Jupiter Mines Ltd

ASX:JMS

Earnings Call Transcript 2022-Q3

[Operator]

Welcome to the Jupiter Mines Quarterly Update Call. I would now like to introduce your host, Scott Winter. Please go ahead, Scott.

[Unknown Executive]

Thanks very much, Erica, and welcome to all those that have dialed in. I look forward to taking you through today, the Jupiter Mines' quarterly update for the operation and what Jupiter has been up to. I'm going to take you through just a few highlights and then a little bit of detail around the operation itself, how it's performed, the production, some logistics, a little bit of a marketing outlook. And then talk about what we're doing from a corporate sense in regard to the Board and executive roles plus strategy. I look forward to your questions. So we can do that near the end, but I'll kick off with some of the highlights for the business. Obviously, we've had a pretty solid quarter. No LTIs for the quarter, which is terrific and that brings the business for no LTIs for year-to-date, a tremendous result. The business achieved around 255,000 cubic meters of graded ore for the quarter, which is on target and going well. Somewhat less waste movement, but we'll get into the detail around that and I'll talk through that in a moment. Logistics is slightly behind, but as expected there are some issues we're managing with planned outages on the rail network and I'll talk to you about some of the road work -- sorry, the road transport that we are bringing back online to assist with that. We've got a solid cash balance, attributable to Jupiter, but in Jupiter and our share of Tshipi. So we're sitting at about $76 million by the end of the quarter. And I suppose what we've been through from a corporate sense, we've obviously had a change to the Board with Peter North joining, myself joining and Patrick Murphy joining, with Peter Acting Chairman and myself as acting CEO, and we're really getting our hands into the business at the moment. So I'd just like to take you through some of the detail now. As I said, graded ore production was on target for the month slightly behind, but we're happy with where we're heading and we will be by the end of the year. We have had a really good look at the mine and the mine plan through to the end of the year. The contractor performance, which we've highlighted before, we're working with them on some performance issues that we seem to be getting on top of now. But we have done a review of the medium-term mine plan that has dropped some of the waste out of the operation and that has lead to the -- fleets have been stood down. We did have a particularly wet October, but November's results are showing ahead of target and that stands us in a really good position for the next quarter going forward. We did implement some operational efficiency measures with moments earlier in the quarter and that seems to be paying dividends with availability and some of the utilization of the equipment, which is terrific. You'll see in the results again that Tshipi continues to be one of the, if not the lowest cost producer in the region with cost of production around USD 1.75 per dmtu. Again, the low-cost, long-life asset, which is terrific for Tshipi certainly going forward, when we start to talk around strategy and consolidation of manganese in the region. There has been a focus on the barrier pillar, which has brought about a few bonuses, so we have brought forward some production there to help. That has reduced the strip ratio. It's actually helped with lowering some of the waste costs again and bringing forward some of the graded ore, which is really helping us. It has meant more high-grade ore and less low grade ore. I'll talk about that in a moment in regard to low-grade and low-grade trials. But we did see some slightly higher fines come through just because there's a higher fine content in that particular ore -- part of the ore body. So mining all around is heading in the right direction. We're happy with the [indiscernible]. I suppose, their performance improvements of [ recent ] and we expect those to continue going forward. Logistics and sales, the railing over the quarter has been lower than expected and that is primarily a result of some planned maintenance and some other infrastructure delays in the area. There was a derailment, which is called some delays, but mainly the planned maintenance. There are expected to be some further maintenance going through in the next quarter. So we've looked at how we can ensure sales are achieved and we get tonnes to the port. So we will be bringing through some more road transport to make sure that those tonnes move from site to the port. With low grade ore really being -- wouldn't say sub economic, but really pushing the economics. We have reduced the low-grade ore sales into the market. That's freed up some of that road transport [indiscernible] to actual the high grade gets through the port and we can get it onto the ships. But we're happy with where that's going. As you'll see, we achieved a CIF pricing around [ 4.60 ] for the quarter. That has certainly moved around from the start to the finish, group, we're starting to see a softening at the back end of the quarter. Just a little bit on the market. It's quite interesting. Obviously, the market is influenced heavily by the crude steel production in China. We are seeing China holding firm on their expected production for the year. They don't want to exceed 2020 levels and we're seeing that, that step absolutely occurring and they're managing those levels and that obviously flows through to the ferroalloy market and some lower demand in that particular area. Interestingly, ferroalloy market was affected by some of the power constraints that China put on at the back end of this year. So again, some of those ferroalloy producers, some of them even stop producing because of the high cost of power and they have marginal production. So you did see earlier in the quarter some price improvement for the manganese ore obviously. But it has softened at the back end of the quarter. I suppose a slight link into expected forecast of price for manganese into the future. The silicon manganese price has plateaued. We've seen it over the last 3 months, I suppose, in that window, come down significantly. But in November, it's actually plateaued, which is a good sign for manganese itself. And I suppose, into the future where we're expecting China to come out of their, I suppose, constraints put on the crude steel production and start to increase that again. And we're seeing the rest of the world have buoyant sort of steel production. So we see that as a positive for the manganese price going forward that steel will increase ferroalloys will start to increase and we can start to see a slight improvement in price. I suppose just linking to also freight, which obviously there's been a significant impact to everyone. We have seen it quite volatile, but [indiscernible] over the last few weeks we've seen that freight rates actually starting to come down. Ships are freeing up. Some of the ships are being allowed to [indiscernible] and unload cargoes and that's bringing ships up in the market for us to use. So we do see freight coming off, going forward. And again looking forward at freight, we can only see that being a slight positive for margins for Tshipi. That's pretty much a wrap on the operational side of Tshipi and let's look at the corporate side. As I said, we hold about $76 million of cash, which is great. As I mentioned earlier in the highlights, the Board is somewhat changed obviously with Peter, Patrick and myself joining and I suppose what we are actively doing at the moment is -- and have engaged [indiscernible], but we're actively looking for a Chairman for the business and a new CEO for the business. That is progressing exceptionally well. We've engaged [ in contrary ] a little while ago and we're working through that process. I will say we're not going to rush to make sure that we put [indiscernible] in place just for the sake of that. We will look at the right person to fit what Jupiter is today and where we want it to go in the future and we need the right people to do that, but that's working quite well going forward. The piece around what the Board is currently working on at the moment is obviously the strategy. I'm sure you're very keen to understand where we're going there. As we've mentioned, the focus of the Board is currently been on making sure those that the Board is stable. The business is well led. And we set it up for the right leadership going forward and leadership and governance going forward. But at the same time, we are looking at the strategy of the business and how we can optimize that going forward. So some of the things that we are looking at is, obviously how we can bring operational excellence through into the Tshipi operation at the moment. And I mentioned part of that before with the discussions we're having with [indiscernible]. We will be looking and reviewing the feasibility study that we had put through to the market a while ago around the expansion of Tshipi. But we're also looking at the opportunities out there with consolidation of ownership in the Kalahari with some of the other manganese producers and even partners. So that's quite exciting. We see that as a priority and we've started that work already. There is a lot of opportunity there for us to investigate and work through. Similarly, we have got open eyes as to how we can diversify the business as well. We are looking at other commodities out there and in particular, how we may participate in the battery minerals supply chain. But again it's a big wide world out there and we're certainly doing the right investigation and we'll be sort of getting some expert advice as to where we point the business and how we do participate. But certainly, initially, our priority is around operational performance Tshipi settling down the board and making sure we've got that right support. And looking at the partners and new neighbors in the Kalahari about growing in the manganese business. And with a low-cost, long-life asset that Tshipi is, we stand in a very good position to do that, certainly being listed. And in Australia, we have a great position going forward. That's my summary of where Jupiter currently sits. I really open now to any questions that you may have. So please feel free. Thank you.

[Operator]

[Operator Instructions]We have our first question from Trent Barnett.

[Unknown Analyst]

Okay. So just to elaborate on the -- what you're talking about the consolidation in the Kalahari, can you elaborate there more at all?

[Unknown Executive]

Yes. Trent, I can, but I suppose I'll do it to the extent we currently have done the work. Look, we are partners at Tshipi with [indiscernible] obviously. And neighbors with [ South 32 ] and various other players participants in the Kalahari, I suppose. So our aspiration is to be a larger manganese producer in a low-cost long life larger manganese producer in the market. So that is, I suppose, an opportunity for consolidation. I suppose I'll elaborate that work needs to be done to look at what is the right fit for the next step with Jupiter. Do we look at adding partnering all of those opportunities that are currently sitting in that the window for us to investigate and really find the right path forward.

[Operator]

[Operator Instructions]We have our next question from Nick Worrall.

[Nick Worrall]

I was just away from the call when the last question was asked, but it's something similar. My question was, we've heard about consolidation in the Kalahari for some time now. What's the different approach that you're going to take to your predecessor?

[Unknown Executive]

Look, I suppose I'll just reiterate that the shareholders and have certainly given advice to the Board to look at something that's slightly different to participating in -- sorry, paying out all of the dividends. So really, what we're doing is investigating further what opportunities there are in the Kalahari for consolidation and that is participants that want to join [indiscernible] the partner, that's what I mean. The strategy has to be clear and the Board is working through exactly what that will be and that will I suppose dictate what we do and how we do a consolidation or whether we do it at all. But certainly, that is the direction we're pointing and looking at it quite strongly.

[Nick Worrall]

Okay. And so of course, First logical step is potentially 100% ownership of Tshipi. I'm presuming that's first on the agenda? Is it?

[Unknown Executive]

I won't say what is first on the agenda at all. They're all currently in a list of opportunities that we'll investigate. But that's a -- it's a logical one to review. But certainly, we're early stages in what -- how we're running through it.

[Operator]

[Operator Instructions]We have our next question from Paul Hannan.

[Unknown Analyst]

Just a quick one. Obviously, business is transitioning away from old management. I guess my question was, are there any deals or any arrangements that are in place that have to be undone or haven't yet been unwound as a result of that transition?

[Unknown Executive]

No. We've got a very clear direction forward. Everything that was, I suppose, that has progressed over the last few months is -- has been dealt with appropriately and managed appropriately and we're looking for the future and it's pretty exciting looking forward. And really that's why I suppose we have got really solid eye of making sure we bring in a chair and CEO that really has got a good deal of energy to look at growing deeper going forward. And as I said, we've already started to form the skeleton of the strategy, focusing in manganese. So now, we're certainly not shackled, very clearly going forward.

[Unknown Analyst]

And did I hear that you said that you might consider the previous 100% payout arrangements to allow the business to obviously accumulate some capital and participate in some of those growth opportunities that you're referring to?

[Unknown Executive]

We'll consider what we're doing with that, absolutely. We're about growing value for Jupiter and we want to do that in the right way and we can do it a number of ways. But look that will be part of the strategy, and we'll let the team know when that's formed. Yes, so I can't say one way or another.

[Unknown Analyst]

Yes. I guess you got to -- before you start doing deals, you've got to get some currency in your share price, which your business doesn't exactly have. So how do you build that before you create the capability of doing deals, which are accretive?

[Unknown Executive]

Yes. No, you're exactly right. I think we've -- I suppose I mentioned it before briefly that it's important we make sure Tshipi continues to be solid, not only in today and it has been -- so we're making sure that it's solid going forward. So you need a great operating asset to continue into the future. So that's a primary objective for us, making sure that's robust. And then we, as a Jupiter company need to have the right people and strategy to actually execute and I think you're right. We don't have track record other than doing the Tshipi deal and listing and which is a great track [indiscernible] going forward doing other deals. We've got to get ourselves ready for that. So getting the right governance and the executive team to do that is really important. Along with getting that -- I suppose, a great operating asset. And then it's about execution. Then it's really about execution against that strategy. So we are very in the infancy of that at the moment.

[Unknown Analyst]

Yes. I appreciate that. I guess my point was that the businesses run reasonably well. It's operationally -- it's done reasonably well. And obviously, you've had a 100% payout ratio. But the issue -- it's never been able to create, never been able to generate market rating [indiscernible] so. So I guess my question is I appreciate you've got to make sure the business continues to run because that's going to be the [indiscernible] bedrock, that's seems to be going well. How do you create a rating for this business that actually gives you a currency to go and to participate in rationalization or consolidation or do deals, which are shareholder accretive?

[Unknown Executive]

I'm not sure I can -- I'll be able to answer your question 100%, but a strategy that clearly outlines our growth and consolidation, we'll start to do that. Other than that as I said, we're going to come back to execution. We've actually got to lay a strategy -- sorry, we've got to lay a plan down for what we do want to do and then execute on those. And at that point, synergy -- synergistic value add will start to show that, we'll start to creep in and we'll start to get a better rating in that regard. I'm not sure I can answer your question completely.

[Unknown Analyst]

No. No, I'm not trying to trick you or anything, Scott, it's just this thing has never been afforded a big rating by the market. It's never been able to capture the attention of the market and that's probably because it needs to have a growth strategy. Now it does with you and your team and with a mandate that the new MDs kind of given is to grow [indiscernible] hopefully that does. And I guess you have to do [indiscernible] marketing first to reengage with investors, which has never recurred before.

[Unknown Executive]

Yes. Yes. I think that's probably a good point in itself. Rebranding a business that actually is pointing in a slightly different direction that will get the attention. So yes, that will be part of it. But thanks for your question. I appreciate it.

[Unknown Analyst]

No, I'd appreciate it. We're not trying to pick you up with -- again, it was more pointed that you haven't been able to attract the attention. It's not your issue, it's was the way that things run previously. So I appreciate the fact that you guys are saying that you are going to really -- glad you realize that [indiscernible] as part of the [indiscernible].

[Operator]

We have our next question from Ben Hanley.

[Unknown Analyst]

Scott, I was just wondering, there's a comment around looking at participation in the battery minerals supply chain. Is that potentially by other commodities? Or are you looking at the suitability of the Tshipi ore to be adaptable for that application?

[Unknown Executive]

We're not specific. I mean, manganese does play a part. You don't need a lot of ore -- manganese ore to participate in the battery market. So we've got plenty of ore. But it will come -- it will constitute reviewing other commodities for sure. And -- Yes.

[Operator]

We don't appear to have any other questions in the queue at this time. So if you're happy, Scott, I can hand back over to yourself and close the Q&A for now.

[Unknown Executive]

Yes, that's terrific. I really appreciate the questions. it's -- I suppose it's a pretty exciting time for us at the moment. We've got a multiple number of things we're doing at the moment and we'll be doing a hell of a lot next year. Continuing to, as I said, work through what the new strategy has been the new exec and government -- sorry, and boarding. So it's an exciting time. It's a good time to be with Jupiter. I look forward to the next time we run through the in-year results, but we've got Christmas and New Years before then. So I wish everyone a happy inside Christmas with family, friends and others. And I hope you have an enjoyable and lovely Christmas. Cheers.

[Operator]

Thank you, Scott. That now concludes the Jupiter Mines quarterly update call. Thank you for attending, and please enjoy the rest of your day.