JLP Q1 update - Jubilee-tion!

Exciting times for Poly Metal Extractor Jubilee

Please see my update of 4th November

Readers, I have no idea where this dome pictured is but what an incredible copper ceiling! Somewhere in Central Asia maybe? I’d love to know.

Photo by Vishal Gautam on Unsplash

Speaking of Copper let’s see how I got on with my Jubilee Forecast following the Q1 update. Badly. In JLP Further Thoughts I gave a 2024 and 2025 forecast.

Today’s update has led me to revise JLP in a positive way:

1. PGM production costs assumed at $2085 are patently too high. It took a bit of time to work out Seisnav’s high tech graphs, because he works out estimated splits each quarter, fuel costs and smelter percentages, but because JLP don’t disclose the splits it is his guess work. I’m going with an ongoing $1850 per PGM Oz which is slightly above the average of Seisnav’s quarterly cost estimates.

2. So I’ve revised FY2024 PGM and Copper volumes downwards and Chrome up based on Q1 results. I’m assuming just 100 tonnes of copper in Q2 (Oct to Dec) because of the 16 weeks upgrade stoppage.

3. Despite this, Gross Margin increases by $12m based on the overstatement of PGM cost per oz.

4. My rather pessimistic $5m net profit for FY2024, rises to $15m

I enclose my old and new forecasts:

<DELETED THE CHARTS> - they were wrong!

It raises an interesting point about assumptions. We assume things will continue along the same trajectory - until they don’t. Then we are surprised.

Modular Process Unit

The key takeaway from Leon’s interview today was the idea of a modular process unit. The exciting aspect to this is JLP appears to be creating a new trajectory. One where they appear to say they can rapidly expand operations in a predictable manner to scale production.

It’s fair to say it’s proven it can do so. With Chrome. Now producing about 2% of world production makes JLP a world player. 4% is within reach.

What if this can be replicated for Cobalt? Perhaps too even Copper?

Price

Just because $8000 is today’s price - and has been for a while - doesn’t mean it remains on that trajectory.

I have produced a 2025-2026 Forecast today. I believe it is reasonably realistic - even borderline pessimistic.

I assume a mild recovery of PGMs will occur in 20 months time. Anglo American’s CEO thinks it will happen far sooner and a bottom is now in the market. I believe Copper will recover its former $10k/tonne price point and Cobalt is prior $80k price point. I provide some charts below to back this up. Chrome is slightly higher too. Cobalt production begins in earnest for JLP. Copper has expanded - but is only happening at just over Roan’s capacity - this is probably the most pessimistic point of all. Will the northern strategy be at nearly zero in 20 months?

Look at the growth of profit.

FY2025 profit is nearly 5X that of FY2024.

<DELETED THE CHARTS> - they were wrong!

A Final Thought

Is the Modular Process Unit just blarney (or the South African equivalent of blarney)?

Blirnie perhaps?

I don’t know.

But if Jubilee have actually created a “secret sauce” for processing and handling waste rock and extracting metals, well guess what, there’s plenty of it.

Will Keanu Reeves walk out of this 6km high cube over Manhattan illustrating the volume of tailings worldwide. That’s just tailings - not dumps or rejected materials. There’s another cube for that. (PS Copper is 46% of this cube)

Credit: VC Elements

Put another way, nearly half of metal is left behind. The problem I believe is due to the oxidisation of copper and persuading it to separate from its oxygen….. leaching in other words.

So what if JLP has some technology….. Kind of like Jetti - who do no mining but instead offer a technology to miners, and recently raised a further $100m in VC funding.

Click the link to see their technology and what does it remind you of?

If you answered, ah yes, leaching, catalysts, modular processing and Jubilee have proven that already, then congratulations.

If 5X profits doesn’t excite you (which by the way is a FY2025 PE of just 2.5), aren’t you just a little bit excited about that possibility? (Such a technology/know how, if it exists) would easily be worth into the billions).

In fact Jetti is working with Freeport at its El Abra (cadabra?!) mine. In their latest investor presentation, they speak to 800 million Lbs of additional copper which at $3.6/lb is nearly $3bn of revenue. That’s just from 1 mine - albeit a big one.

Conclusion

As I said previously perhaps JLP will generate a much bigger return than the market gives it credit for right now.

These are my own thoughts and this is not advice. I wish you every success in your own investment decisions.