Jubilee Metals Group PLC (JSE: JBL) has navigated a challenging period marked by shifts in metal market dynamics. Their recent annual earnings report reflected the impact of fluctuating Platinum Group Metals (PGM) prices, significantly impacting the company’s performance and resulting in a 14% decline in its share price on the day of the release. However, despite facing hurdles due to the decline in PGM prices, with its profit after tax witnessing a decrease from £26.5 million to £12.3 million, the company maintained its production trajectory amidst rising operational costs.
The landscape for domestic mining companies, especially in Platinum Group Metals, has been turbulent. Jubilee, akin to others in the industry, felt the squeeze of escalating PGM costs affecting their financials. Amidst these challenges, the company experienced a 22% contraction in PGM prices, coinciding with an 11% increase in operational costs. These factors played a role in the decline, while the company’s copper revenue saw a dip of 19% per metric ton.
Yet, there were glimpses of resilience. Despite the challenges, the company managed to sustain its revenue, slightly increasing from £140 million to £141.9 million. Looking ahead to fiscal 2024, Jubilee remains steadfast in its commitment, reaffirming its production targets. The mining company aims for 1.45 million tons of chrome concentrate, 42,000 PGM ounces, and 5,850 tons of copper. Their reiterated dedication underscores their determination to meet these objectives in the upcoming year despite the adversities faced in the market.
Technical
On the 1W chart, a descending channel has formed, stemming back to May 2021, when its prior uptrend peaked. The 100-SMA (orange line) remains above the 50-SMA (blue line) and the 25-SMA (green line), with the RSI indicating massive selling pressure in recent weeks.
However, the price is trading close to the dynamic support of the channel, which could see a temporary rebound in the upcoming week. Trading close to the 78.6% Fibonacci retracement at R1.21, the price could aim to test the channel resistance close to the 25-SMA at R1.61 as the week progresses. Should a breakout occur, the 61.8% Fibonacci golden ratio offers stern resistance close to the 50-SMA at R1.85.
Alternatively, failure to exceed the R1.61 resistance could see the price falling back within the prior downtrend. In this case, lower support at R0.95 and R0.70 could come into play, with the neckline established at R0.39, where the preceding uptrend was initiated.
Summary
Jubilee Metals has succumbed to the challenging metal market in a severe slump in its share price. The resistance at R1.61 could be the critical level to watch out for to determine whether a breakout is on the cards or whether the current trend could be sustained longer.
Sources: Koyfin, Tradingview, Reuters, Jubilee Metals Group PLC
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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