Jubilee investors wagging their tailings


Jubilee investors wagging their tailings


Published Date: 2021-06-07 | Source: INCE|Community | Author: The Finance Ghost

Jubilee investors wagging their tailings

Jubilee Metals Group is listed in London and on the JSE, in both cases on the development boards (AIM in London and Alt-X locally). The business specialises in retreatment and metals recovery from mine tailings, slag, slurry and other secondary materials.

In other words, they are living proof that one company's trash is another company's treasure.

With projects in South Africa and Zambia, the company works with Platinum Group Metals (PGMs) as well as chrome, lead, zinc, vanadium, copper and cobalt.

There are two types of shareholders in Jubilee: those who believed in "time in the market" and those who believed in "timing the market".

From 2013 until mid 2020, Jubilee's share price saw more sideways action than a drifting competition at your local racetrack. The share price was range-bound between approximately 35c and 80c per share.

Of course, if you bought at 35c and sold at 80c then you would've been smiling, but how many people got that right? For those who waited and waited, believing firmly in "time in the market", it took a long time for the fireworks to start. They have the biggest smile of all.

Finally, the commodities cycle turned and prices started to rise, especially in PGMs. As a result, the Jubilee share price booked its ticket on a rocketship. Now trading at R3.88 per share, Jubilee is up over 45% year to date.

Those who believe in "timing the market" would've waited for strong price action and a confirmation of the commodities boom before climbing in. Such investors have generated serious returns in a short period of time.

However, some long-suffering shareholders have achieved 10x returns, in a rare example of a share more than making up for several years of poor returns.

The metal recovery business has now announced an acquisition of further PGM tailings in the Bushveld Complex. Simply put, the company acquires surface tailings and processes them to extract metals for sale. DRDGOLD is another company that plays in this space, although in gold as the name suggests rather than PGMs and various other metals like Jubilee.

The metal recovery businesses offer a "leveraged" play on the commodities they recover, as an x% increase in the commodity price usually drives a larger-than-x% increase in profits at these companies. Of course, when commodity prices drop, the same effect occurs in the wrong direction.

As is usually the case in the market, exciting returns come with risks.

Disclaimer: the author holds shares in DRDGOLD


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