JOHANNESBURG (Business Day) -- A Combination of well regarded management and the opportunities presented by the strong uranium price made gold and uranium junior Simmer & Jack [JSE:SIM] the best-performing resources share on the JSE this year.
The Simmers share price rose almost fivefold, to 494 South African cents yesterday from 104 cents at the end of last year, after an eventful year that began with a dispute among shareholders that was resolved in May, and ended with the successful listing on the Toronto Stock Exchange of separate uranium subsidiary First Uranium.
First Uranium [TSX:FIU] raised C$203 million by issuing 29-million shares at C$7 a share and, since listing on December 20, the shares have added 15% to trade at C$8.06 this week.
Apart from Simmers' corporate activity, the price has benefited from the tradability of Simmers shares. According to I-Net Bridge data, about 73.5-million Simmers shares trade each month, which is about 7% of the 1-billion shares in issue.
In August, investment house Imara SP Reid rated the share a buy for speculators taking a view on the bullion price but said it should be avoided by longer-term investors.
A sign of its appeal for more active traders is that Simmers is one of the shares that features regularly in discussions on Sharechat, the chatroom on investment and trading website Sharenet.
Sanlam Investment Managers analyst Stephen Roelofse said yesterday that there were two reasons for the Simmers share price rise in the past year.
The first was that Simmers had a dynamic CEO in Gordon Miller, who investors believed would rescue Buffelsfontein and return the mine to profitability after the operations were put into liquidation by DRDGold [Nasdaq:DROOY].
The second was the listing of First Uranium in Canada as a 69%-held subsidiary.
Roelofse said he did not regard Simmers as a speculative share.
The uranium deposits are known at Buffelsfontein and Ezulwini, and the Buffelsfontein and Hartebeestfontein gold mines have been operating for many years.
The biggest question mark over Simmers is how successful it will be in extracting gold from its shaft pillar at Ezulwini.
"Apart from that, I don't think there is any more risk in Simmers than in any other gold company at the moment," Roelofse said.
The main upside potential for Simmers was how the market would value First Uranium, he said. The listing of sxr Uranium One [TSX:SXR] in Toronto a year ago - combining the South African gold and uranium assets of Aflease [JSE:AFO] with those of Southern Cross Resources - had witnessed a strong appreciation in the share price of the combined entity, Roelofse said.
If the uranium price continued to perform at current levels, there was still value to be unlocked in Simmer & Jack, he said.
