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Jupiter Mines

  • RRR: Owns ~1% of Jupiter Mines Ltd.
  • Manganese Production in South Africa
  • Targeting 3MT+ in 2018-19
  • Completed a A$240 million IPO in April 2018
  • Payout Ratio of 70% from Tshipi Mine Expected

South Africa South Africa

Jupiter Mines Limited is an Australian company with interests in Tshipi é Ntle’s manganese mine in South Africa, a Direct Shipping Ore iron project at Mount Mason in Western Australia and a Magnetite project at Mt Ida, also in Western Australia.

Introduction

Red Rock’s 23m shares (~1%) in Jupiter have formed a significant part of the Company’s investment portfolio since 2007 when Red Rock first vended its iron and manganese exploration tenements into then-ASX listed Jupiter. In December 2013 Jupiter Mines delisted during the sector downturn and has been operated privately since that period, while focusing primarily on developing its manganese assets. Following the commissioning of its main asset into production in South Africa, Jupiter has made a series of distributions via share buy backs totally over $150m and maintains a strong dividend pay-out ratio.

Tshipi

Jupiter owns 49.9% of the open-pit manganese mine Tshipi é Ntle in South Africa. With 86Mt at 36.3% Mn reserves the Tshipi mine started production in early 2013 and has since more than doubled its production and export volumes to over 3Mt of Mn ore, with capacity now raised to 3.6Mt per annum. Tshipi realised its best gross profit ratio during the half year to August 2018 at 54%. Tshipi is one of the world’s largest manganese mines and is well positioned to increase market share across global manganese markets.

Jupiter’s Tshipi manganese ore is shipped to multiple customers around the world and based on Jupiter’s sales experience has been a highly sought-after product in the market place.  Tshipi’s transport infrastructure is considered one of the best in the entire Kalahari manganese field. Tshipi has the potential to load trains faster than any other manganese operation in South Africa.

Manganese is a critical and irreplaceable element in carbon steel production and is mainly used as an alloying agent that increases both the strength and flexibility of steel. Amongst its listed competitors, Tshipi é Ntle is the only manganese producer which provides 100% exposure to the manganese mining, allowing Tshipi é Ntle to maximise profitability during a market upturn, whilst its operating structure allows it to predominately remain cash flow positive throughout the manganese price cycle.

Tshipi é Ntle inhabits a favourable position on the global manganese cost curve with operating costs (including costs
attributable to mining, crushing, transport, general marketing and logistics) of US$2.20 per dry metric tonne unit for FY2017, positioning Tshipi é Ntle as one of the lowest cost manganese producers globally.

The Tshipi Mine’s large, shallow homogeneous mineral resource base provides operational, safety and cost benefits, with its contractor-operator model enabling it to be one of the lowest cost manganese producers globally, whilst still being able to flexibly scale production in response to manganese price volatilities and market conditions.

The Tshipi Mine’s infrastructure includes:

(i) an integrated processing plant with annual production capacity of 3.6 million tonnes;
(ii) an 8km private rail siding that can accommodate up to two trains at once, with those two trains being able to be loaded in under 4 hours; and
(iii) access to road and rail logistics infrastructure (including a Transnet rail allocation of 2.1Mtpa) to transport its manganese ore to four separate ports, utilising up to seven terminals before being sold and exported to international customers.

Other projects

Progress at both of Jupiter’s Western Australia projects has been slowed by low iron ore prices. Mt Ida, in which Red Rock retains a 0.75% production royalty, has a JORC Inferred Mineral Resource Estimate of 1.85bn tonnes at 29.48% Fe. This and the Direct Shipping Ore project at Mt. Mason are on care and maintenance.

Scoping Studies completed in 2011 on the Mount Ida Magnetite Project and the Mount Mason DSO Hematite Project indicated that the projects were financially robust. Both projects are planned around existing infrastructure in the region, including the Leonora to Esperance railway line, and the Port of Esperance.

More information

More information on Jupiter Mines can be found at https://www.jupitermines.com/

Highlights

  • Jupiter distributed over $200m in past 2 years
  • Listed on the ASX:JMS
  • 16.1% H1 2019 yield
  • Tshipi, South Africa 49.9% ownership of open-pit manganese mine
    • Shallow open-cast mine located on large homogeneous ore body
    • Steady state production of 3Mt+
    • One of the world’s largest Mn mines - Life of Mine to 2047
    • Strong manganese prices
  • Mount Mason, Western Australia DSO project
    • On care and maintenance
  • Mt Ida, Western Australia Magnetite project
    • JORC inferred resource of 1.85bn tonnes at 29.48% Fe
    • On care and maintenance