Member Info for TigerByTheTail

Broker note on Jubilee Metals:
http://jubileemetalsgroup.com/wp-content/uploads/2019/03/Shard-Capital-Jubilee-Metals-March-2019.pdf
The Kabwe section may be interesting to BMR shareholders.
IMPORTANT NOTE: This broker note was produced BEFORE the signing of the Sable refinery deal by Jubilee (see their last RNS), so some details are out of date.

https://youtu.be/J-1bHFvkrYo

Hi Sands!
Do some proper research for once and you'll see that I'm right. It's not hard, just google "Mali news", and if you speak French, do it in French as well.
HI Steadyawayy!
I don't disagree with you, in general. Certainly, HUM management are exceptionally greedy and incompetent (falling for the Bunker Hill scam was really special, even for an AIM BOD). But I think the current SP fall is all to do with country factors.

Hi Moneyhawk!
Your point about vanadium being produced right from the start of production at Kabwe is a very good one. It makes a big difference to the early earnings of Kabwe, and thus to the NPV. It's one of the reasons my NPV comes out as substantially higher than Shard's (who don't allow for it). (Remember, almost half of the value of Kabwe comes from vanadium production).
It's also interesting how Shard show a peak in zinc production during the first year as the (very high grade) wash plant tailings are processed, with long term production settling down after that as the other (lower grade) tailings are processed.

Hi Nginv!
The security situation in Mali is deteriorating quite rapidly. E.g. there was a horrible massacre of over 100 villagers in central Mali a few days ago. It's a toxic mix of inter-tribal conflict, common or garden banditism, and Islamic terrorism, and it's spreading. It's no longer confined to the desert fringes in the north, and the central government are losing control of the country.
The same (or worse) goes for Burkino Faso.
Note similar share price declines for other Mali or Burkino Faso gold miners.
p.s. The 1p management share options are scandalous, of course. But IMO they are old news. I think it's the security situation (added to possible Mali tax changes) that is driving the current SP fall.

The broker note gives a NPV (10%) of 74m GBP for Kabwe (to which it then applies an arbitrary 50% discount for its valuation of the whole company). Critically, this is based on metals' prices substantially lower than current market rates. It doesn't give a figure for its assumed profit margin, and in many other ways it is clearly out of date (i.e. the broker note was written before the Sable Zinc acquisition was actually made).
I think:
1. Jubilee struck a good deal in buying Sable Zinc for $12m; it really is a good price for this asset.
2. Leon has been criticized for raising so much in new equity, and at the low price of 2.25p per share. As a shareholder, I hate dilution as much as anybody. BUT, I think we need to recognize that this is a safe way of raising the finance for Kabwe, particularly if a recession hits in the next year.
3. IMO, the broker note's NPV for Kabwe is low. My rough calculation, given current metal prices and target outputs and a 30% final profit margin after ramp up, leads to an NPV (10%) of 118m GBP. (I make it that a 74m GBP figure equals a very hostile discount rate of 15%.)
4. Anyway, I'm not sure how much point 3 matters right now. IMO, Jubilee is either underpriced (as per the broker's note), or very underpriced (as per my own calculations). They lead to the same conclusion...

I read through the broker note with considerable interest. Overall, there is a lot to be optimistic about.
Perhaps less pleasingly, there is also the answer to the mystery of the final profit share between Hernic and Jubilee, once Jubilee's costs have been recovered. No wonder Leon wasn't in a hurry to disclose it!
"Jubilee has a profit share model with a profit distribution of 85% Hernic and 15%
Jubilee. However, this only commences after capex is paid back and Jubilee reaches
a 30% return on capital. At present Jubilee continues to retain 100% of project
revenue and earnings. Based on planned throughput and financial forecasts,
Jubilee estimates that 3rd party earnings will only kick in during 2022 and be fully
applied in 2023."

Hi Sumoskier!
Here's some more large numbers for you:
Net Present Value of Kabwe project at 10% discount rate = $154m (or 118m GBP)*.
Compare to current Jubilee market cap (when fully diluted on Friday) of 43.6m GBP (at 2.35p per share).
Estimated earnings per share from Kabwe project from 2022 forward = 1.5 cents per year (or 1.15 pence)
*assumes Kabwe project completed on time and on budget, current metals prices and exchange rates, 30% profit margin when project reaches stable state, 18 year life of mine, 92.2% of earnings accruing to Jubilee etc.

FROM RNS:
The Company has successfully completed a placing of 491,814,444 new ordinary shares of 1 pence each ("Ordinary Shares") in Jubilee (the "Placing Shares") at a price of 2.25 pence (ZAR 43.22 cents) per share to raise approximately GBP 11.07 million (ZAR 212.57 million at current exchange rates) before expenses.
The placing includes the issuance of 1,473,055 warrants priced at a premium of 50 per cent of the placing price or 3.38 pence (ZAR 64.83 cents) per warrant share valid for a period of 2 years.

Hi Sumoskier!
Are you sure about the extra 1 billion warrants? I see only 7 numbers in the latest Kabwe RNS - an extra 1 million warrants or so, which is pretty negligible in the grand scheme of things.
Or are you referring to something else?

Yes, good results. In particular, I'm looking forward to news from Thorny River re: drill results and imminent trial mining in May. 20,000 tonnes per month is pretty large to be called "bulk samping"!
I note that there is money to be paid out and shares to be issued to Vuotomi in order that Botswana Diamond increases its share in the JV up to 72% (phases 2 and 3 of the buy-in). Since this leads to an increased share of very near term revenue, it of course makes sense to do this. But it may mean that a small placing is on its way.

Botswana Diamonds (BOD) published their interim results this morning. In general, they are pretty good. Bulk sampling (at a rate of 20,000 tonnes per month!) should start at their Thorny River mine in South Africa in May, leading to decent revenues shortly thereafter. There is also positive movement on their Botswana projects, particularly the potentially very valuable Maibwe venture.
As regards Zimbabwe, this is what they have to say:
"Botswana Diamonds signed a Memorandum of Understanding ('MoU') with Vast, to develop diamond projects in Zimbabwe. Following the signing of this MoU, an agreement was concluded to develop the Heritage Concession in the Marange Diamond Fields. The concession contains several targets for modern alluvial diamond placer deposits; Grades of the known modern alluvial placers draining the Marange Diamond Fields range in grade from 50 to 500 carats per hundred tonne of ore (cpht), most typically 100-200 cpht. The next step will be to investigate the potential of the modern alluvial diamond deposits, as well as the older conglomerates on the property. Assuming positive results, the field work will be closely followed by drilling, pitting and bulk sampling, which will form part of a pre-feasibility study, which may justify capital beyond the initial US$1 million committed to the programme by Vast Resources."
As you can see, this description really is rather different from the tale that Andrew Prelea is telling. I've no idea who is right and who is wrong, but James Campbell (CEO of BOD) is a world expert in his field.

Or maybe not.
We should find out who took the placing shares on Friday. Hopefully, it will turn out to be major financial institutions buying for the long term; in which case, there really won't be an overhang here at all.

The Sable plant (which Jubilee has just bought) makes it as part of their operations.

Hi Sumo!
3CradBrag is referring to two useless BMR chairmen. Nothing to do with JLP.
And he's right, both MA and Alex Borelli were (at a minimum) truly useless!

Hi BringMy Reward!
The zinc figure puzzles me somewhat as well. But note that the 26K tonnes quoted in the podcast was for zinc concentrate, and the 8K tonnes figure in the RNS is for zinc metal. There's a difference between the two products. In the end it turns out that vanadium represents slightly more than half the value of the project.
Also note, as JLP are investing more than $15m in Kabwe, BMR's share of the earnings falls to 11% (see August 6th RNS). Since JLP own 29% of BMR the "effective" share left over for all the other BMR shareholders is about 7.8%.
Maybe this sounds a little, but revenue from Kabwe should be around $100m per year over about 20 years "life of mine", and in his last interview Leon Coetzer guided towards a 30% + profit margin. So I make it that the BMR "royalty" should equal (very roughly) around $2.3m per year for about the next 20 years after JLP have been repaid their original investment (by sometime in 2021?). When you compare it to BMR's market cap pre-suspension, you can see that it's a substantial sum.
You'll have a fight to keep Alex Borelli's grubby hands off the money, but I wish you and all other shareholders in BMR well.

One other thing that I don't think has been picked up on fully is BMR's reduced share of the earnings from Kabwe. This has now been reduced to 11% as JLP is investing more than $15m into Kabwe. (See Aug 6th RNS).
Also, it's worth remembering that JLP owns 29% of BMR shares, so some of that earnings share (about 3.2%) will come back to JLP. The "effective" pay-out to BMR's non-JLP shareholders will be about 7.8%. JLP's own "effective" share of the Kabwe earnings will be a whopping 92.2%.
(p.s. I wouldn't be surprised if this arrangement gets tidied up over the next few months, and JLP "sell" their BMR shares back to BMR in return for BMR's share of the earnings falling to 7.8%. There's no point anymore in the companies being tied together like this. It would be better to establish a bit more distance.)

Zinc income is $23m p.a. of course, not $23,000!

Hi Weeble!
My $100m revenue figure is based on the figures in the RNS for Kabwe production after ramp-up and today's metal prices (a little rounded for convenience), as follows:
1. Vanadium pentoxide chips: $36,360 per tonne (or $16.5 per pound) x 1500 tonnes = $54,540,000
2. Zinc metal: $2,900 pre tonne x 8,000 tonnes = $23,200
3. Lead concentrate: $2,000 per tonne (for metal) x 15,000 tonnes - $30,000,000 nominal, but allow random discount for product being only lead concentrate, so say $23,000,000.
Total (roughly) = $100m per year
"Life of Mine" = about 18 years (+)

I have the impression that the market hasn't really appreciated how big the Kabwe deal actually is. IMO, it's a game-changer for Jubilee.
In very crude and simple terms:
Kabwe requires an investment of $24m (+ the already sunk costs of the original deal with BMR)
Project is fully licensed and financed and ready to go.
Time frame to first metal production: 8 months
Ramp-up to full production: 2 years
"Life of mine" (i.e. tailings): 18 years +
Revenue per year: very approximately $100m
Profit Margin: (as per interview with LC) projected at 30% (??) = $30m per year
Total Profit Over Life Of Mine: in the order of $540m (??)
I believe this figures are roughly correct, given current metal prices. Please correct me if I've made any significant mistakes.