JML - Jabiru Metals

[hypnotic]

yeah JML is one undervalued little puppy

They are definitely undervalued! Looking at their presentation for august 2006 their annual net cashflow looks was presented to be 644 mil, with the current spot prices of zinc and copper this company is looking more and more attractive, perhaps 1 bil?

The future of this company relies heavily on the zinc and copper prices (being 100% unhedged) and the demand of them. In my opinion the fundamental is still going to be there and can't really see an over supply of both bass metals any time soon.

But I'll like to see them produce before I really make that call. Things can still go wrong. Interesting times.

Any predictions on the sp of this baby by the end of the year????? I'll like to see it at $1. :

Hypnotic,

 

[dj_420]

JML up around 10% this morning. this stock has seen a huge increase in interest. put on over 20% in last two days of trading. nice to see this upcoming zinc producer getting some recognition.

 

[imajica]

is it too late to buy in? or do you guys think it has some steam left in it?

 

[hypnotic]

JML up around 10% this morning. this stock has seen a huge increase in interest. put on over 20% in last two days of trading. nice to see this upcoming zinc producer getting some recognition.

Yeap another huge day for this baby,

I am tempted to sit out and make a quick buck or 2 but the market is really really strong. Maybe news coming out with insiders buying it all up..

imajica is it too late to buy in? or do you guys think it has some steam left in it?

imajica i can't really make that call, there is some steam in it today. Not sure if it will run out. If the zinc price remains and production gets on its way, it should be a good medium term stock. But do your little research, i am not so good with fundamentals i would love for any fundamentalist out there to calculate an approximate for this stock.

 

[dj_420]

imajica i have posted many times on my thoughts on this stock. i would look back through the posts and previously i have put in a link for broker reports on JML. JML has been valued at 80 cents right now, with a view to increase closer to production.

i think with an increasing zinc spot the broker valuations will only increase (obviously). but IMO it should be valued more than 80 cents as the last valuation was done before the ann re teutonic bore resource.

in regards to ann coming we may have drill results from JML exp tennements. maybe resource increase.

do i think the sp will continue to rise, yes i do, the fundamentals for zinc are getting better and better every day. i also do not think that supply will catch up with demand next year as quickly as has been predicted. JML will be producing right when we have critical levels. should be a good medium hold (im holding for at least a year).

 

[hypnotic]

imajica i have posted many times on my thoughts on this stock. i would look back through the posts and previously i have put in a link for broker reports on JML. JML has been valued at 80 cents right now, with a view to increase closer to production.

i think with an increasing zinc spot the broker valuations will only increase (obviously). but IMO it should be valued more than 80 cents as the last valuation was done before the ann re teutonic bore resource.

in regards to ann coming we may have drill results from JML exp tennements. maybe resource increase.

do i think the sp will continue to rise, yes i do, the fundamentals for zinc are getting better and better every day. i also do not think that supply will catch up with demand next year as quickly as has been predicted. JML will be producing right when we have critical levels. should be a good medium hold (im holding for at least a year).

Thanks for that Dj,

I do agree with you that JML will be producing right when we have critical levels and should be valued more that 80cents. That's why i am still in and looking at the longer term.

Looking really good breaking into 81 cents in the afternoon. Great volume. Something is defintiely up.

 

[tech/a]

Bit of technical stuff.

 

[michael_selway]

Thanks for that Dj,

I do agree with you that JML will be producing right when we have critical levels and should be valued more that 80cents. That's why i am still in and looking at the longer term.

Looking really good breaking into 81 cents in the afternoon. Great volume. Something is defintiely up.

Yeah not bad this one, unless it has production delays

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS -2.2 1.3 17.5 21.6
DPS -- 0.0 0.0 0.0

EPS(c) PE Growth
Year Ending 30-06-07 1.3 53.8 --
Year Ending 30-06-08 17.5 4.0 1,246.1%

 

[hypnotic]

Yeah not bad this one, unless it has production delays

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS -2.2 1.3 17.5 21.6
DPS -- 0.0 0.0 0.0

EPS(c) PE Growth
Year Ending 30-06-07 1.3 53.8 --
Year Ending 30-06-08 17.5 4.0 1,246.1%

Yeah i can't agree with you more, the risk here is production delays and commissioning problems they will encounter in the early stages. That's why i dont like to say they are undervalued until they can prove they can fish some zinc out of the grounds.

But their presentation suggests that the jaguar project is 50% complete and is on track, which is a good sign of a well managed project.

I might read up on the company's project manager/ site foreman to see what his/her experiences are in mine construction.

Hypnotic

 

[Tradewinds]

Its great to see an increasing awareness in this stock.

A couple of bumps and probably a few more but JML is hitting the targets in times we havent seen in WA for awhile.

The've done well to hire some quality key personnel(yep do your research hipno) and keep the plan on schedule when the demand is huge for gear and people.

I hope this stock consolidates now, firms a new rock hard base and we lift off again closer to production........or sooner

 

[Caliente]

i echo your sentiments exactly. JML's a quality company and I'm happy to see it blossom and prosper into an emerging player.

 

[moses]

If this stock is valued at "above 80c" and is now 78c...how can this stock be good value?

 

[dj_420]

moses

that valuation is based on a company that is currently not producing. all the broker reports state that the valuations will increase significantly once JML commence production.

another point i dont think that brokers valuations have taken into account the spot zinc price accelerating as it has done. forecasts were for 3500 + per tonne for 2007. IMO i think we are going to see a huge increase on the forecasts for zinc spot price.

one more point is that these valuations did not take into account the resources at teutonic bore. additional drilling to expand the resource at jaguar and teutonic bore will give the sp a re-rating.

one last point of interest is that CBH had fat prophets valuations of 60 cents two months or so back, i think the current sp is evidence that CBH deserved a re-rating and has shown a significant increase over that valuation. IMO the hartleys long term valuation of 2.49 is much more justified (pending a sustained increase on zinc spot).

 

[hypnotic]

Looks like JML is consolidating nicely around 80 cents, which hopefully will set the new base for the share until the next spike.

Peaked today on 84cents, volume and interest is looking great, it looks like it won't be long until another big run.

The price of zinc is currently at US$1.9185/lb and did spike to US$1.95/lb today.

With the LME in zinc still going down, i am still tipping for zinc to get to US$2 by the end of this month if not earlier.

Wonder how high this baby will go?

 

[imajica]

solid volume over the last few days pushing this baby ever higher! will see a $1 in the next few weeks for sure

 

[moses]

thanks dj, understood.

 

[dj_420]

no problem moses

zinc spot is up again tonight, pushing 1.95 per pound. zinc stocks catching their breath today, good to see JML having such a good run.

 

[dj_420]

FAT have reported JML as a buy outlined below

Jabiru Metals
Buy JML around 82 cents
Production remains on track for mid-2007 start up
SYMBOL DEFINITIONS
Construction and commissioning activities are continuing in line with schedule on Jabiru Metals Jaguar base metals project in Western Australia. The project remains firmly on track for first metal production in the first half of 2007, allowing it to lake full advantage of strong zinc and copper prices. Whilst industry-wide cost pressures have impacted the project's capital costs to some degree, increases in base metal prices have more than offset them. The company will be entirely unhedged, offering Members full exposure to strong base metal prices.
"The emerging Jaguar deposit remains one of the few new sources of base metals on the horizon in A ustralia, und at a low cash production cost."
Fat Prophets initially recommended Jabiru as a buy around 25 cents in February {Fat Mining 14). Our last review of this stock was during August (Fat Mining 38).
PAILY CBARTJ
2005-2006
Buoyant investor support for Jabiru has seen a further acceleration of the upward trend during the past week. Monday's high of 81 cents represented a gain of more than 375% over the past 12 months.
During the past month alone, Jabiru has rallied more than 70%. Following such extensive gains, the upward trend of any stock would be at risk of pausing for consolidation. Jabiru is no exception.
However, growing trading volumes reflect increasing investor support for the stock, which we believe will serve to limit downside risks. The previous high of September at 68 cents provides initial support. Below here, we believe support between 50 cents and 47 cents underpins the shares in the near term.
As shown on the weekly chart, Jabiru is lifting away from a base that formed between 2001 and 2005. We believe that the rally of the past year will extend to new highs above 81 cents in the months ahead.
Some of the key issues facing any emerging mining project at the present time are questions regarding capital cost overruns and possible development delays. These issues are affecting the entire sector and virtually no company is immune. For instance, BHP Billiton has experienced major cost over-runs on several of its key resource project developments, both domestically and internationally.
It is encouraging therefore, to see that Jabiru Metals development of its Jaguar base rnetais deposit in Western Australia remains firmly on track to begin production during the second quarter of 2007. This is despite significant labour and materials shortages that are impacting the entire resources sector. Furthermore, whilst capital costs have increased, higher metal prices have more than offset them.
Managing Director Gary Comb advised recently that the company has firmed up most of its capital costs and have committed prices on most items. The revised capital figure of $69 million compares with an initial estimate of $56 million {a 23% rise), although not all of this increase is due to cost inflation. The company has increased the capacity of its plant by 20% to around 420,000 tonnes to allow it to treat additional resources identified by recent exploration. The cost increase compares with industry averages of around 30-50% over the same period.
Jabirj has also recently upgraded its mineable reserves position and its financial forecasts associated with the Jaguar development. One of the key issues is the value of the Jaguar ore body itself. The per-tonne value of the ore is so high that the company aims to recover of mush of it as possible.
The company has completed geotechnical and engineering studies to determine how to recover some of the underground pillars by replacing them with structural concrete. Jabiru now expects to recover an additional 80,000 tonnes of ore by replacing the pillars with concrete and despite the cost, the return is high, as the value of the ore is roughly four times the cost of the equivalent volume of concrete.
Jabiru has also begun to assess the value of the Teutonic Bore stockpiles and has converted the first of those stockpiles, about 25,000 tonnes, into reserves. This also gives the company the flexibility to treat some ore earlier than the original plan if the concentrator is ready ahead of time.
The company's total reserves have increased from 1.6 million tonnes to 1.714 million tonnes grading 3.0% copper, 11.3% zinc, 0.7% lead and 115g/t silver. This updated reserve, along with revised costs and metal price assumptions, produced a revised financial model for Jaguar, showing Jaguar to be an extremely robust development:
EBIT (Earnings Before Interest & Tax) of $286 million - or 87 cents per share; NPV (Net Present Value) of $215 million - or 65 cents a share; IRR (Internal Rate of Return) of 103%; and
Zinc C1 cash costs (including other metal credits) of -US11 cents per pound and US50 cents per pound (excluding byproduct credits).
Higher capital costs have resulted in an increase in the co-products zinc and copper costs, but importantly, the C1 costs after credits still show that the copper and silver credits more than cover all of the company's costs, leaving the zinc effectively as all profit. Current spot zinc and copper prices are US$1.90 and US$3.30 per pound respectively, so the margins are potentially enormous.
Project financing arrangements that require no mandatory hedging should enable Jabiru Metals to exploit these high metals prices.
Jaguar is likely to be a low cost operation in all respects. Annual ongoing capital is modest at just $5 million. Jaguar is also a relatively high-grade base meta! deposit, which means relatively low cash operating costs compared with its sector peers. Around 55% of revenue will come from zinc, 35% from copper and 10% from silver.
With respect to earnings, we anticipate EPS (Earnings per Share) of 15 cents in 2007/08 and 20 cents in 2008/09. This would put Jabiru on a very modest PER (Price/Earnings Ratio) of 5.5x for 2007/08 and 4x for 2008/09. We do not anticipate the payment of a dividend in the initial years of production.
In terms of project development, Jabiru achieved one of its major development milestones during the September quarter, with the mine decline now more than 50% complete. Work on other key infrastructure items is well on the way, including refurbishment and construction of the concentrator, ball and SAG mills, and flotation cells. Concentrator construction is now around 45% complete.
The company is in a good position to leverage off any discovery, as plant and infrastructure will shortly be in place. The Cadgebut plant has a design capacity of 350,000 tonnes annually, but can operate at rates of up to 550,000 tonnes. The potential for extensions to the current five-year mine life at Jaguar is substantial. Jabiru holds 30km of continuous strike length to the north and south of the Jaguar and Teutonic Bore deposits. This ground is highly prospective, as deposits like those that Jaguar and Teutonic Bore tend to occur in clusters rather than in isolation.
The most likely and immediate resource expansion opportunity is the down-plunge metal potential at Jaguar. A hole drilled 100 metres down plunge from the existing Jaguar resource intersected both the main lens and the footwall lens, indicating the massive sulphide mineralization is continuous. Further drilling of this zone will be undertaken in the near future. In addition to the down-plunge potential at Jaguar, further mineralization exists in close proximity to both deposits.
Earlier this year, Jaguar announced a drill intercept of 131 metres @ 1.4% copper equivalent from the interpreted Teutonic Bore feeder zone, which in our view was extremely encouraging. This is because it confirms the existence of both a feeder zone and remnant massive sulphides around the old workings at Teutonic Bore, with the potential for mining down the track.
The Dairnler prospect lies about 1 kilometre north of Teutonic Bore and hosts feeder zone-style mineralization, with intercepts including 30 metres @ 2% copper equivalent. Its current dimensions cover 150 metres of strike length and 100 metres vertical depth, which simply represent the current limits of drilling.
Snowy's Bore is a less advanced prospect, where massive sulphide mineralization exists, including feeder zone-style mineralization. All these targets warrant follow-up and Jabiru has committed to an exploration budget of $5 million per annum for the next two years.
The immediate focus is on the Teutonic Bore/Jaguar trend. The original drilling in the area was only to 100 metres depth and the Jaguar deposit starts at 300 metres depth, so there is certainly potential to find more deposits like Jaguar. For patient investors, Jabiru Metals represents an emerging, low cost base metals opportunity. A $10 million exploration program over the next two years is sure to generate speculative interest. It could significantly boost the resource base.
We also believe there is strong potential for a possible corporate play, with diversified miner Consolidated Minerals holding a 32% stake in the company. CSM has stated that is looking to continue to grow its diversified metals business. Jabiru would make a neat fit in our view.
Jabiru Metals will remain Held in the Fat Prophets Mining & Resources portfolio, but for Members with no current exposure we recommend the stock as a Buy around 82 cents.

 

[hypnotic]

Thanks for the read dj_420,

That's a really positive report. I don't think i will be selling until it reaches $1. I believe it won't be too long until this will happen. Probably in the next run it'll peak at $1. Still great consolidation at 83-84 cents, looks like there is 2 resistance point, one at 80 - 85 cents and then the next one is 90cent.

Just looking at the zinc price now, it's at US$1.93/lb, slowly reaching the $2 mark. It will be interesting week next week.

 

[imajica]

strong buy side in the pre-open this morning - last couple of days has seen a gradual decline in the share price with a consolidation in the low 80's

a few hundred thousand on the bid should spark a bullish run