South32s pain is our gain!, page-6

Foster Stockbroking released a report on this in their Lunch Time bites report released today.

Their view is positive for JMS!

Here is an extract on their view for JMS.


Good luck to all holders.

Cheers Aussie


JMS S32
GEMCO shutdown may squeeze Mn market

• Groote Eylandt shutdown from major damage.  South 32 (S32) yesterday temporarily ceased operations at its Groote Eylandt (S32 60%) GEMCO manganese mine in the Northern Territory, due to structural damage suffered by the wharf from Cyclone Megan.  Further reports from sources close to the mine suggest the damage is major – including “massive” and “severe” damage, including to a bulk carrier and the loading wharf.  The NT News quoted an GEMCO employee stating “could take months to repair, preventing ore from being loaded to ships”.
  
  
• Mn price likely to see continuing uplift. Mn is mostly consumed for steelmakers, and we expect they will be scrambling in coming weeks and months for alternative Mn supplies to make up for the GEMCO shortfall.  South Africa is the world’s largest producer – accounting for 36% of ore – and we expect inbound interest for supply to rise post the cessation of GEMCO operations.  The RSA Mn 37% price has already risen in past weeks to be at near 12-month high at US$3.13/dmtu, following a period of inventory drawdown.  The cyclone damage comes at inopportune time when steelmakers are seeking to restock.
  
  
• Jupiter Mines (JMS) to benefit from price uplift. This will flow through to JMS’s Tshipi, we estimating every US10c/dmtu increase in the 37% Mn price adding 2cps to JMS share valuation.  We currently rate JMS a Buy with 12-month price target of $0.57, forecasting it to yield a 10% dividend.  JMS represents an option on any Mn price kick - limited downside should GEMCO resume operations quickly, but material upside from a stronger price if GEMCO is out for some while
  

Lunch-Time Bites mostly discusses stocks for which Foster Stockbroking does not provide formal research coverage, offering additional investment ideas that lie outside the firm’s universe of formally covered stocks.  Occasionally, some stocks under formal research coverage will also be discussed, distinguished by having a recommendation and price target.

Mark Fichera
Research Analyst