Following a strong upwards move, platinum group metals have taken a bit of a dip recently but are still at levels that should generate plenty of free cash flow for producers and the share price weakness that some of those have shown the past couple of weeks could present a buying opportunity. In recent months I’ve already covered a couple of the smaller miners that I like the look of – those being Tharisa (THS) and Sylvania Platinum (SLP) – but a third one that is definitely well worth a look I think is Jubliee Metals Group (JLP).
In the past it was all about its Tjate platinum project in South Africa which has been independently assessed to contain 65 million ounces of PGMs and gold, and although that is still at the pre-production stage, earlier this year a mining licence was granted and, given the size of the resource, I would hope that at some point the company will be able to exploit it and unlock the value there. In the meantime though, there is more than enough potential from its producing assets to keep investors interested, and it recently announced that it had achieved its full year target of 50,162oz of PGMs from its Inyoni chrome tailings project – 23% higher than the previous year and with further increases set to come during the current quarter onwards as operations there are expanded. In addition to that the company has also recently entered into agreements to process feed supply from third parties and also acquired more tailings. The first of which saw a ten year agreement to process feed stock for a third party, and in quick succession it also announced the acquisition of 255,000t on tailings, and then another for 944,000t of tailings. This is in the vicinity of Inyoni and it is expected that 30,000t per month will be transported to the processing plant and should yield circa 1,600oz of PGMs per month.
The company has also been enjoying strong chrome production as well, thanks to two new processing plants, the latest of which was completed in June this year, and saw 752kt produced during the full year 2021, to the end of June, and of that, 431kt came during the first half of this year. These new facilities take total capacity to 250kt per month, processing tailings and run-of-mine ore. Jubilee also recently successfully got another income stream underway via the Sable refinery, at Kabwe, in Zambia, and which is now producing copper and cobalt, with a little over 2,000t of copper produced since the facility was brought back online. Sable utilises historical copper rich tailings onsite, as well as material from third parties, and is targeting annual production of 10,000t from next year onwards. Further upside at Kabwe should come from its Project Elephant, whereby it has acquired 270 million tonnes of copper rich tailings to process, and this should see annual production of around 12,000t, and eventually from Roan and Elephant combined, production is expected to reach 25,000t per annum.
The good thing here is that the increased production, alongside strong metals prices, is also being reflected in the financial performance of the company, with operational earnings for the first six months of 2021 being 36% higher than the previous period, at £40.1 million, and for the full year 2021 they were up 178% at £69.6 million, so that shows that things appear to be moving in the right direction and quite significantly. In terms of overall profitability, the last set of interims up to the end of 2020 showed that the company made a post-tax profit of £19.25 million, and given the strength of metals prices, as well as increased production, that should now be substantially higher. Certainly in terms of supporting the current market cap of £347 million with the shares at 15.7p on the ask. As long as metals prices continue to remain strong, and I don’t see any reason why they would suddenly drop substantially lower from here - barring something unexpected like the world shutting down again with another wave of Covid - and the company continues to perform well operationally, I can see enough potential upside from this level to suggest that it offers a good buying opportunity. Longer term you also still have the potential from Tjate finally being developed.
Filed under: Jubliee Metals, Zoetic, Chill Brands, TomWinnifrith.com, McBride, Dispersion, Block Energy
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