The offer is backed by Aquarius Platinum’s board, but needs to be approved by shareholders which Sibanye Gold is aiming to complete in the first quarter of 2016. It represents a further step into the platinum industry by Sibanye Gold after it previously purchased the Rustenburg operations of Anglo American.

The deal comes at a challenging time for Aquarius Platinum, with it suffering from the dual effects of a falling platinum price as well as a rising cost base. As a result, its share price had been down by as much as 56% since the turn of the year and, even if the deal does go through, investors in the company prior to March of this year would still be sitting on substantial losses.

Despite this, the outlook for the platinum industry is rather downbeat at the present time – in the near-term at least. Demand for the precious metal is waning and its growth outlook has not been aided by the emissions scandal in Volkswagen’s diesel cars, for which platinum is a key component.

And, with rising input costs, Aquarius Platinum is expected to continue to be a loss-making entity in the current year. However, this is due to be to a far lesser extent than in recent years, with a pretax loss of $3m being anticipated versus a loss of $90m last year. Therefore, on the one hand the deal could be viewed as good news for investors in Aquarius Platinum, since there is no clear catalyst to push the company’s share price considerably higher in the coming months.

However, the deal does not appear to be overly generous. For example, it values Aquarius Platinum at just 80% of its net asset value and, while its net assets may fall in future years due to write downs and further losses, the company does not suffer from the same labour challenges as a number of its rivals since its mines in South Africa and Zimbabwe mostly use machines as opposed to labour.

While Aquarius Platinum will seek an independent report as to whether the deal is good or bad for the company’s investors, much of its future potential depends on the price of platinum. If prices rise then it may not be such a good deal (and vice versa) and, since the future path of platinum prices is highly uncertain at the present time, the value of the business may not be straightforward to calculate. For many investors, though, today’s news will come as welcome relief after a troubled period for Aquarius Platinum.

The post Aquarius Platinum Limited (UK) Soars 43% On Offer From Sibanye Gold Ltd appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Anglo American. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

In the short run, things may get worse before they get better. Uncertainty regarding Chinese growth and a glut in the supply of a number of commodities means that the industry’s performance is likely to remain volatile in the weeks and months ahead. However, the valuations on offer mean that for investors looking at the long term, now could be a great time to buy.

For example, Glencore (LSE: GLEN) may have experienced a very challenging period in recent years, with its bottom line falling by 72% in the last three years. However, next year is due to be much improved for the diversified miner, with it being expected to increase its earnings by as much as 47% in 2016. This puts it on a forward price to earnings (P/E) ratio of just 9.5, which indicates that there is significant scope for an upward rerating over the medium term.

Furthermore, Glencore’s appealing valuation suggests that it offers a relatively wide margin of safety. As a result, if the company’s earnings disappoint over the medium term, its share price may not fall as heavily as would normally be the case. And, if its financial performance does surprise on the upside then Glencore could post stunning gains over the medium to long term.

Likewise, Tullow Oil (LSE: TLW) appears to be unjustifiably cheap at the present time. For example, it trades on a price to earnings growth (PEG) ratio of just 0.1, which indicates that its shares are well-worth buying. Certainly, its financial performance has been rather volatile in recent years, with its pretax profit ranging from a loss of over $2bn to a profit of over $1bn during the last five years. During this time, Tullow Oil’s share price has declined by 82%, which indicates that investor sentiment is very weak. However, with its bottom line due to rise by over 300% next year, it appears to be a logical purchase at the present time for investors who can accept above average levels of volatility.

Meanwhile, Aquarius Platinum (LSE: AQP) has bucked the recent trend among resources stocks to post a share price gain of 40% in the last month. And, while the precious metals miner is restructuring its business and selling off non-core assets, its financial performance in the last four years has been disappointing, with the company recording a pretax loss in each of the four years.

However, with a pretax profit of over £11m being forecast for next year, it appears as though the market’s view of the company is beginning to shift. And, while the short to medium term is likely to remain volatile for the business, with the price of precious metals having the potential to remain weak, Aquarius Platinum’s longer term future appears to be bright and potentially highly profitable.

The post Are Glencore PLC, Tullow Oil plc & Aquarius Platinum Limited (UK) 3 Super Resources Stocks? appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Tullow Oil. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

But it’s a couple of precious metals miners I want to look at, starting with platinum and gold miner Lonmin (LSE: LMI), whose shares were up 17% to 33.7p by just after midday. Lonmin has been through a truly dreadful patch, with its shares down a massive 97% since the end of 2010. (And if, a year ago and after a drop of 80%, you were wondering how much lower it could get, well, today you’d be looking at a further 12-month loss of 87% — which is a useful lesson for bottom-pickers.)

Is it really back?

But is Lonmin’s rise today anything more than a so-called dead cat bounce? It’s not clear, after the stock plunged to a 27-year low yesterday, amid fears for the company’s financial security. With falling commodity prices, Lonmin is set to close its Eland operation in South Africa. And though we shouldn’t see anything as bad as last year’s pre-tax loss of $326m, there’s still a $79m loss forecast for the year ending September 2015.

With platinum prices down around 30% over the past year, there’s even a chance that Lonmin could go bust if it doesn’t cut its costs sufficiently and get a refinancing plan in place. If it manages that, and platinum prices recover — we’ve actually seen an upwards blip this month — then Lonmin might be a long-term bargain. But I reckon the shares are too expensive right now to accommodate the risk.

Aquarius Platinum (LSE: AQP) has also enjoyed a nice rise on the day, of 16% to 8.3p, although the longer-term price performance is similarly painful — a 69% fall over 12 months, and down 97% since a peak in February 2011.

Years of losses

Aquarius has been recording pre-tax losses for several years now, and its latest full-year results, to 30 June 2015, reported a $90.4m loss — and that was after record production from both its Kroondal mine in South Africa and its Mimosa mine in Zimbabwe. There’s a very small profit forecast for 2016, and the few analysts who are offering recommendations seem to think Aquarius is a Strong Buy at the moment.

But there’s still a potential cash problem, and though Aquarius added $60m during the year from the sale of non-core assets, its “focus on consistent cost and capital discipline” and “initiatives to reduce absolute costs and increase efficiencies” are going to be crucial in the coming year.

The post Why Are Lonmin Plc And Aquarius Platinum Limited Soaring Today? appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Anglo American

Boosted by news of a successful Greek debt deal, diversified digger Anglo American (LSE: AAL) was helping to drag the FTSE 100 higher with a 0.9% advance in start-of-week trade. The stock has broken its broad downtrend over the past week, the company having climbed 5% since last Monday, but with chronic imbalances hanging over key markets I reckon shares should resume their dip.

Indeed, Chinese trade data overnight showed iron ore imports — an area from which Anglo American generates 40% of total earnings — decline 1% during January-June, to 452.9 million tonnes. Sales of coal have also soured in recent times as a slowing domestic steelmaking industry and Beijing’s emissions legislation has weighed, and imports of the black stuff dived by a third in June to 16.6 million tonnes.

With the outlook for such critical markets remaining sombre at best, the City expects Anglo American to print a fourth successive earnings decline in 2015, this time by a chunky 44%. So quite why the business changes hands on a P/E multiple of 14.2 times is beyond me, I’m afraid — I would consider a figure closer to the bargain benchmark of 10 times to be a fairer reflection of the risks facing the London firm.

SThree

Recruitment specialists SThree (LSE: STHR) greeted the market with a bubbly trading update in Monday’s session and was recently trading 3.3% higher on the day. The business advised that revenues leapt 18% during December-May, a result that propelled pr-tax profit 68% higher to £13.8m.

SThree noted it had made significant progress in its priorities of “contract, ongoing sector diversification and international growth,” and continues to pull up trees in foreign shores — indeed, revenues across The Americas alone climbed by almost a third during the six-month period. Given this success the abacus bashers expect the company to enjoy earnings growth of 13% and 24% for the years concluding November 2015 and 2016 correspondingly, driving a P/E ratio of 20.5 times for this year to just 16.2 times for the following period.

And SThree’s stunning growth prospects are expected to get dividends moving higher again, too, following four years of locking the payment at 14p per share. A predicted dividend of 14.5p for 2015 creates a chunky yield of 3.9%, and this moves to 4% for next year amid forecasts of a 15p dividend.

Aquarius Platinum

Precious metals producer Aquarius Platinum (LSE: AQP) has emerged as one of the darlings of Monday’s session and was recently 11.5% higher from Friday’s close. The bling behemoth was boosted by Credit Suisse’s affirmation of its ‘outperform’ rating, helping the company break the colossal slowdown of recent years — Aquarius has shed almost three-quarters of its share price since the same point in 2014 alone.

But like fellow resources play Anglo American, I believe today’s uptick is likely to prove a temporary respite as the platinum market remains on shaky footing. Indeed, prices have collapsed from around $1,500 per ounce as of last July to current levels around $1,030 as resilient supply and weak demand — particularly from the Chinese jewellery sector — has weighed.

These pressures are expected to have widened losses per share to 2.2 US cents for the 12 months ending June 2015 from 1.13 cents the previous year. A bounce to earnings per share of 1.2 cents is anticipated for 2016, leaving the business dealing on a low P/E multiple of just 8.3 times. This could be considered a decent punt for some, but not for me I’m afraid. In my opinion the supply/demand imbalance looks likely to worsen as carbuilders increasingly opt for cheaper palladium in their exhausts and above-ground supplies remain abundant.

The post Should You Stash Your Cash In Anglo American plc, SThree Plc And Aquarius Platinum Limited (UK)? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.