Obviously someone still looking to get out, maybe I jumped the gun at 28c...lol.
Just had a reread of this from Pattersons Weekly report a month or so back when JML was trading at 44c. Suggests Zinc not the main driver of earnings. Copper price looks to be the key.
Unless there is something very wrong operationally that we're not aware of yet it looks oversold.
INVESTMENT COMMENT JML’s Jaguar mine is operating at BFS (Bankable Feasibility Study) levels and at current commodity prices expects more revenue from copper and silver than zinc in FY09. Two diamond drill rigs will be following up near mine targets at Jaguar from September while resource confirmation drilling at Benambra is underway and another rig will arrive in September. With 4 drill rigs operating, newsflow will be regular on the mine life extension front. Despite the fall in the zinc price JML remains one of the lowest cost producers with copper and silver production covering all site costs. For FY09 we forecast a $32m FY09 NPAT putting JML on a PE of 7.0 times FY09. With strong and growing leverage to copper we retain our BUY. Copper pays for zinc production: Now that recoveries are at BFS levels, high copper prices and an even stronger outlook and copper grades we forecast zinc cash costs for FY09 of US$0.08/ lb. Greater Copper leverage than Zinc: Given the strong copper price and growing copper production from Jaguar and later Benambra JML now has greater leverage to copper than zinc. A 10% increase the copper price increases our DCF valuation by 20cps or 18% while a 10% increase in the zinc price lifts it 3cps or 3%. Benambra: Resource confirmation drilling is underway. We believe the market is currently subscribing zero value to the Benambra deposit however we believe with combined resource expected to be 12.3mt at 2.3% copper, 4.7% zinc, 38g/t silver and 1.0g/t gold, Benambra will demand 50% of JML’s value within 12 months. First assay results are expected to begin filtering back within 4 weeks and the first step towards realising its value is confirming the resource which remains on track for CY end. Extensive work has been carried out on the Wilga and Currawong orebodies significantly de-risking all pre-production activities ahead of FY09 feasibility studies, FY10 construction and late FY11 commissioning. Recent $50m equity raising @ $0.80/share: Once Palmary’s 27% is approved by FIRB (we don’t expect any problems given Palmary is only maintaining its position not increasing) JML’s net cash position is circa $9M following the proceeds from the placement. The Jaguar operation has been cashflow positive since the end of May and first debt repayments are not required for 12 months
JML Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held