Jubilee Platinum plc has four-bagged in 2 years: is it a buy?

Can Jubilee Platinum plc (LON: JLP) continue to produce results?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Over the past two-and-a-half years, shares in Jubilee Platinum (LSE: JLP) have charged ahead of the wider market as the company has pushed ahead with its growth plans. Since the end of December, the shares are up nearly 400%, and there could be further gains to come. 

Making progress 

During the past year, Jubilee has transformed from a struggling speculative miner into a cash cow with bright prospects. Even though the company reported a loss for its financial year when it announced the figures at the end of last year, according to chairman Colin Bird, the firm earned a total of £2.3m during the third calendar quarter of last year, which fell just outside the end of the fiscal year. 

Income from a full year of tailings processing at Jubilee’s flagship Dilokong mine is likely to come in at between $8m and $10m. The nearby Hernic mine is set to come on-stream as well in the near term, which will add a similar-sized contribution to the group’s bottom line. 

On top of the two South African chrome and platinum projects, Jubilee announced today that it had inked a deal to process copper tailings from Resilience Mining Australia’s Leigh copper mine. RMA will receive A$8m payable in stages and dependent on certain milestones being hit. 

According to today’s press release on the matter, the project has potential production of 12,000 tonnes of copper at a production cost of US$2,569/t compared to a current price of $6,000/t. With such impressive economics, it’s no surprise Jubilee expects the project to be cash flow positive within six months. 

Finding a value 

City analysts are not yet covering the company, so it’s difficult to try and place a value on the shares. However, considering the income projections above, and Jubilee’s current market capitalisation of £60m, it looks as if the company could be undervalued considering its potential. 

As an estimate, if income for the Dilokong mine comes in at $9m for the full-year, that’s earnings of around £7m, excluding income from any other sources. Put simply; it looks as if the company is trading at less than 10 times earnings. 

Tricky business 

Jubilee’s move into the tailings business comes after the company’s unsuccessful venture into deep-level platinum, a business Lonmin (LSE: LO) knows is fraught with risks. 

Lonmin and Jubilee’s fortunes could not be more different. As shares in Jubilee have rocketed over the past two years, Lonmin has lurched from one disaster to another, and over the previous five years, the shares are down by 99.9%. 

It looks as if there could be further declines to come as well. For the three months to the end of December, the company reported lower production volumes and higher costs, exactly the opposite of what management wanted to achieve.  

Management had promised shareholders lower costs and higher production volumes to promote the last equity fund raising. The question is, for how much longer will major shareholders be willing to support the company? 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »