Jubilee Metals share price: risk/reward favourable

By:
on Aug 25, 2023
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  • Jubilee Metals stock price has retreated by more than 66% from 2022 highs.
  • The price of most Platinum Group Metals has been in a steep decline recently.
  • The company is making a lot of progress in Zambia and South Africa.

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Jubilee Metals (LON: JLP) share price has been in a downward trend this year as the metals industry goes through major headwinds. The decline helped push the shares to a low of 6.26p this week, ~66% down from the highest point in 2022. This plunge has brought the FTSE AIM listed company’s market cap to about 201 million pounds.

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Strong progress but prices are key

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Jubilee Metals is a company that deals with metal recovery in Zambia and South Africa. The firm focuses on treatment and metals recovery from mine tailings, waste, slag, and slurry that are generated from mine operations.

Jubilee focuses on the Platinum Group Metals (PGM), chrome, lead, zinc, vanadium, copper, and cobalt. These metals have not been doing well as I wrote here. Platinum and palladium prices have dropped sharply this year, hitting margins of companies in the industry.

Other metals like copper and cobalt have retreated as demand from China has eased. Earlier this week, BHP Group published weak financial results and even slashed its dividends. Other firms like Rio Tinto and Anglo American have also cut their payouts to investors.

Despite these woes, Jubilee Metals management is excited about the company’s future. In a statement this week, Leon Coertzer said that the company had upgraded and commissioned its brownfield processing facility. The firm hopes that the facility will boost its chrome processing capacity by 360k tons annually.

Jubilee Metals hopes that its chrome and platinum group metals (PGM) production will be higher than in 2022. Further, the company is aiming to boost its partnerships this year as it seeks to produce more metals. 

In addition, Jubilee’s copper expansion process is expanding rapidly in Zambia. The CEO expects the Zambian business to grow at a faster pace than expected. The commissioning of the Roan facility will happen in October of this year.

Jubilee Metals share price forecast

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The daily chart shows that the Jubilee Metals stock price has been in a deep sell-off in the past few months. This decline saw the shares fall to the important support level at 6.26p this week. It has now bounced back and retested the 50-day exponential moving average.

Most importantly, the shares have formed a falling wedge pattern, which is shown in black. In price action analysis, this pattern is usually a bullish sign. Therefore, while it is too early to tell, I believe that the risk/reward for the stock is favourable. 

If this outlook is correct, the shares will likely bounce back to the key psychological level at 10p. The stop-loss of this trade is at 6.26p.

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