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Sylvania Platinum Shares Are Up 42.5% in 2021. Are They Overdue for a Pullback?

Simon Mugo trader
Updated 17 Mar 2021

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Sylvania Platinum logo

Shares of Sylvania Platinum Ltd (LON: SLP) are up 42.5% this year after the platinum producer reported excellent Q2 and H1 2021 results after the financial period ended in December 2020.

The mining company prides itself on being a low-cost producer of platinum group metals (PGM) via its dump operations and opencast mining operations.

The miner operates in South Africa and has dump operations comprising six chrome beneficiation and platinum group metals (PGM) processing plants located on the Eastern and Western Limb of the Bushveld Igneous Complex (BIC).

Sylvania Platinum produces PGM from dump operations by treating chrome tailings. It is a low-cost business model that allows the company to keep increasing its profitability last year despite the coronavirus pandemic.

The miner reported H1 profits of $40.5 million, a 70% improvement to the $23.9 million recorded in a similar period in 2019. The company’s revenues rose 44% to $85.2 million compared to 2019 figures, with its earnings increasing 58% to $58 million.

For those wondering whether Sylvania Platinum shares are overdue for a pullback, the short answer is that they could be. The shares have edged higher slowly since March 2020 but have not formed a parabolic rally, usually followed by a pullback.

Sylvania Platinum shares have formed a gently sloping uptrend that could persist for a while, given that it is punctuated with minor pullbacks. As technical traders, we know that an uptrend is typically followed by either a balancing zone or a pullback.

We could see a sideways trading range form soon, indicating that the trend will continue, or we could get a shallow pullback followed by a bigger one as the trend reverses. The company’s solid fundamentals suggest that the trend will continue, but we could still get a pullback.

Sylvania Platinum share price.

Tradingview chart of Sylvania Platinum share price 17-03-2021

Sylvania Platinum shares are up 42.53% this year on positive earnings results, are we due for a pullback?

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading