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Shares in Sylvania Platinum , a little-known London-listed miner, are set to rise by 50%, according to Ben Davis, mining analyst at Liberum Capital. The company, which extracts metals such as platinum, palladium, and chrome, also offers an 8% dividend yield. Shares in the company were trading around £1 ($1.21) Friday, but Davis sees them hitting £1.50 in 12 months. The stock is already up over 13% this year, handsomely beating the benchmark FTSE All-Share index, which is nearly flat at 0.42%. Sylvania Platinum is also favored by Neil Shah, director at the investment research group Edison Group. He told CNBC Friday: “It’s a genuine cashflow company. It’s a small cap, so it often gets neglected.” The miner has seen an average annual growth of 67% in net cash flow from operating activities since 2018, according to the company’s annual reports. Looking ahead, despite a challenging year on the horizon, Liberum Capital’s Davis expects net cash flow to increase by 33% in 2023. “Sylvania’s cash balances continue to swell to new highs of $139m, giving the company plenty of firepower for both dividends and potential growth projects,” Davis wrote in a note Oct. 31. The company extracts platinum-group metals through recovery and retreatment, which means they are either a by-product of a larger mining company’s operations or extracted through the recycling of goods such as old cars. This business model allows the firm to have a low-cost base while selling metals at the current market rate, according to Edison Group. The metals the company extracts are bought by both investors and industrial customers, which means their prices are more resilient than other commodities during economic downturns. Platinum prices are up 6.5% this year compared to other industrial metals such as copper, which is down 11.9%, according to FactSet data. However, Liberum’s Davis does warn that the company faces some headwinds due to factors outside the company’s control. “Used car values have started to come off to reflect this recovery in production, but still remain well above the historical trend and will crimp any recovery in scrap supply for the time being,” he added.
Shares of mining company will rally 50%, analyst says
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