Jubilee Metals Share Discussion Threads

[bullster] 11/8/2019 16:47

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"Bullster can you explain the difference between percentages and absolute numbers?"

I am giving up with Leons generic terms, material, feed, concentrate etc.
It gets to a point where you don't if that tonnage came out of this tonnage that was left from the tonnage beforehand. Compounding percentages can be tricky at the best of times without having to cope with double dutch.

The big boys won't give up their tailings, Leon had better get some near surface open pit mining in the portfolio, like Colin, toll treating won't make big money.

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[kryptonsnake] 11/8/2019 16:39

Glencore will truck tailings to Sable

Jubilee will process for copper. Jubilee gets a cut of profits but Glencore gets better end of deal

Jubilee gets acid out of it to process tailings from Kabwe


LOLsss

[bullster] 11/8/2019 16:32

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"can you explain what your rationale is for suggesting that JLP/PPC get paid in tailings by the 3rd parties and how this would be treated by IFRS?"

I am thinking, "why would i pay JLP a fee for crushing my ore, when i am letting them have the tailings which they recover chrome from and keep the pgm's which are far more valuable than the chrome".
As for IFRS, i'm not even bothered to look what that means, i'll concentrate on the basics for now.

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[1madmarky] 11/8/2019 16:27

Me thinks someone sold and wants back in before details of the copper deal come to light.

[sleveen] 11/8/2019 16:17

Bullster can you explain the difference between percentages and absolute numbers?

[sleveen] 11/8/2019 16:15

Bullster

can you explain what your rationale is for suggesting that JLP/PPC get paid in tailings by the 3rd parties and how this would be treated by IFRS?

[bullster] 11/8/2019 16:03

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Have you ever wondered why BMR wanted to use some brine in place of acid.

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[bullster] 11/8/2019 15:57

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Yes, upgrading doesn't add much profit.

Upgrading material incurs labour and processing costs, in the first place.

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[sleveen] 11/8/2019 15:55

Bullster can you explain how many angels can dance on the head of a pin?

[bullster] 11/8/2019 15:42

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The weight of the material makes a collection centre uneconomical.

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[plat hunter] 11/8/2019 15:33

That's why you need a collection network.

Like all profitable recycling business's it's all about volume.

You need a few deals with a few big boys.

[bullster] 11/8/2019 15:29

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You might say, "but Bullster, how come JLP are making a good profit from sifting out what chrome is left from 5%", then Bullster says, "your fogetting about the 2m tonnes of stockpile tailings we bought at the beginning".

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[bullster] 11/8/2019 15:21

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It took Kabwe over 100 years to accumulate 6.5m tonnes of tailings.

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[bullster] 11/8/2019 15:18

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What proportion of 3rd party ore comes back to JLP as tailings ?

5% ?

This is why tailings industry is not sustainable, it is at a very low gearing to mining.

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[plat hunter] 11/8/2019 15:05

100% Bullster

[sleveen] 11/8/2019 15:05

PH I was also thinking Bezant resources.

[plat hunter] 11/8/2019 15:03

I think we may have been missing something on the copper front.

Dr Evan Kirkby and Bezante perhaps?

[gsg] 11/8/2019 14:51

sleveen, Very helpful post, which sets the scene. Thanks.

[bullster] 11/8/2019 14:47

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Can we be sure JLP get a tolling fee ?
Could it be that the tailings are taken as payment instead.

"PlatCro chrome (PCC): is large and JLP get 100%.
Chromite ore is processed from 3rd party miners on a toll processing basis. The Cr conc is then sold onwards for the benefit of the 3rd party miners".

Didn't we pay the first installment of £1.5m and the second installment when we took Platcro completely, so we actually paid £3m for the tailings.

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[1madmarky] 11/8/2019 14:26

Thank you sleveen, much appreciated

[sleveen] 11/8/2019 14:12

To consolidate my last few posts:

CHROME CONCENTRATE PRODUCTION

DCM chrome (DCMC):is small and JLP get 50%. So small beer.

In Q1 DCMM made a loss during commissioning/ramp up phase until commerciality was declared in March 2019. In Q2 DCMC had positive earnings, which could be netted off against the Q1 loss to conclude that DCMC for H1 broke even broadly speaking for the 15.6k tonnes chrome produced. DCMC could produce perhaps 20-24 tonnes chrome concentrate (Cr conc)at full capacity assuming the theoretical 25t/8t is reached.


PlatCro chrome (PCC): is large and JLP get 100%.
Chromite ore is processed from 3rd party miners on a toll processing basis. The Cr conc is then sold onwards for the benefit of the 3rd party miners.

In H1 PCC produced 150k tons Cr conc from 450k tons (75k tons/month) with revenue of £6.5m (deduction of 100k due to DCMC)gives revenue of £43/t cr conc and and earnings of £2.6m (using 40% gross profit identified in Q1 update figures)gives earnings of £17/ton and therefore costs of £26/t.

(IMV the Cr conc price does not affect the above unless there is an adjustment factor based on Cr conc price perhaps.)

It appears that there is "an negative stock value adjustments for FY2019" of about £1.2m, which has been expensed thru' earnings on recognition of a stock value impairment.

Importantly this is not a cash cost.

The main positive for PCC is that the initial Cr conc extract is that it enriches the PGM material for onward transport to Eland. 75k tons/month Chromite will produce 25k tons Cr conc and 50k tons enriched PGM material per month. So even if PCC was not profitable (ie it broke even) the step would still need to be done anyway. But would miners continue to mine if the Chromite price was on its knees? Probably not IMV, so it's good to know PCC has 1.8m tonnes of enriched PGM material just waiting to be transported to Eland for around 3 years which should give the price of Chromite a chance to recover.

This 50k tons + 10k tons will make to 60k tons to be processed at Eland. The transportation cost of around $4/ton will cost $240k/month.

Assuming $400/ Pt oz earnings @ 2800oz would mean $1.12m/month split 67/33.

So JLP get a net $750k less transport costs of $240k = $510k/month.

The real kicker for JLP is that they don't have to do anything other than manage the subcontracter transporting the PGM material to Eland and ensure PCC plant is well maintained.

Since the PGM material is already paid; JLP get earnings of $500k/month all for a transport cost of $240k/month.

Even better than Hernic.

Adding a fine chrome line would further improve the earnings at PCC and also enrich the PGM material further from 2.7g/t to around 3.4g/t (using the DCM FC 25k -> 8k ratio)thus allowing more PGM/truck load and increasing PGM production and profitability. Clearly this would deplete the 1.8m tonnes earlier but this could be offset by contracting other 3rd party miners if there are any. This may involve equipment upgrades but PCC could offer to do it for free just to get the PGM material.

What a joy!!!

HERNIC

The shock here was the unexpected £0.6m cost of backdated wages.

"It also includes backdated employee costs for FY2019 in an amount of GBP 0.60 million (ZAR 1.10 million)"

The £0.6m has been deducted from the cal Q2 2019 figures only. Note that the revenue is consistent with the 6437 oz produced (as is the revenue for cal Q1 2019 on production of 5086 oz.)

In round numbers, between cal Q1 and Q2 there is a difference of approx 1350 oz, multiplying this by £450 ($540) gross earnings gives £607k, which is bang in line with the £0.6m back pay.

By my calcs the £0.6m represents an additional cost per oz of approx $100 (using £1 =$1.2).

Therefore add back the £0.6m to earnings and deduct $100 from the cost per oz gives £2.757 earnings and costs of $312/oz, which is in line cal Q3 2018 ($311/oz 6009oz) and cal Q4 2018 ($320/oz 6279oz).

Bottom line: Hernic is going full steam ahead, but will have to absorb £150k per quarter in extra costs/oz, which is around $25/oz in additional costs.

Pretty sure the Hernic business case will not collapse due to an extra approx $25/oz production costs.

[plat hunter] 11/8/2019 13:58

Keep stalking Kenny, you flatter me.

Ps a spade will always be a spade and you wear the cap so well.