Jupiter Mines Limited (JMS) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Jupiter Mines Limited General Meeting. I would now like to hand over to the meeting Chairman, Brian Gilbertson. Thank you. Please go ahead.

Good afternoon, ladies and gentlemen. Welcome to this General Meeting of Jupiter Mines Limited. My name is Brian Gilbertson, and I am the Chairman of the company. As a quorum is present, I declare the meeting open. And I'd like to introduce my fellow directors, whom I believe to be on the line. if I introduce anyone that's not there, well, we'll just move on from there then. The first, of course, is Priyank Thapliyal, who is Jupiter's Chief Executive Officer. Then we have Mr. Yeongjin Heo, who is a Non-Executive Director. We have Hans-Jürgen Mende, a Non-Executive Director. We have Peter North, a Non-Executive Director. We have Scott Winter, a Non-Executive Director. And we have Brian Beem, who acts as an Alternate Non-Executive Director to Mr. Mende. Also present is Melissa North, Jupiter's Chief Financial Officer and the Company Secretary. This is a meeting of shareholders of Jupiter Mines Limited. Only shareholders and their appointed proxies or corporate representatives are permitted to ask questions and to vote. All other attendees are welcome as observers. Shareholder questions will be taken prior to the voting and during each resolution. I intend to vote all proxies given to me as Chairman in favor of resolution 1 and resolution 2 and against resolution 3 and 4, where I am directed or permitted to do so. After any questions and before a poll vote is taken, the total number of valid proxies and the manner in which each has been directed will be displayed. These figures will be as at the closing time for receipt of proxies, which was at 5:30 p.m. Australian Eastern Daylight Time. And the resolution will be voted on by a -- at the end of the meeting. So Melissa, can you please read out any questions and to whom they are addressed so that we may start with those?

Okay. Thank you, Chairman. We have received 2 questions ahead of the meeting and 1 online. We will start with the ones we've received before the meeting from shareholder [ Michael Buckley ]. With China selling back real estate and other steel end-use markets, this has heavily impacted iron ore. If this is a long-term, say, 3- to 5-year impact, can you describe the impacts upon the company in the near and long term? And that's just directed at the Board.

Okay. Priyank, do you want to have a crack at that?

Sure, Brian. I think as we all know, when we are in the commodities or the mining industry, the 2 important things are the life of the mine and the cost of production. And both those factors Tshipi probably in the first quarter, as we all know, it's a mine which is going to last for decades. The cost of production is at the low end at USD 2.20 FOB per dmtu. And that provides us what I call a very comfortable position to weather such storms. We are going through one right now, and we went through one a couple of years ago. And in both those circumstances, Tshipi never lost any money. That said, we do have a certain amount of flexibility where, depending on the manganese price, we can play with the amount of low-grade or the fine-grade product which is in our product mix and also on what amount of our production we want to put on the trucks. That are the 2 levers which we basically exercise depending on the manganese price. So obviously, when the manganese price is low, the profit will be low, the dividends will be lower. But because of these couple of parameters which are within Tshipi's control, we are able to judgment and prudence and maneuver those challenges.

Thank you, Priyank. I hope that gives the answer wanted. Melissa, what else do you have?

I have another question from shareholder [ Claude Eagles ]. Regarding the spill of directors with Jupiter Mines' 100% income and its 49% of Tshipi mine's earnings, question one, why do we have to have more directors to run a company than staff employed?

Well, we basically don't. This company has been run really very efficiently on the basis of minimum staff. And it is often a surprise to shareholders to learn that, I think, Melissa, we only have 5 staff members.

That's correct, Brian.

Every one, all of them ladies with the exception of Priyank. And the premise has been that we would run the company lean and mean, and that is what we have done. So the question might be better directed at Mr. Mende. Hans, do you want to say anything about that?

Yes, this is Hans Mende. I'm calling in from New York. I have some sympathy with the question I asked. I think then I joined the Board approximately 3 years ago. I think the Board has maybe more members than necessary, but that's, to some extent, a legal question. And as far as the staff is concerned, I'm aware of 2 or 3 staff members, and the rest may be some back office. But my concern was more that do we have confident staff that can make -- help Tshipi to optimize operation, create more value for shareholders instead of just collecting dividends.

Well, again, I hope that answers the question that has been put. Priyank, why don't you just remind us of the value of the company in relation to what it is managing?

I think, Brian, in the announcement which Melissa put out yesterday on the dividend, it basically elaborates that since our listing, we have paid out $309 million worth of cash to shareholders of dividend. Prior to that, we paid out, I think, $150 million more 2 years prior to the listing. So over the last 5 years, we've paid out in excess of $450 million against the market cap right now of pretty much the same amount. And even if we look at, at the time of the IPO, it was $800 million. So over the last 5 to 6 years, a substantial amount of the value of the company which has been reflected in the stock market has been paid out. And that will last for decades, like I said.

Okay. Thank you, Priyank. Melissa, do you have any other questions?

Yes, Brian, there's a number of questions. The next one is why are directors getting huge directors' fees and remuneration payments when shareholders have suffered a depreciation of over 25%, while other mines are recording record profits and rising share prices.

Melissa, my first reaction is that I'm not getting any of this super-payment that you're referring to. To the best of my knowledge, the only remuneration I get out of -- me personally out of this process is my arrangements with Jupiter. I don't earn anything out of the other operations. As to -- I don't know if there's a question about -- if implied in the question is anything about Priyank, sorry, and/or yours, Melissa. Again, I would only say that, that was all set out very -- in very great detail and very clearly when we took the company to its listing, and that has been adhered to. So I really don't have anything to add to that. What else you got, Melissa?

Okay. Why are directors' fees and remuneration payments more than the total salary of staff employed?

Well, the short answer is because it's run as a lean and mean company, and there is no staff. You've just heard we have 3 ladies, that's it. The company is run on the lean and mean basis, and it has run very successfully on that basis. I have nothing that I can add to that.

Okay. Next question, why are some of the directors collecting directors' fees out of the Tshipi mine, Jupiter Mines and Juno mines, which was spun out of Jupiter Mines, producing a downward trend of the new company while producing more directors' fees for no gain in investment?

Not even sure I understand the question. Melissa, can you help?

I believe that the shareholder is wondering why there are so many directors' fees out of each company and then obviously with the share price depreciation over the years. Just to clarify from the factual point of view, there are no directors' fees paid out of Tshipi. The Jupiter directors are only remunerated from Jupiter, not Tshipi.

Well, I think that answers the question, really.

Thank you, Chairman. Much the same question, why are we, as the shareholders, suffering millions of dollars of directors' fees for less return?

I think we've already answered that, Melissa. I have nothing to add to what have been -- to what's been said already.

What decisions have the directors made since floating Jupiter Mines that benefited Jupiter's shareholders?

I would say that we have delivered everything that we undertook to deliver. And we've produced in the input that we have made into the building of the mine from the outset. We've created one of the finest operations in the industry, and it continues to achieve its targets. Priyank, do you want to add anything? I really think that covers it.

I think really, Brian, I think as you've very rightly said, Jupiter raised the funds which were brought back into South Africa to build this mine. We have delivered everything which we promised at the time of the IPO. The share price is largely a function of where the manganese price is, which is not in my control, the Board's control or, in fact, anyone's control. The only thing within our control is what is the strategy of the company and what are the production and the cost targets, which we have always met or exceeded. So as far as the delivery of the strategy which was articulated in the IPO, I would be very surprised if we have faltered at any of those things. Some of the things we have explored, like my letter says, and we have not done because they were not in the interest of the shareholders. And sometimes not doing something is better for the shareholders rather than doing something which might destroy value down the line.

Yes. Then I would just add to that, that through the input that you in particular make, also with, yes, the shareholders [indiscernible], the operation is hugely efficient and will continue to operate for decades to come. And I take great comfort in that. All right, Melissa, what else have you got?

Okay. It's a statement and then a question. It appears the directors are doing more to enhance their share of earnings from Tshipi, Jupiter and Juno than the shareholders are getting considering all Jupiter's earnings are from the Tshipi mine. Earnings from Tshipi could all be distributed to Jupiter's shareholders by computer transactions. What are the directors doing, nothing by the looks of things, other than collect millions of dollars for themselves? It appears directors are doing more to enhance their income from the profits of Tshipi mine than for the mom-and-dad Jupiter shareholders.

Well, again, I think I've dealt with that. I really don't know what more can be added. I don't know where the millions that have been referred to are going. It is not going there. The company is operating very efficiently and is going to operate for years and years, decades into the future. And it is being extremely well run. So I have nothing further to add to that. Melissa, what else have you got?

Just a further statement from this shareholder. What shareholders require is a Board of Directors working for the benefit of shareholders. We have Brian Gilbertson getting fees from Tshipi and Jupiter. We have Priyank Thapliyal getting fees from Tshipi, Jupiter and Juno mines. I think this sets out the concerns we shareholders have of the running and exploitation of Jupiter Mines and what we need is a Board that is not interconnected with other related companies. That is the final question I have submitted. I have one question more online.

But let me just deal with that one minute. I've already said that we -- I mean, again, I'm not getting anything outside of the arrangements within Jupiter itself, so the statement is simply incorrect. I think we dealt with it. What's the next one, Melissa?

We have a question online from [ Richard Logan ]. The net profit after tax for the half year was $27.5 million, yet the dividend was only $9.8 million. Where did the rest of the money go? The profit reported was similar to the prior corresponding period, but the dividend was only 1/4 of that declared in the prior corresponding period.

Melissa, do you want to deal with that? Or Priyank?

Yes, Brian, I can, and Melissa can jump in if I've missed anything. The reality is that this $27 million of profit reflected about $13 million which was a noncash item depending on -- which reflected the sale of Juno from Jupiter, the iron ore assets from Jupiter into Juno. So that was a noncash item, so it is not apples-to-apples comparison. And then beyond that, we try to maintain discipline within Jupiter and maintain a cash flow amount and which also needs to reflect what is happening in the industry. And based on that, the Board took the decision to declare the $0.005 dividend.

Anything you want to add, Melissa?

No, that's correct, Brian.

All right. Well, then I think the question is dealt with. All right. Well, then if there are no further questions there...

Yes, Chairman, there's one more question.

Sorry.

A question from [ Chris Cormack ]. Has any thought been given to amending the remuneration structure given shareholders have expressed consistent disapproval of how the bonus/incentive schemes are structured?

Well, I think it has cropped up from time to time in discussions with shareholders. But because those arrangements were set out and entrenched at the outset, I really have not felt that they need to be changed. Right. What's next, Melissa?

That's all the questions I have, Chairman, unless there are any on the shareholder line.

Anyone? No?

Thank you. There are no questions from shareholders participating via phone.

Thank you. Okay. So we will now move to the formal business of the meeting. Resolution 1 concerns my reelection as a director. And accordingly, I will ask Priyank to chair this next part of the meeting. Priyank, would you do that, please?

Yes, Brian. So resolution 1 relates to the reelection of director Mr. Brian Gilbertson, that for the purpose of section 250V(1)(c) of the Corporations Act and for all other purposes, Mr. Brian Gilbertson, a director who shall otherwise cease to hold office immediately before the end of the meeting in accordance with section 250V(1)(b) of the Corporations Act, being eligible, be reelected as a director with effect from the end of the meeting. And the results are in the contained table. Thank you. Back to you, Brian.

Well, I have no intention of addressing the meeting. Our position has been set out very clearly in the assorted documentations. And are there any other questions, Melissa, on this matter?

No further questions, Chairman.

Okay. So then please now select either for or against or abstain for resolution 1 on the voting card. [Voting]

The resolution 2 is an ordinary resolution to approve the reelection of Mr. Yeongjin Heo as a director of the company, as included in the Notice of the Meeting. And Melissa, I don't know if it's on a screen anywhere, but it was certainly in the Notice of Meeting. All directors recommend that shareholders vote for the reelection of Mr. Yeongjin Heo as a director. Mr. Yeongjin Heo, do you want to make any statements in support of your election or take any questions? Not sure he's online.

There are no questions, Chairman.

All right. So if there are no questions, then we will proceed. And we would ask you please to select for or against or abstain on your voting card. [Voting]

Resolution 3 is an ordinary resolution to approve the reelection of Hans-Jürgen Mende as a director of the company, as included in the Notice of the Meeting. And Melissa, I don't know if there's a screen anywhere, but if there is, I guess, you've got it up. Mr. Heo, Mr. North and Mr. Winter all recommend that shareholders vote for the reelection of Mr. Mende as a director. Mr. Thapliyal and I recommend that shareholders vote against the resolution to reelect Mr. Mende. And Hans, I now invite you to speak in support of your reelection, if you wish to do that. Is there anything you want to say?

Brian, let me just say that I appreciate the shareholders' support and happy to continue to serve as a director.

Okay. Thank you. Melissa, are there any other questions?

No other questions, Chairman.

Okay. If there are no other questions, then I ask you to select the for or against or abstain on your voting card. [Voting]

Resolution 4 is an ordinary resolution to remove Mr. Priyank Thapliyal as a director of the company. Mr. Mende, Mr. North, Mr. Winter recommend that shareholders vote for the removal of Mr. Thapliyal as a director. I recommend that shareholders vote against the resolution to remove Priyank as a director. And Mr. Heo has chosen to abstain from providing a recommendation to shareholders. Melissa, are there any questions on that?

No questions, Chairman.

If there are no questions, then, Priyank, is there anything that you want to say beyond what you've already said in support of your position?

Nothing further, Brian. Thank you.

Thank you. Since there are no further questions, I ask you to please select either for or against or abstain on your voting cards. [Voting]

So I think we have now come to the end of the meeting. Shareholders participating at the virtual meeting website should ensure that the votes are cast. And beyond that, ladies and gentlemen, there is no further business, and so I declare the meeting closed. I thank you for your attendance, ask you to keep yourself safe and wish you Godspeed. The meeting is closed.