Jubilee Metals Group PLC

Jubilee Metals Group PLC (LON: JLP) is an FTSE AIM 100 index listed metals development company focused on the production of copper, nickel, and platinum group metals (PGM).

Investment Rationale for Valuation – SELL at GBX 17.20

• Despite showing outstanding top-line revenue & bottom-line profitability growth during FY21, JLP had not declared any dividend yet.
• The stock price jumped almost 9.00% in a single day due to the news of boosting up copper and cobalt refining capacity in Zambia.
• The IHS Markit’s UK composite purchasing managers’ index had dropped to 55.3 in August 2021 from 59.2 in July 2021, indicating a slowdown in economic activities.
• From a technical standpoint, JLP is hovering between the middle Bollinger band and upper Bollinger band, indicating a correction in the stock price.
• The 14-days RSI of ~55.90 is inching towards the overbought zone, indicating a correction in the stock price.

Key Risks

• The uncertain global economic conditions could have an adverse impact on business operations.
• Lower commodity prices and oversupply of the resources in the market can severely affect the business.
• Depletion in the value or quality of resources in the mine can impact profitability.

Recent Developments 

On 24 August 2021, JLP had signed an MoU with Mopani Copper Mines PLC to implement the additional copper and cobalt refining capacity.

FY21 Operational Highlights (for the year ended 30 June 2021, as of 06 August 2021)

(Source: Company result)

• The maiden earnings from Zambia copper production during H2 FY21 had resulted in copper production reaching 2,026 tonnes.
• JLP had shown excellent top-line revenue growth of almost 133% during FY21.
• The Company had achieved the target of 50,162 PGM ounces during FY21.

One Year Share Price Chart

 (Source: REFINITIV; Analysis done by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)

Conclusion

The Company was unable to provide detailed production guidance for FY22, even after it had produced stellar FY21 operational results. JLP had identified various expansion opportunities in South Africa, with several long-term PGM supply agreements. Meanwhile, the stock price had shown a tremendous jump of almost 221.83% in the last one year, providing a lucrative opportunity for the investors to liquidate the positions and book profit at current levels. The stock made a 52-week low and high of GBX 5.10 and GBX 22.00, respectively.

Based on the volatile precious metal prices, weak technical indicators, and unfavourable valuation as done using the above method, we have given a “SELL” recommendation on Jubilee Metals Group PLC at the current market price of GBX 17.20 (as on 25 August 2021 at 08:20 AM GMT), while we will suggest fresh buying after analysing more corporate earnings announcements made by the Company.

*The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and Peers/ Industry information have been taken from REFINITIV.

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