JLP stock rises on new PGM processing partnership

Investing.com -- Shares of JLP climbed 3% following the company's announcement of a joint partnership agreement with a PGM producer to process excess PGM feed material from its South African operations.

The news comes as JLP has successfully commissioned two new chrome processing modules, positioning the company to surpass its chrome production guidance for FY25.

JLP's recent operational expansions have led to an accumulation of surplus PGM-bearing material, which has been affecting the company's working capital. To address this, JLP has entered into a partnership to process a portion of its surplus PGM material.

The partnership involves JLP delivering the material to the partner's processing facility and managing the operational and technical aspects. The processed PGM ounces will be sold under an equal earnings share arrangement.

Analysts have responded positively to the development, anticipating a favorable market reaction due to the monetization and release of JLP's PGM stockpile. "We expect a positive reaction to today's announcement as it monetises and enables the release of its PGM stockpile at its South African operations. Assuming a gross profit margin of 35% for the PGM business (avg FY23-24), we calculate that the additional PGM ounces processed represent ~8% of FY26e cons EBITDA and represent ~1% of our NAV."

"The release of stockpiles should also help to unlock FCF following the $6m inventory build up in H1 FY25. We continue to see value in the Jubilee investment case, but we believe management will have to deliver on the copper strategy to unlock a re-rating. We rate JLP Outperform with a price target of 7.60p/sh," RBC analysts added.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.