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Here's my calculation for FY2023, everything in yellow is taken from RNS figures, everything in blue is an estimate. I've calculated the PGM and chrome earnings seperately but also show the chrome credit figure in the PGM section, just to illustrate how it's changing. If you spot anything wrong let me know! In the graphs I've included the FY2022 revenue and earnings as a comparison.

http://tinyurl.com/2s37czby

I realised that the bottom graph showing PGM production was slightly misleading because the last two data points are quarterly rather than half year so here's a more representative one with the two quarters summed together and the fuel cost averaged: https://tinyurl.com/2sja2dup

Another thing its worth mentioning is these new mine site integrated plants are within 125km of Inyoni so transport costs will be much less anyway compared to trucking material from the eastern limb. It's a no brainer when you think about it, processing on site decouples the operation to some degree from fuel price fluctuations. I think we will see more of these operations going forward.

It's been bugging me to understand why PGM production at Inyoni has been lower than expected and I have been digging around in the data... what it looks like is that as fuel costs increased the PGM ounces delivered dropped but also the ratio of chrome produced to PGM ounces produced increased, have a look here https://tinyurl.com/2ndcncbk

What I think this is showing is that the overall grade was being reduced as fuel costs increased, possibly the amount of on site lower grade tailings was increased to reduce the amount of ROM which was being trucked in at increasingly higher costs. If you look at H1 FY2022 the transport costs were ~US$1.5m but by H2 FY2022 they had doubled to just over US$3m. In that time the average diesel price per litre went from ZAR 16.2 to ZAR 20.4. It peaked in H1 FY2023 at ZAR 24.6 and has since started to decrease. Obviously by reducing the overall grade you would increase the production cost per PGM ounce so I think they have been trying to find the sweet spot between increasing transport costs and increasing production costs.

The good news is that we should already be past the worst of that, fuel costs have come down somewhat and the new site of mine processing contract will both reduce transport costs (only transporting the PGM concentrate to Inyoni rather than ROM) and also improve the overall grade of the feed going to the PGM circuit, reducing production costs. If you take the 200,000 tonnes of chrome production and estimated 10,000 PGM ounces, that's a ratio of 20 which will significantly improve the overall average as well as delivering more ounces each period. Leon stated the target for this year for Inyoni is 42,000 PGM ounces which bears this out.

In the longer term, the chrome plant on the eastern limb will reduce the transport costs further and we should still be able to make a decent margin even at these depressed PGM prices.

I'm surprised Tertiary didn't highlight the new license next to our JV, soil sampling has already been done there by Arc so they should have a head start! It's very close to the Cheyeza East high grade discovery and has a lot of potential imho.

https://tinyurl.com/nex5wm3c

Mikie, the average chrome price in Q3 was US$286 and in Q4 it was US$290. I use the low end of the quoted range to be conservative so the price achieved might be a little higher than that. Yes the PGM ounces increased significantly in H2 but most of that increase is likely through the JV at 60% to Jubilee.

Yes, I’ve already shown the comparison with SLP which shows we are being treated exactly the same by the market and little account is being taken of increased chrome or increasing copper earnings, both of which pure PGM plays don’t benefit from. Still, you can’t affect the market, only inform yourself and make sure you make the best decisions based on information rather than the FUD that people like BT throw out with nothing of substance to back it up.

The worst is yet to come for the pure PGM plays as the full effect of the lower PGM basket comes through in Q1, I think most will be operating at a loss at that kind of level, which is clearly unsustainable. The PGM basket has been creeping up in the last couple of weeks but unless there’s a decent rise then I think it’s inevitable that some high cost operations might shut down. We are certainly benefitting from chrome prices and will benefit much more from copper this year.

I’ll have a look through the spreadsheet again and maybe post it later. I know a rising tide lifts all boats and all that but there are a couple of rotten ones here that I’d much rather see scuppered!

Regarding the Mufulira project I should probably have said that ‘Jubilee Metals Solutions’ already has an active exploration license which covers the s l a g dump, so that kind of makes us default front runners in that race already.

The most arrogant people I’ve worked with almost always turned out to be the most clueless…. Just saying.

Just to be clear the US$7.5-9 million a quarter is for total chrome production not just the 17,000 tonnes / month!

Mikie, if you're talking about the effect of chrome on the FY 2023 numbers then the information is already there to work it out if you want to. Just look at the Q3 numbers:

chrome credit / PGM Ounce x number of PGM ounces sold = 402 x 11,437 = ~US$4.6 million in chrome earnings for Q3. For H1 the earnings were US$2.94 million, or US$1.47 million per quarter. So the chrome earnings has tripled in Q3. Q4 is potentially higher. The chrome sold was about 30,000 tonnes more than in any other quarter, this might be due to the 24,500 tonnes from the new contract which has already been sold into the market. If that's the case then the earnings would be ~US$6-7 million depending on which end of Leons US$50-80 / tonne you choose to use.

That's a nice little boost and certainly cushions agains the drop in PGM's but the real effects won't be felt until the current financial year when we start to see the full production of the new contract coming in. It should be worth between US$7.5-9.0 million a quarter at 17,000 tonnes a month production (at current prices). They were guiding 60,000 tonnes for H1 so I guess they are not at full capacity yet.

I've got all this in a nice spreadsheet but I'm keeping that to myself for now!

I'm not sure what if anything to expect from the Mopani deal finalising. They haven't mentioned the MoU for a long time and seem to be focusing on acquiring the new refinery, which would have all the capacity they need. It's possible they are just keeping quiet until things are finalised or maybe they decided to forget about that due to the uncertainty over new ownership. I guess we will find out in a few weeks! I'm hoping that the government has included our bid for the Mufulira S l a g project in the negotiations... really we need to get Chambishi Metals signed off in order to progress that project because it's already set up to process that kind of material.

I think its time that everyone reports his lies and demands his account be removed

The sad thing is, Bushytailed is down on his investment in two companies despite a very strong gold price. What’s going to happen if the gold price drops? Or in the case of HUM, the government decides they want to take a much bigger slice of the pie…. Which they have just done. Maybe he should spend more time examining his own investing record instead of trying to advise others 😂

Leon has said that they have budgeted US$8m to upgrade the first new facility to a capacity of 390,000 tonnes / year of chrome concentrate. If you assume a profit margin of US$60 / tonne of chrome produced, it's current capacity (200,000 tonnes) should generate about US$1m / month in earnings and after the upgrade about US$2m / month. It just shows how quickly they can recoup the investment and start generating cash, and this is a model which can be repeated. All assuming the chrome price maintains its current level of course. Any recovery in the PGM basket would be an added bonus although we have to remember the PGM's are shared with the mine owner, with JLP retaining the 'majority' (so at least 51%).

Gotreal,

Yes good point about the pilot plant, so that would be 500 tonnes of tailings at a time rather than copper output. Funny how you can listen several times and still get it wrong!

I still think that the profit figure that Leon quoted of US$50-80 / tonne is for the overall process, which would include processing the ROM, sending to the fine chrome / ultra-fine chrome circuit and then the PGM circuit to produce (initially) up to 10,000 PGM ounces. Although at current prices I don’t think the PGM ounces will contribute very much to the bottom line anyway.

At current prices and assuming the two contracts are on the same kind of terms, I would estimate the additional chrome tonnage of 390,000 + 325,000 = 715,000 tonnes / year would be worth an additional ~ US$35-57 million based on Leons US$50-80 / tonne profit (including a small contribution for PGM’s). If you calculate for the 1.3 million tonnes already being processed as well as the additional 2 contracts I make that ~US$57-78 million / year overall.

HD I guess they are still waiting on permitting to get started on the Eastern Limb, Leon said they were ready to start building as soon as that was granted.

Https://m.miningweekly.com/article/mali-president-signs-new-mining-code-in-bid-to-raise-govt-stake-2023-08-29

Here's some notes I took from the recent interview with Leon. I think I got the most important points but if I missed anything feel free to add it on:

South Africa:

* Current chrome price US$295-305 / tonne. Prices remaining high due to expansion in stainless steel industry (India plan to increase 5x) as well as the problems in South Africa which make getting the product to market more difficult. Also mining costs increasing as miners forced to mine deeper ore, all putting upward pressure on the chrome price.

* Margin on new chrome contract is US$50-80 / tonne (inc PGM component). This is a major step up from previously.

* The two new chrome contracts when fully operational could double current revenue.

* Pure PGM producers earnings down 60-70%, JLP earnings will not be impacted nearly so much.

Zambia:

* Southern copper strategy, processing ROM, mixed oxide/sulphide material previously regarded as too complex to process. Not indicated yet what the recovery margins are but this innovative process could be very significant. Going after the small and medium size miners. Mining through the oxide cap to get to the sulphides has held back a lot of smaller operations from progressing. Should enhance the profitability and potentially even the viability of these type of projects. Galileo’s Luansobe give as an example (CB of course!).

* New Roan front end, which prepares and sorts material prior to chemical extraction, is greatly expanded to accept a wide variety of feedstock, which allows the plant to change feedstock as the seasons change and road transport can become more difficult.

* Front end is modular and further modules can be added to Roan as well as being stand-alone satellite operations at the site of the feedstock for pre-concentration prior to delivery to Roan. Designed to be power light and rapid in deployment.

* Roan will be impacted for ~5 weeks in late September / October then should step up production about 20% from the first module, eventually 8-10 thousand tonnes. Presumably there will be another ramp up but not specifically mentioned. Step-up in production profile expected in H1-H2 comparison.

* Northern copper strategy is specifically targeting copper / cobalt tailings. Large scale semi-commercial pilot plant to be rapidly deployed at Luanshya, up to 500 tonnes / year of copper before scale up to ~25,000 tonne concentrator plants. Mentions going to full scale at both Luanshya and Kitwe after the pilot plant has confirmed small scale results, so 3 plants in total.

* Targeting copper production costs below US$5,500 / tonne (we’ve already seen US$5,200 in H2 FY2022) but with scale that should come down to low US$4000 range.

* Zambian government want the company to go faster and bigger, they see the potential for enhanced copper production and employment. Very supportive and willing to help where necessary.

I think we’re all long on Arc, even the trolls! 😁

I haven’t been checking the board much lately so apologies if this has been discussed already but I notice in the latest Khoemacau presentation that both Mawana Fold (directly adjacent to Arc’s drill locations) and Zone 9 (also on the license border) are now listed as “recent discoveries” (page 25). I’m pretty sure last time I checked that Mawana Fold was listed as a priority exploration target so something has changed.

Nothing new if you’ve see it before but for any new investors you might be interested in this little blog wot I wrote:

https://seisnav.blogspot.com/2022/05/some-thoughts-on-arc-minerals-licences.html

In my view (as a geophysicist by training) the evidence is very strong that there are significant deposits within the licenses, it’s only the scale of the deposits that is yet to be determined.

Here are a few preliminary notes on the Botswana licensees too:

https://seisnav.blogspot.com/2022/07/arc-minerals-in-kalahari-copperbelt.html

Hoping we see more action there once everything is signed off in Zambia and we can leave Anglo to get on with it!

“ The current platinum group metals (PGMs) basket price puts 70% of the South African production base at a loss when taking into account replacement capital requirements on top of the working costs.”

“If we overlay the current economic headwinds on the natural depletion profile, we can reasonably expect earlier closure of marginal mines and the potential to delay projects.

“This will potentially lead to a dramatic contraction in mine supply should current prices prevail,” said Dunne during the presentation covered by Mining Weekly.

If palladium prices remain as they are, the Johannesburg Stock Exchange-listed PGMs mining company expects significant pressure on supply and the potential for not insubstantial decline from 2025.

The mainstay of production for rhodium is upper group two reef on the western limb of the Bushveld Complex, where operations are amongst the oldest and highest cost in the industry.

“They are vulnerable to a low price environment. We anticipate lower production into the future even if rhodium prices recover somewhat.

“Supply of PGMs will become increasingly constrained and if the world truly needs these critical and strategic metals, then the markets must incentivise additional supply from here. If this is not the case, the world’s primary PGMs production base will rapidly shrink,” Dunne forecast.

It doesn’t take a genius to see that low cost producers like JLP, SLP and THS will be big winners if this plays out.