Jupiter Mines Ltd

ASX:JMS

Earnings Call Transcript 2022-Q4

[Operator]

Good morning, and I would like to welcome everyone to the Jupiter Mines Q4 call. Today, we have Jupiter Acting Chief Executive Officer, Scott Winter and Independent Nonexecutive Director, Ian Murray to provide a brief update on the last quarter of the 2022 financial year. And then we will open up to questions from callers. Please go ahead, Scott.

[William Winter, executive]

Thanks, Erica. Much appreciated. Good morning, everyone, and welcome to Jupiter Mines' Q4 results, end of year for us. So we'll talk through some of the end of year performance as well.

But before I go on, I suppose I want to introduce Ian Murray. First investor call for Jupiter Mines. Certainly not a stranger to investor calls in the Australian Stock Exchange, but certainly the first one for us. Ian, maybe I'll hand over to you to say good day?

[Ian Murray, executive]

Thanks, Scott. It's a pleasure to be on you and especially after we visited the project a few weeks ago. So I look forward to answering questions later in the session. .

[William Winter, executive]

Thanks, Ian. Much appreciated. So as Ian said, we'll just going to take you through some highlights through the business a little bit about the visit that Ian mentioned into the Kalahari very recently, take you through some of the highlights as we saw it, and then run into some of the detail around safety environment, production and processing, logistics, run through some of the costs and obviously some of the marketing and at the end, we'll run over some of the corporate bits and pieces that we can walk through, and Ian can make some comments through there as well.

At the end of that, we'll have some questions. So send them through or get them ready and we'll welcome all of those.

But I want to start with the trip. So at the start of March, the Board, Pat, [indiscernible] and myself went across to South Africa. We spent a week seeing the Jupiter team and major shareholders in Ntsimbintle and both Johannesburg and then out on site.

It was a terrific visit. The Kalahari is supposed to be a desert, but I'd tell you it certainly wasn't. Very green when we went over there. It even rained while we're there and some of the locals were telling us that some of the tributaries haven't flowed in 50 years, but they had just recently so. We saw a very different Kalahari and certainly Tshipi to what we've been used to in the past.

But look, really impressed with the visit. One of the things we look forward is meeting the team and the partners. And really, they were all very across the detail, knew the main areas of focus, knew the pit, knew the numbers and really could talk about what they were focusing on in the short and medium term.

The site looked -- well, it looked wet, actually it was raining when we were out there, but some of the diggers were still operating, moving some of the Kalahari sand. So that was pretty good. But certainly, it had been affected by rain and we've made a mention in the past around rain affecting some of the production. So we could see the reality that, that had actually occurred.

But it was a good trip, the pit looked pretty sharp. One of the things that stood out from our visit was the barrier pillar that's very much there, available, full of graded ore. Mamatwan is just there, but that graded ore, about 1.4 million tonnes sits there and is available for us in spring capacity, and we'll talk about that a little bit later.

I suppose on ground, we saw -- we saw some opportunity there as well. We're always looking for where we can pull some operating costs there. And I think with some investigation, a little bit of capital into the operation, we can look at some of the material handling that is there on site and see some operating cost improvement over time. It's a long-life, low-cost asset, so it does lend itself for putting sort of money into infrastructure on site.

I suppose another standout was the train loader. We actually saw a train get loaded, which was terrific. It is a significant asset for that mine and Transnet know that and Tshipi benefits from that. It's a -- it's a fast train loader, loading the train within 2 hours. So Transnet when they have got wagons that are loose and other companies can't pick them up, and they give Tshipi a call and we pick up extra trains, which is terrific for us. So that was a real benefit.

I suppose we also took a write-up the Kalahari itself off the belt and dropped in at Makala. I had to look at that new operation, that was pretty sharp and then took sort of an [indiscernible] up to vessels, didn't go underground, but just have a look at some of the lay of the land and where those operations were in the vicinity to Tshipi. It is a very sort of condensed area and a lot of support infrastructure around to really make that a central manganese area for the world really.

So it was a great visit. I got to meet the face-to-face the team and the Ntsimbintle team as well. We have great partners over there and really look forward to working with him in the future as well.

Any other comments on the trip, Ian, that you want to pull out?

[Ian Murray, executive]

No. I think it's a very professional meeting the team at Tshipi.They certainly know what they're doing. They've been doing it for about 10 years now. And comments just on that, the efficiency of loading the trains relative to our peers. It's a real standout.

[William Winter, executive]

Thanks, Ian. Appreciate that. So look, I will just touch on some overall highlight comments that we'll go into a little bit of detail, but I'll just touch on these briefly.

So for the year, 3.3 million tonnes sold and about 3.7 million produced, slightly down on sold from last year at 3.4 million, but 3.7 million greater than 3.4 million produced last year. So it was a good production year.

EBITDA was obviously down largely on the back of manganese price being down. So EBITDA this year of $140 million and an NPAT of $86 million compared to last year of $206 million and $135 million, respectively.

Great safety year point. So no LTIs for the year and the TRIFR is slightly coming down. We'll talk about that a little bit more later. From a mining perspective, the graded ore was on target, slightly down on Q3 last year, but going well. The waste movement was down, but largely as a result of sort of moving rehandle, it just doesn't get counted in the in-situ volumes. But again, I'll talk about that in a minute.

I mentioned the barrier pillar exposure of 1.4 million tonnes, which is a really terrific asset sitting here available for opportunity. High-grade production through the plant exceeded target for the year and for the quarter. So happy with that [indiscernible], and I suppose the issue to manage is on land logistics, we're seeing certainly some issues with the rail network running at about 90% capacity. And certainly, that's being made -- those volumes are being made up with trucking capacity. Again, we can go into some details why.

We have a $75 million attributable cash balance at the end of the quarter and largely supported by the dividend, the Tshipi distributor of about ZAR 500 million.

So there the highlights, I'll go into some detail now, certainly starting with safety and the environment. I'm really impressed with the focus they had on safety, they have no LTIs, but as we know, really the focus then becomes down on just some of those lesser grade injuries and TRIFR a focus for them. They see that improvement coming through addressing the culture on site. So they've run a new program "My safety, My family, My community", a terrific program. It is starting to show some improvements with the TRIFR slightly coming down. They've got -- it's crept up over the last 12 months. So they know that they've got some work to be done there, and that program will be a great benefit to that.

From an environmental perspective, 2 things I wanted to pull out and that is work on the biodiversity programs they're doing, securing land to put those biodiversity programs in the offset lands. That's progressing to plan, and we'll continue the -- the impact -- sorry, the main work stream in the environmental management plan is the amendments that they're working through with AMP3 , which is regarding the closure commitments for Tshipi, which is in 100 years. So it's one of those things that will continue to be worked on. But certainly in the very short term, there's some changes being made that are going through the department at the moment, that is a sort of focus of everyone, both in Jupiter and the Tshipi team as well.

Moving on to mining and production. Look, we're focusing largely on sort of graded ore through we exceeded the target with slightly -- sorry, behind on overall movement for the period. That is I suppose, affected by some of the rain that we saw in January, February and some of the performance that was coming out of Moolmans for some of the efficiency on the excavators.

It has affected them, which is why I'll talk a little bit later about why we're talking about Moolmans with their contract, and the introduction of some new equipment later in the piece -- probably at the later part of this year.

We do see some improvement with their with the efficiency program running out across the site. So we did see a volume improvement in Q4 over Q3, which is terrific.

One of the other areas that we have been focusing on and I come back to that point around rehandle is the barrier pillar, and the associated ramps in and around that barrier pillar. So we have exposed by removing all the waste, we have exposed this 1.4 million tonnes of graded ore. And in doing so, we've had to move one of the cross bridge ramps, which is about 300,000 cubic meters of waste, and doesn't get captured. So overall, waste management was actually better than reported, but it doesn't get reported as in-situ. So I'm sort of happy with how that is going.

I want to make a particular point here, which is we've got a really -- I suppose, an opportunity in that 1.4 million tonnes of ore, but we're not planning in our medium-term plan to I suppose, high-grade that, so to speak. We are planning to mine on a life of mine strip ratio. So our cost profile will remain sort of constant as we expect. And we address, I suppose, the capture of graded ore as the market presents opportunities, as the price rises, we can quickly get to graded ore and put it into market. So that's sitting there as a terrific asset for us.

Processing of high-grade ore was on target. It actually ended up slightly ahead of target for the year. We took a deliberate decision to suspend the low-grade tonnes largely on the back of manganese price being lower than expected, and it really doesn't pay dividends for us to consume trucking capacity to put low grade into the market. So obviously, flipped some of the trucking across the calling high grade to port.

With some of the mining of the barrier pillar ore has a higher -- slightly higher fines content, so we did see a slightly higher fines content in the quarter. But overall, for the year, we're on target around 15%. So that's fine.

Moving on to logistics. I can come back to that point again. The rail is being hampered by maintenance delays, power outages and some of the cable theft, derailments. Transit is very aware of it. They are putting things in place to address some of those. But it's certainly not showing immediate signs of improving.

The capacity is around 90% of what is expected. And as I meant before, we are consuming some of the trucking capacity that we've used for low grade. We're putting that into hauling some of the high grade. As an example, we moved on land, about $750,000 this year and the on-land logistics was sort of split evenly with -- almost evenly with trucking and rail. The -- I suppose the Tshipi team continues to be a leader in innovative logistics solutions, they really do pride themselves on trying to kind new solutions around logistics. So the ship times was a classic example that in the past. So they are looking for this next financial year beyond to look at logistics solutions to pick up where Transnet's filings are being created.

Happy with the overall shipping for the year. We're getting -- we shipped 3.3 million tonnes for the year. We had actually 2 vessels that sort of fell over into March that were booked into the February sale, so it would have been slightly higher than that, should that have occurred, but it just fell over.

Moving a little bit on to costs. If I look at holistically cost for the business, we were down on revenue, obviously, as a result of manganese price, but the overall FOB cost in this was actually quite good apart from, I suppose, the fact that trucking is slightly higher than rail, the FOB cost was great. So if you look at it on a dmtu basis, this quarter was even lower than last, which sort of had $1.60 dollars -- sorry US dollars per dmtu compared to $1.75 last quarter. But the year ended up at about $1.86 -- US dollars per dmtu, which is 15% below the plan that we had. So that's terrific.

On a shift basis, obviously, that's a different story because of the freight rate pushing up -- weighing in excess of where we thought . And it's even now starting to be quite volatile. We did see prices in the last quarter up to $60. It's sort of come down to around $52, $55 mark. But it is volatile, and we're sort of expecting it to be volatile into the near future.

From an overall year perspective, just give you some numbers. Our CIF price, high-grade lump was about $4.60 in the market. Fines obviously sort of around $4.10, low grade is even lower than that and fines is sort of about $3.80. So our overall price revenue for the year on an average basis about $4.30, which puts our margin in the range of about [$0.80] per dmtu, just to give you some rough numbers.

A little bit on the market before we get on to corporate -- book to market, I suppose in the last quarter was sort of relatively stable, but it was low. And only at the end of February, we started to see an uptick. And obviously, in March, we've seen a significant uptick. The reason for that is largely around we're post Chinese Spring Festival and the New Year. The alloy plants are looking to restock, and both Australia, Brazil and Gabon have come out and indicated that their production levels for the year are going to be lower. So that's sort of driven up the 44% rise -- sorry, 44% manganese price.

Semi-carbonate at 37% has jumped on the tail of that, and has obviously seen a rise along in a lagged sort of 1 or 2 weeks, but it has driven up. There was a little correction over the last week. So it came off the $5.70, there wasn't a lot of liquidity in the market at $5.70, but the cargo sold obviously. But we've seeing it sort of coming back this sort of at the moment around back to $5.40 and, we expect this to remain for a while, we actually expect this year to sort of sit north of $5, which is good. And that's largely off the back of China, it is expected the steel production to not go below what they had last year. The rest of the world steel production is actually forecasting a growth, which is good. The [indiscernible] starting to see growth, not only sort of in China, but in the rest of the world. We're seeing it sort of a fairly significant increase in Asia, and particularly India sort of starting to take more cargoes, and we're certainly trying to put more cargoes into diversified markets other than China, which will help in the long run.

So we do have a positive outlook for the manganese price. We do have a positive outlook for our cost profile going next year. So again, we're sort of looking -- looking I suppose, happy for what we're expecting next year and the budget at the moment is just getting finalized with the medium-term plans, and we should be able to give some indication.

Look, from a corporate perspective, just quickly, I might hand it over to Ian shortly to talk about some of the things we're doing in corporate. But from an overall EBITDA, I mentioned before, $140 million, NPAT $86 million compared to last year's $206 million and $135 million. EBITDA for the quarter was up against last quarter, so EBITDA of $44 million, NPAT of $28 million, which is good, largely because of the low cost actually and production levels.

We received the $500 million dividend -- sorry, the Rand dividend from Tshipi. And in the last quarter, our cash going from $17 million to $39 million. And overall, we have an attributable cash of $75 million.

I was going to mention the Moolmans' contract discussion, but I mentioned that before. And the budget I just recently mentioned was certainly something we're finalizing at the moment, and really looking because of the prices around that $5.40 a little higher than what we expected when we sort of started putting it together last year, but it's -- we're looking at what opportunities we can place in the market in the very short term.

Ian, I might hand over to you to potentially talk about some of the appointments in the near future and engagements around strategy if you don't mind.

[Ian Murray, executive]

Yes. Thanks, Scott. So the next key thing that the Board is focused on delivering is the appointment of the CEO. We are well down the track of that. There are very good candidates, both internally and externally that we as you go through the next phase of interviews, and we are aiming to have that wrapped up in the upcoming quarter.

The thing that flows from that is in the corporate strategy. There's no point coming out corporate strategy before we appoint the CEO, so the focus is on the CEO's first. And then coming to the market of what the corporate strategy is. But it was pretty clear to see from the business that we did to the Kalahari based on that, there are a number of assets in that region that are closed together. That makes sense for some form of consolidation. And certainly, Jupiter wants to be a participant in that strategy and in that process. So that's stuff that we're aiming to deliver in the next quarter. Thanks, Scott.

[William Winter, executive]

Thanks, Ian. I appreciate that. So that's largely where we are, I suppose, to my comment around the strategy work that we're looking at the moment. We, as you know, appointed Treadstone to help as a corporate adviser to sort of do the strategic review and help with the growth strategy. And in respect to that, looking at some other advisers and support for the work that is really up and coming.

So that concludes really the detail across the quarterly, really open then now for questions. Happy to answer any of that you might have. But really, thanks for jumping on board, and I really appreciate your time.

[Operator]

[Operator Instructions] We don't appear to have any questions coming in at this time, Scott. Would you like to hand back to yourself or keep it open for a little bit longer?

[William Winter, executive]

We can keep on for a little bit. Always happy to do so, as for sure.

[Operator]

We have had a question come in, just one moment. We have a question from Michael Scantlebury from Euroz Hartleys.

[Michael Scantlebury, analyst]

Just a quick one around going potentially downstream in the manganese space. Would you consider this and yes, and what kind of value chain would you kind of look to exploit going in that kind of direction? Or will you look to consolidate upstream first in that kind of area?

[William Winter, executive]

Thanks, Michael. Again, thanks for jumping on board too. Look, as Ian just said before, one of the first things we're looking at is obviously the strategy and what does that mean for Jupiter and what can we do. The most obvious thing is, Ian mentioned is the consolidation piece. Manganese, we are currently in manganese for steel production and producer. But certainly, in the strategy discussions we've had so far, manganese is not only is a key product in steel, but it's actually a key product in the battery space as well. So we are looking. Well, when I say we're looking and investigating and educating ourselves on what we can do down the track.

There is an order that we would like to step forward with in regard to the growth, and that's largely going to be consolidation of manganese within ourselves and some of those opportunities around Tshipi. A downstream processing high-grade manganese and purification is definitely something we're learning about, trying to learn more about it, and is a future opportunity for sure.

[Operator]

We don't appear to have any more questions coming through at this time, Scott. Would you like to end the Q&A now?

[William Winter, executive]

I think so. I think actually, everyone has got a really good perspective on the quarter and some of the end-of-year results. And certainly, we're having another call in the near future. So I'm sure questions will come at that point as well. But really appreciate everyone joining on board and listening to the quarter and look forward to talking to you next time.

[Operator]

Thank you. That now concludes today's call. Thank you so much for joining, and enjoy the rest of your day.

[William Winter, executive]

Thanks, Ian. Thanks, Erica.