Member Info for NorthernShark

From Caerus and Tharissa:

Highlights
· Jubilee Metals (AIM: JLP) has taken receipt of the last batch of test work samples and is progressing towards plant design
Planned Exploration and Objectives for 2022
A wide-ranging programme of Resource development and further exploration is scheduled for multiple projects in Cyprus with an emphasis on the completion of a first Joint Venture and the development of the first mining project.
· Troulli Project - Conclusion of the first Jubilee Metals Group ("Jubilee") Joint Venture in parallel with the generation of a JORC (2012) Mineral Resource triggering design of a processing facility and commencement of mine development.

Tharissa
Market update
? The PGM spot markets were weaker than the past several quarters, but early indications are that the supply-demand balance is improving, with bottlenecks in the chip and motor industry abating, and stockpiles from some of the major producers being worked through the market. While
COVID-19 seems to remain a short-term risk, global growth looks set to recover, with the increasing emissions standards underpinning prices. On the back of this, prices have risen in the early weeks of this calendar year, with the current spot basket price at around US$2 700/oz, versus prices received for the quarter of US$2 394/oz
? Chrome prices remained steady quarter on quarter but have seen an uptick to around US$175/t at the end of the quarter owing to increased consumption of chrome concentrates in China, as power restrictions eased in many of the major industrial production hubs resulting in an increase in ferrochrome output supported by stainless steel demand. Coupled with this increased consumption was a significant destocking of port stocks, reducing from a quarter start of 4.0 Mt to around 2.7 Mt presently, a level not seen since Q1 CY2018.

Nelson,
I really can't fathom a reason to sell - only just getting started...

Northern

Interesting debates today and I guess it depends on what you want from JLP.

I am in my mid/late 40's with just short of 1m shares in ISA's. I don't need cash in the short term so I invest looking to grow my captial and am looking on a 3-5 year horizon. I don't know of a better company to invest in right now for growth. My reasons are as follows:

It seems obvious that we have processing IP which gets value from tailings dumps and proven in PGM's, copper and cobalt amongst others.
There are masses of tailings dumps around the world which are currently a liability on most miners balance sheets.
PGM's, copper, cobalt and nickel are vital for de-carbonising the economy. (I am in the automotive industry - due to the chip shortage there is a massive, and I mean massive pent up demand for EV's and ICE vehicles which will start to be serviced mid to end of this year - cue metals prices rising!)

So...
Am I worried about the numbers of shares in issue? No - can always do a share consolidation
Dilution - if it yields exponential growth then fine - if it is for paying to stay alive then no - not that I am worried on this side.
Debt - Used selectively then yes we have headway in this space however I have seen some companies who have gone too early on the debt side which has ended up shafting the shareholders.
Dividends - no thanks - rather re-invest in growth and take the dividends when the opportunities are harder or less profitable to come by.

My personal musings but recognise others have their own agendas
Northern

35p for me please

Northern

Bushy,
I appreciate you taking the time to share your views - always good to have a balance on the board. That said I do want to provide an alternative view to your main points.

You view JLP has reached the top. The presentation in my view showed it is just the beginning. Copper and cobalt will drive the top line revenues as will the expanded PGM/Chrome facilities in SA. This excludes an Eastern Limb Inyoni type plant or any expansion via more projects in Zambia (mentioned in the presentation) or more widely to other geographies.

Kabwe - Leon explcitly stated in the presentation that the solutions for Zinc, Lead and Vanadium have been proven in a pilot plant and can be turned on "at very short notice". The delay is due to uncertainties regarding the vanadium market price. So not a huge issue for me. ESG - Leon stressed the importance of this during the presentation.

Kendrick - you will have to enlighten me as to your concern here. Any material legal issues would need to be declared by the company and I haven't seen anything by way of an RNS.

As for Colin - my view is that he has been pushed out and he didn't seem at all happy when he was talking about it during the presentation.

These are my views only and as an investor as opposed to a trader I have longer term horizons than some on the board but I am more than happy to see how we develop over the next two years as this is when the broader investment community will see how good a company Jubilee really is.

Northern

Billy,

Note 4 Page 81 there is £18m for amortisation of intangible assets then look at note 9 on page 85 where you can see £17m of Nickel tailings has been written off (now a zero balance).

You would expect amortisation over a period of time but this looks to me there is no future cashflow anticipated from the development work on the Nickel tailings so the implied value is now zero. Normally this would be covered by the impairment of the asset but it has been taken to the P&L in the operating expenses line rather than in the impairment line.

These expenses were incurred many years ago and the action therefore (in my view) artificially reduces the operating profit numbers in this financial period - its a non-cash expense. As there is no more to write off then next years comparables will be substantially better (by £17m) all things being equal.

Tjate is the only balance sheet item left which could realistically be treated in the same manner.

Hope this helps
Northern

Billy,
I did a post on this so have a look back through my history and you should find it,

Northern

Thanks Jonah.

One I would add is Colin Birds replacement. If we can get a heavy hitter with the right contact list then I for one will be very happy!

All the best and hopefully someone can get to the AGM and get some facetime with management!

Northern

Thanks HG - interesting hypothesis!

Go on HG - lets hear your hunch - it is Christmas after all

Homey,
I disagree - if you look at the wording it focuses on using the IP. I think there will be JV's where the partners fund (in whole or in part) the build in return for the use of the IP.

We may also think about alternative funding but this will become clear as part of the strategy.

Northern

Dorfan,

I think a new Chairman (experienced on a global stage & associated network) will move the dial on the PE ratio. When copper earnings become more clear (hopefully in Jan) that will also provide a catalyst.

That said I am happy to hold as I view this investment as my early retirement ticket!

Northern

Interesting news release!

As the company grows it was inevitable that changes to senior management will take place. Colin has helped develop the company through his network in Africa but to go global we will need someone with the appropriate network and dare I say gravitas.

I look forward to seeing the strategy evolve.

Northern

Homey,
I don't think we will see a drop in EPS unless something dramatic happens with metals prices (which I don't expect) for the following reasons:
1. I seriously doubt we will have £17m put through the expenses line for historical write offs (Only Tjate really left in this regard)
2. Inyoni will be the primary PGM plant which is low cost and Eland will only be used for excess material
3. Eastern Limb material will increase the basket price via higher Rhodium content
4. Contribution from Copper and as I mentioned previously I think we have a fair amount of ROM stockpiled at the end of the last financial year.

Our growth may not be as explosive this FY as it was last year but we will grow in my opinion.

Northern

Homey,
I too was a little surprised at the earnings forecast for Copper, so I did a little more digging.

If you look at the end of year balance sheet there was £17.7m in inventories (Up from £2m the year before). Note 14 says £14.4m of this is in respect of ROM material that will be processed in the next 12 months. In prepayments there is £5.3m for 516k copper tailings stored in a bonded warehouse, ownership of which passes once tails are delivered to site.

What I think (but stand to be corrected) is that they have a lot of material already on site to be processed into final product prior to project Roan coming on stream. We should get a better understanding of this once the half yearly operational review comes out in Jan-22.

Main news to come out of the Broker note for me in terms of opportunities:
1. Likely expansion into DRC
2. Mufulira potential to add to the copper streams
3. Eventual capacity for copper processing - Leopard 34k tpa, Sable 12-14k tpa plus room for expansion
4. Zinc 2023 (including potential finished product rather than 70%) and Lead 2026
5. Cobalt as Mikey points out could be massive if they can sort the processes out
6. Eastern Limb expansion on PGM's highly likely

Some really good detail which will take a while to get through and fully understand so other peoples interpretations most welcome

Northern

Sumo,
I think once a number of the data providers update their figures with the latest accounts information then we may see the price go up. Those who are not aware of JLP might see the new PE and view it as better value.

Northern

Broker note now on the Jubilee website

My reading was Inyoni will be fully utilised and any surplus material would go through Windsor.

Makes sense as the lower cost operation would be Inyoni.

Northern

Charles - the Nickel piece relates business development costs relating to BHP owned dumps in Aus (Leinster). I seem to remember Jubilee thought BHP owed them some money after pulling the plug on the deal but appears this must have been settled I presume in BHP favour.
This is disappointing in so much as they would have represented a massive resource, metal diversification and in a favourable mining locale.

Still, there is plenty more out there for JLP to look at!

Northern

Nelson - I agree with the comment on the adjusted EPS.

Hard to give numbers on next year as will depend on speed of copper expansion. My read is we will have steady growth in 2022 FY with the substantial copper and cobalt returns hitting in 2023.

That said I would like to see an updated brokers note or company presentation with the latest view.

Northern