Jubilee Metals Share Discussion Threads

[goldibucks] 18/8/2019 12:13

1MadMarky they will either have had to take the stock provision as a result of the year end audit or initiated it and then supported it to their auditors because they can see problems with Windsor Chrome in the current financial year and are trying to boost it’s profitability in H2 19 rather than report a big profit in H1 19 followed by a very small profit or loss in H2 19 due to the lower Chrome concentrate prices.

They will have a separate stock value for the PGMs in the Windsor tailings so the chrome stock provision won’t impact that. PGMs are going up in value following their purchase of the PGMs in the tailings from PlatCro a year or two ago so shouldn’t be any issues with net realiseable value falling below the PGM stock carrying value in the Balance.

Not all shareholders will understand the Windsor tailings (I didn’t initially) and how they acquired the PGM rights first and then the tailings themselves with the chrome 8 months ago. So one lot of tailings with a PGM and chrome stock value in their Balance Sheet.

[1madmarky] 18/8/2019 10:40

Exactly, so why take the provision? Essentially it means the material being transported to Eland has zero book value. Are they attempting to flatter the PGM side?

All very strange.

[sleveen] 18/8/2019 10:24

1MM

Yes the FC is a side project even at WC with its larger scale than DCMFC, the main earnings shall be derived from the WC PGMs.

[lostabillion] 18/8/2019 08:49

Significant progress being made. All will be revealed come December.

[1madmarky] 18/8/2019 06:56

Thanks Goldi.
That makes sense however, we are talking about tailings.
From the shard note

"PGM-rich material. There is currently 1.85Mt of PGM-rich material at surface and the future arisings are expected to add approximately 12,000tpm. The material grades about 2.7g/t 4E PGMS before further upgrade through chrome removal."

So as a chrome asset it's value is whatever we can get out of it via fine chrome removal (small). Assuming we go down that route at all. It's real value is in the 2.7g/t of PGM'S that it contains, which are currently being transported to Eland. PGM prices have improved so its value has improved, yet they write it down?

[plat hunter] 18/8/2019 06:38

Makes sense Goldi

[goldibucks] 18/8/2019 00:04

1MadMarky how much miners and a processor like Jubilee make producing chrome and chrome concentrate depends on the carrying value of the chrome on their Balance Sheets. A chrome miner will have higher production costs than a processor but they may carry the chrome on their Balance Sheet at a lower cost. When each produces chrome or chrome concentrate they will move the cost of the chrome on the Balance Sheet to their Income Statement along with the other production costs. JLP paid £8.6m for the Windsor Chrome operations and part of that would be for the chrome stock. The higher that stock value the harder it is for JLP to make money on the chrome when they move it to their Imcone Statement and add the processing costs.

Jubilee would have had to make the stock provision if the stock value plus expected processing costs exceeded the value of chrome concentrate they’d make from it based on 30 June 2019 chrome concentrate prices. If they made the provision accurately and chrome concentrate valuations don’t change in H2 19 they should theoretically make no project earnings. Companies might exaggerate expected costs to produce and sell to justify a stock provision to push profit into a future year to smooth profits. You’d need to convince your auditors of that though because they will be checking your calculation against current production and sale costs. Jubilee said Windsor Chrome was making £4,500,000 and that they were targeting 300,000 tonnes of concentrate a year. That’s £15 of profit per tonne. That means chrome concentrate prices don’t have to move by much to wipe out the profit. Equally, you could make a killing if the price went up since the extra revenue on the 300,000 tonnes would all wash through to the bottom line.

I don’t think shareholders expect Jubilee to end up losing money from processing because to date Hernic is a more “toll-likeR21; processing arrangement with PGM price pain and gain because JLP doesn’t have the PGMs it’s processing on its own Balance Sheet so project earnings are less volatile than Windsor Chrome and less likely to end up loss-making due to provisioning, and DCM losses, which Jubilee take 50% of, have so far been relatively modest.

If you look at the difference between total chrome earnings in H1 19 and chrome earnings attributable to Jubilee the difference is £357k. That was Jubilee’s share of the non fine chrome DCM loss which was £714k in total for H1 19, up from £534k in H2 18. Still relatively modest but eating into the fine chrome profits as they ramp up which I’m assuming are 100% attributable to Jubilee.

Jubilee need chrome concentrate prices to go up and Hernic to stay open or at least retain access to process the Hernic tailings in the event of a closure, at least until their “majority share” of Windsor PGM ramps up and Kabwe starts making money. In the short term, Kabwe could lose money as it ramps up so that could be another drain on resources.

However, if chrome concentrate and chrome prices go up and the Hernic sale finally completes Jubilee could end up in a fantastic position with Hernic, Windsor Chrome, Windsor PGMs, and DCM fine chrome all chipping in to produce bumper profits in the current financial year.

So if investors want to predict H2 performance they should be tracking chrome concentrate and chrome prices even more closely than PGM prices because the former has a material and disproportionate impact on Windsor Chrome performance and the latter will probably determine whether the Hernic purchase by Samancor ever completes because it will make the electricity supply deal Eskom is offering either viable or not viable commercially.

[1madmarky] 17/8/2019 21:30

I don't understand why JLP felt the need to write down the chrome. Surely everyone with a stock of chrome or any chrome related asset should have followed suit?
All very strange.

Sleveen - thank you, yes forgot the PGM'S we are about to sell.

Goldi - as we don't have mining cost when producing chrome at Windsor. If we were ever in a position of loosing money, then none of the miners would be producing chrome. Thus the price would have to rise again.

[gsg] 17/8/2019 21:06

That's me. lol

[plat hunter] 17/8/2019 21:02

Marketing effort is poor but this is AIM, there's lots of people with unreasonable expectations, high stacks and low patience.

[aceshi] 17/8/2019 19:44

SleveenFor a normally fairly together poster, you are not doing well with this? concept. Again, let me clarify. We are all fully aware that companies may post losses but please, losses DO NOT = "negative earnings" You either have earnings or you don't. Earnings, as I stated previously may prove to provide either negative or positive returns, or in fact a break even situation. How on earth could you have a less than zero earnings, then it wouldn't be an earning, would it. You are suggesting the act of paying out for selling your own product, the term just doesn't make sense.

[aceshi] 17/8/2019 19:19

Rising metals prices have zero effect on JLPs share price because the general market is fully aware that the company, as yet, has remained unable to achieve production levels that would provide any notable profits. Added to that, most sane investors, that have followed the company's, over hyped progress, remain unconvinced that they ever will. Hence the continued dismal share price performance, which, although confusing to management and some on these boards, undeniably speaks for itself.

[kennyp52] 17/8/2019 18:30

Lots of interesting and very deep research comments on here but IMHO JLP have been so poor with credibility that the only sure and reliable information will be audited accounts . Lots of assumptions on profit this and profit the other ... it’s all BS until the financials so I will wait for them then decide . Could be huge upside in value here based on many “informed̶1; comments countered by miserable , pessimistic , deramping ( possibly ) comments that just leaves this share price floundering .

[sleveen] 17/8/2019 17:29

Can anyone PROVE that WC doesn't toll charge processing for Chromite ore?


"The chrome operation now acquired processes 75,000t/month and Jubilee CEO Leon Coetzer said the acquisition “provides Jubilee with a strategic position within South Africa’s pgm and chrome-rich Western Bushveld Complex” and “will significantly enhance future earnings from pgm and chrome.”

Coetzer added that, “this transaction repositions Jubilee in the chrome/platinum arena in South Africa. Our integrated processing hub offers leading processing access to the various independent mines free of the capital and regulatory burden associated with own-build.

"integrated processing hub offers leading processing access to the various independent mines free of the capital ... burden with own-build."

quod erat demonstrandum

[gsg] 17/8/2019 11:40

Cobalt rockets as Glencore plans closure of major mine

[frogkid] 17/8/2019 09:59

I await a decent rise in share price with baited breath and a certain amount of lack of expectation

[goldibucks] 17/8/2019 09:49

“Windsor chrome £4.5 pa (ignoring the write down in q2)”

You can’t ignore the stock provision though. It’s telling you that unless the price of chrome concentrate improves from the 30 June 2019 level they will make no money going forward. If it falls and they have to make another provision they could lose money. They need the price to rise to start making money from Windsor Chrome.

[sleveen] 17/8/2019 09:20

1MM

Not to mention Windsor/Eland PGMs in commissioning phase and about to produce a saleable (to industry standards but not necessarily commercial ie make a gross profit)product as a precursor to ramp up to steady state commercial capacity during Sept/Oct.

[1madmarky] 17/8/2019 09:07

Ok so the dust has settled on the half year update. What are we left with....

Hernic earning £8m pa
Windsor chrome £4.5 pa (ignoring the write down in q2)

Fine Chrome should be earnings positive by now. (total pre-production capex of $3.4m.) So any follow on ones should be cheaper than this.

Kabwe copper production some time in the 2nd half (thought it was q3). This is to "capitalise on the regional demand for such refining capacity" - so tolling agreement?

Kabwe V and Zn concentrate within 3 months.

Lead and Zn metal early next year.

In my view, this latest bout of AIM droop should be short lived. But it's the AIM so anythings possible. Place your bets and good luck!

[niloc4] 17/8/2019 08:51

Even if Rhodium reached $10000.00, jubilee would still fall

[nelson01] 17/8/2019 08:35

Yes he does sound desperate, well quite pathetic really, not someone you
Would want on your side....he’ll be back ramping soon enough.

[sleveen] 17/8/2019 08:13

"Is anything going to stop Rhodium?"

Goldie could think of a scenario no doubt...

[frogkid] 17/8/2019 08:01

Kryptonite