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Sylvania Platinum Shares Are Up 55.6% This Year on Surging PGM Prices. What’s Next?

Updated: 7 May 2021

Shares of Sylvania Platinum Ltd (SLP) are up 55.6% in 2021, with their gains over the past 12 months totalling 188.7%. The impressive gains have left most investors wondering whether the company’s shares could keep rising in future.

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The short answer to the above question is yes. The platinum group metals (PGM) producer’s share price can rally higher for the rest of the year, given the firm’s excellent fundamentals and supportive market dynamics.

Sylvania Platinum recently reported a net profit of £29.76 million ($41.3 million) for the quarter ended March 31, 2021, buoyed by the rising PGM prices despite lower production figures.

The company produces platinum, palladium and rhodium. It has benefitted immensely from rising rhodium prices that saw its average basket price increase 38% to $4,576 per ounce (oz) than the cash production cost of $745 per oz.

Sylvania Platinum is regarded as a low-cost producer given that its production costs make up just 16% of its average basket price, leaving the company with impressive margins.

The company’s management maintained its full-year production guidance of 70,000 oz, implying that its revenues at current prices could rise to $209 million compared to last year’s $116 million.

The rising demand for rhodium is unlikely to wane. The metal is used in vehicle catalytic converters that help manufacturers meet the strict emissions standards set by the EU, China and other developed countries.

Rhodium is also two to three times more effective than platinum as an autocatalyst; hence, it is the preferred catalytic converter among vehicle manufacturers. Since the start of this year, rhodium prices have almost doubled, driven by the lack of new mines coming onstream.

The metal is generated as a by-product from the production of platinum. Hence, its supply increases with the production of the other PGMs.

Sylvania Platinum is set to keep benefitting from the high demand for PGMs, which is unlikely to change any time soon. Hence, its share price is likely to keep rising over the medium term.

Sylvania Platinum share price.

IG chart of Sylvania Platinum share price 07-05-2021

Sylvania Platinum shares are up 55.63% this year. Can they keep rising?

Should you invest in Sylvania Platinum shares?

Sylvania Platinum shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Sylvania Platinum shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

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