up in the copper/cobalt operational earnings, but fear you are not. Project Roan will only start to process around the end of Q1 2021 and will then be gradually be ramped up. Let's say it is ramped up so we get full targeted production in the 2021/22 financial year. Project Elephant will at best be ramped up to produce full production in 2022/23. So the 25K tonnes of copper units target will not be reached until the financial year 2022/23 and more likely not until the financial year after that.
There will also be growth in the SA earnings. It should be noted though that the PGM plant extension at Inyoni will probably replace the equivalent current production through the JV with Northern. This will though significantly increase the margins on the target 1000pm PGM ozs. from the Inyoni extension plant.

It is confirmed that Borelli is now the Secretary of the Company on the first page of the accounts. As long as Colin Bird has the Jubilee Board behind him, which is probably almost a given, and the fact he may well be propping up the company at present with directors loans, not surprisingly he will be completely running the show. He has bought another 3 months to come up with the future strategy which will presumably include an exploration asset.
The accounts appear to have been rushed out almost to meet the end of year deadline. I could easily be wrong here so what follows is a bit of speculation. It looks to me as though there was some quite late discussion/ negotiation going on with Jubilee about the inclusion of the (copper) 3rd party ore within the Kabwe project in exchange for getting the royalty reduced to 11%. This is perhaps why the accounts have been structured in the way they have been, which allows a complete impairment on all of the holdings in the investment companies( including Kabwe Operations Ltd-the company managing the Kabwe Project) whilst at the same time allows the value of the royalty not to be included. It should be noted simplified BMR accounts ( as at 30 June 2020) allowing for BMRs share of the Kabwe project are included in Jubilee's own full year accounts (up to 30 June 2020), which would have been used to value Jubilee's 29% shareholding in BMR. But that would be Jubilee's own valuation model and assumptions, and anyway the metal prices have increased substantially since then, and hopefully the zinc circuit is now being built ready to be commissioned during Q2 2021 moving the first production date much closer.
There are a number of questions that need to be asked o management about how the Kabwe Project will operate. For example my best guess is that all 3rd party ore designated for the Kabwe Project will be bought from the miner by Kabwe Operations Ltd.(KOL). KOL will have an agreement with the Sable Refinery for its processing. The most important question is what type of processing agreement is it? Hopefully a toll processing one on fixed terms. This agreement will determine how the profit margin that can be made on the 3rd party ore after being bought by KOL is allocated between the Sable refinery and KOL itself. Only that part of the margin coming to KOL after the Sable Refinery's cut or charges will form the earnings for the Kabwe Project and the royalty for BMR shareholders. All of the margin retained by the Sable Refinery would be Jubilee's exclusively.

Shiner the zinc, lead vanadium will be produced from the Kabwe tailings which are another feed source for the Kabwe Project. The zinc production will be added to from zinc rich feed from 3rd party miners presumably one of them being Galileo through their Star Zinc project.

Shiner75, The Kabwe Project is no longer a JV between Jubilee and BMR. All the assets that BMR brought to the JV are now owned and controlled by Jubilee. In exchange for these assets Jubilee will pay BMR a royalty of 11% of the Kabwe Project earnings, after all of the capital invested by Jubilee to monetise the Kabwe Project together with 20% interest on that capital has been repaid.
The Sable Refinery as it is called now, and all processing assets including the copper processing ones, are or will be owned by Jubilee.The Kabwe Project will be utilising those assets to process all the Projects metal rich feed material, which based on BMRs annual report statement by Colin Bird includes the copper rich material coming from 3rd party local miners to produce a targeted 3K tonnes of copper cathode p.a.

At no one watching time, on 23 December 2020, the 2019 accounts up to 31 December 2019 for the company were posted on the company's website. Note it was not the group's accounts and the reason given is weak. However, by the middle of 2020 the BMR group ceased to exist in effect when the Enviro subsidiary companies became subsidiaries of Jubilee Metals, who then sorted out the renewal of the small scale mining licence for 10 years. Shareholders will see in black and white what they really knew in their hearts. The devastated financial state of their company is set out starkly. In fact it appears it is being propped up as a going concern by a director, almost certainly Colin Bird, until some source of revenue starts to materialise. But there is hope of eventually something coming back to the shareholders but it will not be riches. More about the company's future is to be set out in Q1 2021.
For the first time there is a better explanation of exactly what the Kabwe Project includes and the 3 phases Jubilee is going through to monetise it. There is also confirmation that the royalty has now been reduced to 11%. The good news is the project includes earnings from 3rd party copper rich material up to a target of 3000 tonnes of copper cathode a year, and I believe earnings from such source(s) should now be underway. It also appears to include future earnings from local 3rd party zinc rich material, which presumably will come from Star Zinc and eventually Ka.hitu, should Galileo prove it to be commercially minable. This will be on top of the earnings from the Kabwe tailings. But of course Jubilee's significant capital expenditure, and the interest on capital supplied to get everything going, has to be paid off first from the Kabwe Project earnings, so it will be a while yet before any payments come to BMR through the royalty. But at least the unknown copper part of the project should bring forward that day considerably.

BMR posted their 2019 accounts up to 31 December 2019 on 23 December 2020. For me the interesting aspect was a more detailed explanation by the new chairman (Colin Bird of course) of what the Kabwe Project actually consisted of and confirmation that the BMR royalty had now reduced to 11%. The Kabwe project is being implemented in 3 phases
Phase 1, the upgrading and commissioning of the copper refining circuit with a targeted capacity of 3,000 tonnes of refined copper per annum ( from local suppliers of copper rich material);
Phase 2, the implementation of both the zinc and vanadium refinery circuit with an initial targeted capacity of 8,000 tonnes per annum of zinc contained in a high grade zinc concentrate suitable for the market and 1,500 tonnes per annum of vanadium pentoxide (utilising the Kabwe tailings and local zinc rich material); and
Phase 3, the implementation of the lead refining circuit with an initial targeted capacity of 11,000 tonnes per annum of lead contained in a high-grade concentrate.
No time scales given, that is up to Jubilee to state, and hopefully we will hear more in January's operational update. But this is the first time I have seen that future from copper and zinc from local 3rd party miners is included and will contribute to the BMR royalty. It is very likely that the copper earnings for the Kabwe project have already started.

Northern, I think your earnings figure is on the low side. Personally I am expecting at least £35m ( a minimum of £20m in October to December) and that is being conservative about anything that comes from the copper side and allowing for the Xmas break. In particular the PGM basket price should be averaging over $300 more than the average in the 3 month period July to September on the back of the surging rhodium price.

Thanks for posting the Kitco survey. Everyone overlooks the most important PGM as far as Jubilees short term financials are concerned and that is rhodium. Probably it cannot be traded so easily. Although only 8% of Jubilees PGM basket by volume, it is now around 50% by price. This little known PGM is in deficit and its current booming price is significantly funding the large CAPEX programme as the copper strategy unfolds.

https://www.fool.co.uk/investing/2020/12/23/cheap-uk-shares-for-2021-3-top-bargains-id-buy-for-my-isa-and-hold-til-2030/

In the cheapest 3 shares list today. To be faithful the site has been tipping Tharisa all year especially from April onwards. Must have helped today.

The Iridium content in the basket is more difficult to refine I believe and the margin retained by the refiner is far higher than for platinum, palladium and rhodium. Based on a broker note on Jubilee Metals, it seems their agreement with the refiner only returns 50% of the iridium metal content value, but 85% of the rhodium, and 90% of the palladium and platinum values. So great to see the iridium price going up so significantly but if Tharisa receives something like what Jubilee does the iridium figures being set out here may need to be halved!