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Interesting looking at Sylvania's results this morning and perhaps a minimum indication of where JLP should be in 12 months time. 72,000 Oz of PGM's, $18.2m net profit and a market cap of £126m.
Interesting to read about their Chrome circuit which may add weight to some of our earlier discussions that the JLP Chrome margin is down due to a strategy of enhancing future PGM revenues??
"The relocation of our redundant Steelpoort chrome circuit to Lesedi, identified during FY2018 as an opportunity to improve chrome removal ahead of flotation, which will enable higher PGM feed, analogous to the standard Sylvania SDO operating model, was completed and commissioning of this new section started in June 2019. It will further contribute to higher PGM feed grades and ounce production in the coming financial year. "

Hi TBTT, below is a copied post of mine from earlier this year. I have not checked the current Phosphate prices, the $ rate has changed in GLR's favour and the issue of 100m shares happened - although it was for Star Zinc and not Glenover. This is for the Phosphate only, I did post some numbers on the REE's but can't seem to find it at the moment. My Net Profit assumed no other projects were contributing to the GLR overheads (my tax calculation is way over the top also). From a timing perspective I believe that Star Zinc will happen first followed by the Glenover Phosphate deal - the last time I really looked at the Phosphates Omnia & GLR were looking at the removal of some unwanted impurities in the Phosphates - I cannot recall any news saying this had been fully resolved but I could be mistaken on that one.

My take on Glenoever EPS - lots and lots of assumptions - the main ones are:

- Delivered tonnage worked out on the supply of the surface stockpile over 7 years. (The full mine will be able to supply more Tonnage)
- We are selling at 33% P2O5 whereas the rock is 22%, so I have assumed the processing will remove 50% of the available tonnage, giving 192,000T / year over the 7 years.
- The processing requires CAPEX for which funding is not available, thus is it is likely that a dilution will occur.
- Dilution will also occur based upon the South African Mining Charter.
- I have used 100M shares dilution as our contribution to the 2 points above.
- GLR percentage of profits are 36%.
- I have assumed 30% operating costs and 50% of EBITDA reductions to give the net profit. General mining companies have a 70% EBITDA reduction, we should be less and be able to offset some profits when consolidation into the P&L occurs.

Tonnes - 192,000
Revenue - ?12.2m assuming a 1.35 $/? exchange
Op profit - ?8.9m
GLR% - ?3.2m
Net profit - ?1.6m
Shares in issue - 400m
EPS - 0.39p

I think equity is the most likely option - there is a lack of appetite from Financial Institutions to loan the money, although option 3 could work, maybe even the Govt will stump up the cash for a larger equity stake (no idea of the rules in Zambia). I previously thought that a pre-financed offtake may work but moved against it looking at JLP cash position, however, the delay to mid next year may leave JLP in a much better cash position.
Interestingly when you look at GLR's accounts and the working capital position they are effectively negative due to the large trade and other payables in the current liabilities, the problem is that we have no idea when this is due or if it will be rolled over. The only guide - and not an accurate one - is to look at the net movement of cash in Y/E 2019 and then 2018, it's fairly consistent. Following this theory it still puts GLR to about Feb next year assuming the payables can be rolled over.
At the end of the day we know that money is needed in one form or other. I am comfortable with that because the income stream, cash generation and net profits over the next few years will be the outcome of that money input - so the investment case is still very strong.

I have always been of the view that the capacity is significantly greater than both JLP's and GLR's quoted numbers for Zinc. If you look back at the original RNS on the purchase of Kabwe and work out the capacity based upon those numbers it dwarfs what will be going through the plant. Now some of that could be taken up with the Cu circuit if it uses common parts but we don't have too much information on that front yet.

Working Capital - unless you have another way of funding the day to day?

Mostly agree with you Kalan, Q3 2020 before GLR gets revenue now looks the most likely after JLP have put the Zn & V205 circuit back by 6 months to concentrate on the Cu circuit. However, I see that a cash raise of £1m will be sufficient. I had hoped £500k would be enough but the delay will add an increased requirement for funds. The reason I believe £1m is sufficient is that Star Zinc will be a 100% sub contract operation so the set-up costs will be under £100k.
From my perspective, nothing really has changed. A dilution will happen but I don't see that happening until the sp has risen following the announcement of the SML and offtake. The dilution will be relatively small if the sp goes to where I think it will. Ok, the timescale has moved, but realistically it has moved from Q2 next year to Q3 next year. Talk of revenue from Oct/Nov this year was way off the mark.

Numbers are slightly lower on the Pb side Jonah, 11,000T instead of 15,000T. Zn and V are the same. Timescales have shifted out by 6 months for Zn & V and are quite disappointing for Pb at mid 2021. However, the plus side is 3,000T per year of Copper.

Hi Zeb, there won't be a need for a beneficiation plant to begin with IMO. It will be dig, transport to crusher, crush and load into lorries. The only reason for the crusher is to maximise the tonnage transported i.e. smaller pieces = nicer fit in the truck = higher tonnage transported. The high grade material is close to the surface so it's a simple operation. As the grades decrease over time then some additional plant may be required, but that is quite expensive to do. I assume that CB will try to stick to the grades agreed with JLP i.e. if he has agreed 16% he will try to mix high grade (say 21%) with lower grade (say 6%).
A quick look at the financials and GLR has sufficient cash until March (as expected), I believe they will dilute between Nov & Jan. From ore supplied it can take 3-6 months to receive payment, i.e. cashflow and not revenue. So in my view they need £500k but I think they will go for £1m to be sure. However, CB will not want to dilute at these prices so he will wait until the the SP is much higher IMO.
Always the problem for us pi's - we know dilution is a high probability and in the ideal world it's nice to hold off until that is complete. But dilution may arrive at 1.5p and then drop the sp to 1.25p (although I have known dilution in companies that are about to get cash in to actually significantly boost the sp). So for me it's much better to invest at 0.6p than 1.2p or higher!!

Or, of course, the MM's were sitting on a large stock of shares following the recent regular large sells and thus it was a buy !

It's impossible to know - let's go with buy to make us feel good ! Either way, the volume is good which gets shares noticed and gets the MM's interested.

Normally MM I would say a buy but I am not so sure. The increase of yesterday was after this. If MM's had a big buy coming in at an agreed price they would drop the price rapidly to entice sellers to fill the order and then ramp it up later. But the opposite happened, they took it up to entice buyers and then dropped it later. So by the trade log I would say buy, but by the MM's actions I would say sell. Very difficult to know because the spread at the peak of the rise was 15% yesterday and by delaying negotiated trades the trade log does not necessarily represent what happened in real time. If anybody can remember the mid price at the start of trading yesterday this might help - the spread was either 3.59% or 3.27% so we can work out the bid and ask at the time of the large trade. I thought it was 0.61 (0.60 & 0.62) but I could be slightly out. If it was then it implies buy. Confused - me too !!

Hi Jonah. Firstly on the concentrate or metal - it will not matter to GLR. GLR will negotiate a price based upon ore, whether the refiner produces concentrate or metal is their issue. From a refining perspective Zn metal is much more profitable than Zn Conc but it has additional processes and thus more up front costs - hence the reason that JLP are going for a two staged implementation of the Zn circuit.
On the proposed income front the offtake agreement will be a reasonably standard contract i.e. refiner will pay GLR a certain price for a certain grade of metal, with credits issued for any metals that the refiner can use and penalties for any impurities that need to be removed. It would be also reasonably standard to have the price paid agreed at a certain Zn price, with a penalty for GLR should it go below a certain level and a gain should it go over a certain level. It does not take a genius to figure out that the Zn price is below what CB uses in his RNS's or that Zn is currently under pressure for the same reasons that Cu is.
In GLR's favour is the weakening of sterling against the $ which is helping to offset some of the Zn price falls.
At current Zn prices and using CB's RNS figures there is a GM of just over $10m, at Zn of $2,700 (the RNS numbers) there is $15m. How that splits between JLP and GLR is anybodies guess at the moment.
Taking into account Mgt and other costs I estimate GLR's EPS to be 0.6 to 1.10 on a full year of processing basis and assuming it all goes as planned (I use a 50% reduction from EBITDA to Net Profit). Junior miners on AIM tend to have a P/E of circa 6 to begin with, rising to 9-12 once they have been profitable for a while and have a good long term profitable stream ahead of them e.g. Ka****u. So if all goes perfectly to plan then GLR could sit on a 3.4p to 13.2p SP, excluding all other assets.
But, the cash flow does not start as quick as people seem to think, so there will be some dilution. How much and when is anybodies guess - I would not be suprised to see an XTR scenario on that front. I would expect a 1/3 dilution and thus my SP targets will be reduced by 1/3. There are hurdles to overcome, a given if you believe certain people, but still they are hurdles that have not yet been achieved - SML, off take agreement, grades coming in as planned, and then there are risks/rewards outside of GLR's control Zinc price, exchange rate, taxes, political etc etc.
That is how I see GLR. As with all AIM explorers there is a risk, the rewards in this instance are potentially very good and reasonably close. How AIM actually reacts and where the SP actually ends up in anybodies guess. AIM tends to massively overshoot when things are going well and undershoot when they are going bad. Good luck.

Hi Gavster, I think it sits in accounts receivable (end 2018 = $109k, end of June 31st = $532k). In other words, revenue is booked at the time of raising the invoice but obviously cash is not received until the money is in the bank. Loan payment is an instantaneous transaction that immediately comes out of cash flow. So the cash has not been received so it has not been paid to Ocean Finance.
Most of the Receivables are due within 3 months. It is not unusual for it to take 3-6 months to receive payment from the date of concentrate shipment.
A little strange to be capitalising the revenue until development is complete, development costs - absolutely, but revenue?? There must be an obvious benefit to doing this because it means that we will not have revenues on the P&L until Q1/Q2 2020 - and as we all know with AIM companies that people like revenue !!
It's a sit and wait game I am afraid at the moment. I would like it all to happen much quicker but realistically we have a 6-12 month wait ahead of us in my view. I hope I am wrong and AIM has a tendency to spike shares when we are least expecting it - so I sit and wait.......

Could be CB Candid holding more shares ! You are right though, it impossible to know. One can only surmise if a link to the nominees can be found. RNS’s should give the purchase dates, most likely at the points of GLR’s equity raises but that still doesn’t help much apart from indicating how long they have held and at what purchase price, which may help with their figuring out their lowest get out price.

Hi Candid - Jim Nominees can be found on Companies House (04634540). The people have various Nominee & Holdings companies so I would say the they are professional investors. A search through the RNS's would give more information on who they are and at what point they invested.
The Bank of New York Nominees are also on there (00928736). Again, a bunch of professional investors by the looks of it.

We have a regular block seller in play. Pretty consistent round number sells taking place - any thoughts?

Hi P14, on your note of yesterday I am a little more conservative putting Q3 earnings at £3.8m and Q4 at £4.7m. This still gives earnings of £8.5m for H2 and a 50% improvement on H1.
I think my numbers are very conservative and differ from yours in 2 aspects:
1) I have much lower Chrome earnings. My hope is that they come in closer to yours but again I have taken a cautious approach until we fully understand the picture. The one off charges should be gone so I am hoping to see improved margins.
2) I have taken a slower progression on the Windsor PGM earnings. I think it will be Q1 next year before the plant is really flying. I have also taken a lower % margin than Hernic - nothing to back this up, just a cautious approach broadly in line with the points raised by 34Deg & MH.
Either way, we have your number of £10.5m and my number of £8.5m - I will be happy with either. Hopefully we are somewhere in the middle which gives us confidence that we can predict reasonably accuratly JLP's future earnings and thus the SP.

I think CB has been misquoted on the £25m revenue - the expectation is for more than that in earnings after 2 years !!

12,000T Zn from 66,000T of Ore = 18%. probably higher to begin with. Anything below 15% and it's not worth adding to JLP's tailings.
66,000T @ 40T loads = 1,650 loads = 6-7 loads per day depending upon the days worked. Transport costs estimated at $726,000 which I think is reasonable.
CB's costs for GLR of $2m look OK as far as I can see. Then there are JLP's costs of $16-$17m for processing and then JLP 15% toll processing costs of $4.1m. CB might negotiate the $4.1m down depending upon how much of the processing costs are duplicated in processing the mix of GLR & JLP Ore i.e. Do those costs mean JLP process their Zn for free or are these the costs for processing GLR Ore - the latter I suspect.

Hi KB
Please read the GLR RNS of 26th June, Scroll down to the bottom and you will see the costings. Adjust for the current Zn price, acid leach costs, add in toll processing and adjust the $ to today's value and you can come up with a pretty good idea of how the income looks for GLR and JLP. If you want to go further then you can come up with a reasonable guesstimate of the full P&L for GLR including the EPS and also what it means for JLP.
On the acid leach side I believe this will be used. I am presuming the presentation that you refer to was for the Willemite at Kash*tu and not the Star Zinc Ore??
On the funding side, I have always stated that GLR will need funding even for the low upfront cost operation they will have. My comment on the timescales are known may have been mis-understood. The Copper circuit will be first before commissioning the Zn circuit later in Q4, meaning no real Zinc processing until Q1 next year.

A bit of both I think MH. JLP need the Star Zinc to make Zn Conc at a lower cost due to the acid costs. V205 is after the Zn circuit. Somewhere there will be a calculation to determine the best mix of JLP tailings and Star Zn to maximise both the Zn circuit and the V205 circuit. With V205 prices low it may be more favourable to do more Zn Conc - even though the Zn price is also low at the moment. Either way JLP will be working out the optimum mix that is for sure.