Jupiter Mines Ltd

ASX:JMS

Earnings Call Transcript 2023-Q4

[Operator]

Good afternoon. I would like to welcome everyone to the Jupiter Mines Q4 call. Today, we have Jupiter Managing Director and Chief Executive Officer, Brad Rogers; and Independent Non-Executive Chair, Ian Murray, to provide a brief update on the fourth quarter of the 2023 financial year. And then we will open up for questions from callers. Thank you so much. Ian?

[Ian Murray, executive]

Thank you very much, Lisa, and welcome, everybody, to our February quarterly report. You would have seen from the announcements today that it has been a busy quarter. This is [indiscernible] we're reporting on and the company is making good progress. Over to you, Brad.

[Brad Rogers, executive]

Thanks, Ian, and thanks, everyone, for joining on a Friday afternoon. We will actually have a look at the time of the [indiscernible]. So thank you for who have joined us. You would have seen this morning, no doubt, that the company put out 3 releases, the most straightforward of which was our notification that we're intending to change our financial year reporting date from what is currently on a South African financial year-end of 28th of February through the 30th of June. That's a relatively simple change, notwithstanding [indiscernible] but the intention there is that, that brings our reporting dates in line with the usual Australian cycle so that should make us easier to follow, hopefully, from an investment perspective. The second update was the quarterly report, which we'll provide some more detailed comments in a moment and take questions in relation to. And the third document we released this morning was a company strategy.

That is a very detailed document as you would have seen. Hopefully, people find it useful. It is representing a comprehensive amount of work [indiscernible] that has gone on within the company in working out what's the most valuable executable plan for it is, and we're excited by that plan and we think it's achievable. And you will see within that plan that a number of the initiatives, in fact, all of the initiatives outlined within that strategy are underway. And so we've been working on bringing that strategy out, but we've also been working on the elements with ensuring [indiscernible] over the last period of time.

This study is a very detailed document what we're proposing to do is [indiscernible] it's something that will take a bit of time [indiscernible]. It does stand alone. [indiscernible] but we also think it might be helpful to host a webinar in due course once people have had time to [indiscernible] fitted in with our various clarity, we were quoting in terms of things we're working on here [indiscernible] questions on that strategy [indiscernible] session today to do that, and that's why we're proposing a separate dedicated webinar to be able to make that strategy. But today, what I'm proposing to do is present the quarterly report and take any questions that you may have with respect to that quarterly.

In relation with the quarterly, you would have seen that Tshipi has had an extremely strong end to the financial year, really across the board, planning with which is a continuing strong performance from site management, no lost time injuries for the quarter reported, and they're now approaching lost time injury free, which is fantastic. The total recordable injury frequency rate [indiscernible] is also improving over time consistently. And at the end of the quarter was down 0.20, which is fantastic. From a production perspective, that was also stronger quarter-on-quarter, up 14% from total production volumes, and sales, we saw the strongest quarter for the year. We were up 29% quarter-on-quarter.

In the last quarterly call, we held late last year, I mentioned that we expected the fourth quarter to be strong and clearly it has been. And that we expect it to come in at about 3.4 million tonnes for the year [indiscernible] expected strong quarter, and that would require a step-up in sales [indiscernible] that level of sales. And that's just occurred.

In fact, we've beaten that guidance and coming at 3.48 million tonnes for the full year, and given that performance was almost entirely comprised of high-grade ore, the year just closed this quarter represents the high-grade ore sales ever recorded by Tshipi. You'll also note that as a side note really that costs were up by 9 cents quarter-on-quarter, but that was almost entirely a result of royalties and royalties are linked to profitability, EBIT profitability in the case of that royalty calculation and because our EBIT profitability in other, the crude royalties for that comprised almost all of that cost increase of 7 cents that was due to royalties. From a price environment, you would have seen that FOB prices during the quarter were higher, and that was largely a result of shipping rates improving during that period of time and that's something we've been mentioning in the last couple of quarters. That was coming through.

And we've seen that in the fourth quarter. It was also due to some temporary disruption that occurred in Gabon, where there were derailments in late December, which interrupted exports from [indiscernible] and so that caused the price to increase through a period of the fourth quarter, and that also provided some price [indiscernible] mainly because of those 2 prices were better for the fourth quarter.

Post the quarter, FOB prices have moderated somewhat, so back down to around $3.23 currently. And that's a combination of continuing fairly muted Chinese demand [indiscernible] issue that I mentioned a moment ago. And also a slight seasonal uptick in shipping rates, and that's due to South American [indiscernible] that we use throughout South African manganese exports. Having said that, it's not a dramatic increase, we've gone up from about $25 at it's the lowest during the quarter to in the range of $27 to $30 per tonne currently, and would expect us to moderate. From a financial perspective, also improved quarter-on-quarter, quite markedly in fact looking at the quarter-on-quarter performance and results overall for the financial year, given the prevailing levels of the manganese pricing during the year.

If you look at the full year FY '23 versus FY '22, it shows a good level of improvement. And if you look at the quarter-on-quarter EBITDA and impact results, there's quite a material step-up through the fourth quarter. EBITDA was up 50% and then 52% as a consequence of the drivers that I've just mentioned, strong sales, overall freight rates, relatively manganese price compared to the previous quarter.

Do we paid the dividend during the quarter. So if you're looking at the cash movements at Tshipi level, that's the reason why. And obviously, we'll be announcing our own dividend to shareholders and part of our final year mark-up to that to come. So those are the kind of highlight comments that I wanted to make. Concluding again, that was a bright quarter from really across the board of the back of the continuing strong performance and benefiting from the shipping rates coming down as well. So it is good to say that we had a strong financial and production quarter. Lisa, I'll just hand back to you and go to any questions.

[Operator]

Thank you very much, Brad. [Operator Instructions] We do have a question. It's from Mark Fichera from Foster Stockbroking.

[Mark Fichera, analyst]

Congratulations on a great quarter. Just on the sales side, FY '24. I know that given previously sort of guided expectations for the new year, previously got the proven -- have you got any drive inform that. And also, if so, [indiscernible].

[Brad Rogers, executive]

Yes. So no guidance but I'm kind of -- I don't think we normally do give guidance on that pipe, obviously, last quarter, so I could give a bit of a view for the full year. I think it's been going in relation to the fourth quarter, but to my knowledge, no guidance has been given for the full year. But I would say that we are looking to, as a rule, and you would have seen that in the strategy document maintain level at a minimum stable production from [indiscernible] the manganese price environment. And if you look at the historical figures, the sales have come in at an average of 3.4 million tonnes per annum. The composition of that will be a factor of the market to some extent and our ability to profitability able to sell low grade over time, over the much longer time or the coming years, we want to be able to sensibly increase that production target. But as you're thinking about the forward year, I would guide you towards recent history of around that number of 3.45 million tonnes.

[Mark Fichera, analyst]

And a second question that I had. You mentioned that the mix of CIF and FOB sales. Just wondering if you have got any sort of guidance of that going forward and also the reasons for the difference why some sales at FOB and some CIF?

[Brad Rogers, executive]

Yes. So Tshipi historically has been almost entirely [indiscernible] and you can see that in the numbers, it's still predominantly a CIF-based market. It's just really -- there's no particular quality on CIF is differently in terms of target mix of sales currently. But we're looking at Jupiter's marketing here when you're talking about that, obviously, we're marketing our share on Tshipi and we are always trying to see if we can optimize [indiscernible] we're looking to diversify where in the world we are selling our ore to, predominantly goes to China [indiscernible] we've been looking at some Indian sales and had some success in that. So it finally comes down to where we think the value is, what some of those new customers might want. There's no particular policy about what target level of FOB versus CIF sales we should have, more something we are just open to and testing from the value perspective going forward. I would draw out coming up with some more [indiscernible] and qualities around that. At the moment, it's opportunistic rather than [indiscernible].

[Operator]

[Operator Instructions] We have no further questions.

[Ian Murray, executive]

Okay. Perfect. Thank you all, and look forward to speaking to you soon.