Jupiter Mines Limited (JMS) Earnings Call Transcript & Summary

That's 3:31. So with a lot of time, let's kick off. Good afternoon, ladies and gentlemen. Welcome to the Annual General Meeting of Jupiter Mines Limited. My name is Ian Murray and I'm the independent nonexecutive Chair of Jupiter. As a quorum is present, confirm Mel? Good. I declare the meeting open. First slide is what we're going to run through today. I would like to introduce my fellow directors, Scott Winter, a Non-Executive Director as well as the acting CEO of Jupiter Mines. Peter North will be online at some stage. He is currently overseas. Patrick Murphy, Non-Executive Director and shareholder representative; Ben Kim, Non-Executive Director and shareholder representative. Also present are Melissa North, our Chief Financial Officer and Company Secretary. We also have our auditor here, Brent Steedman, a partner from Grant Thornton. Thanks, Brent. This is a meeting of shareholders of Jupiter Mines Limited. Only shareholders, their appointed proxies or corporate representatives are entitled to ask questions and vote. All other attendees are welcome as observers. Shareholders attending the meeting online will be able to cast their vote and ask questions online, which Mel will be monitoring. Prior to voting, questions will be taken for each resolution. Shareholders present here today can raise the yellow or blue shareholder cards to ask questions. Those on the phone lines would have contacted link prior to the meeting to obtain a pin per the instructions in the notice of meeting and will receive instructions on the phone line. A phone moderator will introduce you. Those shareholders online can click on the Ask Question button, please select the resolution to which your question relates or general business from the drop-down menu, then type and submit your question. I intend to vote all proxies given to me as Chair in favor of the resolutions 1 through 6, we are directed or permitted to do so. Finally, after any discussions and before the poll vote is taken, the total number of valid proxies and the manner in which they have been directed will be displayed on the screen. These figures will be as at the closing time for receipts of proxies, which was at 3:30 p.m. Australian Western Standard Time on the 24th of July. The resolutions will be voted on by a poll, which will be conducted at the end of the meeting. I will now give you the Chairman's address. Good afternoon, shareholders, and thank you for participating in this Annual General Meeting of Jupiter Mines. My name is Ian Murray, and it is my pleasure to be chairing my first AGM of Jupiter Mines. Before I begin my address, I would like to acknowledge the Whadjuk Noongar people on whose land we meet here today and acknowledge their leaders past, present and emerging. I also want to extend my acknowledgment to the First Nations and indigenous people on the lands that Jupiter has its operations. I was initially appointed to Jupiter's Board as a Non-Executive Director on the 16th of February of this year, ahead of assuming the role of Non-Executive Chairman from the 1st of May. I joined Jupiter with extensive experience in the global mining industry and in the capital markets, having held senior executive and leadership roles with mining and exploration companies across Australia, Africa and North America. I am driven by team success in delivering sustained positive outcomes for all shareholders. As you can tell from my accent, I am -- I was born in South Africa, but I've lived in Australia for a few decades. So the opportunity to chair a company like Jupiter, which straddles both countries is a wonderful opportunity for me. You will recall that a fourth consecutive annual vote against the remuneration report, led to a Spill meeting at Jupiter's 2021 Annual General Meeting and the subsequent departures of directors, including the then Managing Director and Chair. In November last year, Mr. Peter North and Mr. Scott Winter were appointed as acting Chair and acting Chief Executive Officers, respectively. On behalf of all shareholders, I would like to thank Peter for accepting the role of Acting Chair last November and for his leadership prior to handing over to me, as well as I'd like to thank Scott Winter, for the -- taking on the challenging role of acting CEO, a role that he has carried out superbly since then, and we are seeing those improvements coming through with the operations in South Africa. So thank you, Scott. Thanks to their efforts, Jupiter continued to operate strongly and was able to complete a thorough and extensive process to appoint a more permanent CEO as well as position the company for future and ongoing success. I would also like to acknowledge the foundation roles played by the previous board and management in helping establish Jupiter and oversee the company's investment in the Tshipi manganese mine, which is a world-class, long-life, low-cost operating asset. What attracted me to this company was an asset with a 100-year mine life operating close to the lowest quartile operating cost. If I can now turn to the performance of Tshipi and of Jupiter in the past financial year. COVID-19, combined with softer global manganese prices, created a challenging environment for Tshipi. Despite these difficult conditions, Tshipi in which Jupiter has a 49.9% economic interest, had a profitable year and maintained production with reduced operating costs. The global pandemic affected logistics and supply chains around the world and Tshipi endured a significant increase in freight costs. However, Tshipi achieved 9.8% increase in production from 3.4 million tonnes to 3.7 million tonnes, while reducing the average FOB cost from USD 2.03 down to $1.93. Pleasingly, the safety performance of Tshipi was very good, with injury rates remaining low, and this remains a strong focus for your new Board and management team as well as the Tshipi Board and management team. I also want to note the tremendous local and community engagement by the Tshipi team, which is so important in today's world of mining and a key plank in the strong sustainability credentials that Jupiter is building. Jupiter reported a group net profit after tax of $54 million for the financial year, and your Board declared a final unfranked dividend of $0.01 per share, adding to the interim unfranked dividend of $0.005 per share. During the year in review, Jupiter also completed the demerger of Juno Minerals Limited, which housed the noncore West Australian iron ore assets via an in-specie distribution to shareholders. This enabled Jupiter to commence the new financial year in a strong position to concentrate on Tshipi and consider high-value opportunities to grow our core manganese business. As we announced this morning, I'm pleased to introduce to you Mr. Brad Rogers, sitting at the back, our incoming Chief Executive Officer. He will commence on 1st of August as CEO and Managing Director. Brad is here today as a guest. Welcome, Brad. Next year, you'll be up here giving the presentation that Scott is giving later. Brad is joining us from a leading mining logistics company, Bis Industries, where he has been Managing Director and CEO since 2015 and a member of its leadership team since 2008. So Brad has extensive experience in the industry. Prior to Bis Industries, Brad was General Manager of Corporate Development at mining, engineering and infrastructure Company, GRD Limited, where he was responsible for group strategy, corporate finance and Investor Relations. He also led GRD's global renewable operating business in Australia and Australia for 3 years -- sorry, Australia and Asia for 3 years. At Bis Industries, Brad has had extensive exposure to the value chain in manganese and other bulk commodities and his experience in managing a large international business. He has extensive experience in setting group strategy, overseeing complex mining operations and logistics, M&A and stakeholder engagement. And I'm delighted to welcome Brad to Jupiter as we embark on a strategy to deliver sustained value and growth to all of our shareholders from our world-class manganese business. I know Brad is looking forward to getting his feet under the Jupiter table, visiting Tshipi as soon as possible and then meeting with all -- with our shareholders over the ensuing months and sharing his vision of the growth strategy with all of you. In closing, I would like to thank my fellow directors and the Jupiter team, led by Scott Winter, and our long-serving Chief Financial Officer and Company Secretary, Melissa North, and all shareholders for your ongoing support. Thank you. I now move to the formal business of the meeting before inviting Scott to take us through an update of operations. The notice of meeting was sent to shareholders on the 24th of June 2022. If there are no objections, I propose the Notice of Meeting is taken as read. The annual report for the financial year ended 28 February 2022 contains the 2022 Directors' report, financial report and the Independent Auditor's report. The financial statements have been approved by the directors and audited by Grant Thornton. As required by Section 317 of the Corporations Act, these reports are tabled. I now invite your questions or comments on the financial reports or on any other general matters. Brent Steedman, a partner from our audit firm is also available to answer any specific questions you may have. Please note, only shareholders of Jupiter Mines can ask questions or make comments at this time. Please note all questions will be addressed firstly from the floor. Are there any questions from the floor? Mel, on the telephone lines, anything?

No.

And anything online? It doesn't look like it.

No.

Great. Thank you. That appears to be the questions, I now move on to the resolutions. Resolution Number 1. Resolution 1 is an ordinary resolution and advisory vote on the adoption of the 2022 Remuneration Report as included on the screen and in the notice. The directors recommend shareholders vote in favor of this resolution. I note the resolution is advisory only. However, the Board will consider the outcomes of the vote when reviewing Jupiter's remuneration policies. Also note that the shareholders who are members of Jupiter's Key Management Personnel may not vote on the resolution. Are there any questions firstly from the floor? No? On the phone or online?

No.

No. Thank you. Please now select either for, against or abstain for Resolution 1 on your voting card. [Voting]

Resolution 2 is an ordinary resolution concerning the reelection of Director, Patrick Murphy, as included on the screen and in the notice. The directors other than Mr. Murphy recommends shareholders vote in favor of this resolution. Are there any questions firstly from the floor? No? Phone and online?

No.

No? Please now select for, against or abstain for resolution number two. [Voting]

Resolution 3 is an ordinary resolution to approve the reelection of Mr. Ben Kim, as Director of the company, as included on the screen and in the notice. Directors other than Mr. Kim recommends shareholders vote in favor of the resolution. Are there any questions? No. Mel?

No.

No. Please now select either for, against or abstain for Resolution 3 on the voting pad -- voting card. [Voting]

This one, I will need to hand over to Mr. Scott Winter.

Okay. Resolution 4 is an ordinary resolution to approve the reelection of Ian Murray. The directors other than Ian Murray recommends shareholders vote in favor of this resolution. Are there any questions? Please now select either for, against or abstain for Resolution 4 on the voting card. [Voting]

Resolution 5 is a special resolution to approve the adoption of the new constitution as included on the screen and in the notice. The directors recommend shareholders vote in favor of the resolution. Are there any questions? None from the floor on. Mel, none?

No.

Please now select for, against or abstain for resolution 5 on the voting card. [Voting]

Resolution 6 is a special resolution to approve the proportional takeover provisions as included on the screen and in the notice. The directors recommend shareholders vote in favor of the resolution. Are there any questions?

No.

No, nothing from you, good. Please now select either for, against or abstain for Resolution 6 on the voting part. [Voting]

This is now the end of the formal part of the meeting. Please place your voting cards in the ballot box circulating in the room. If everyone has submitted their voting cards, I declare the poll closed. Shareholders participating via the virtual meeting website should ensure their votes are submitted prior to the end of the countdown shown at the top of the screen, which I don't see. Their screen. Okay. Assuming they [indiscernible] something. This will also be announced to the ASX after the conclusion of the meeting. Thank you, ladies and gentlemen. I now invite Jupiter's acting CEO, Mr. Scott Winter, to update shareholders on the activities of the company. Thanks, Scott.

Not sure if I need this or not. Good afternoon, everyone. Thanks very much, Ian, shareholders, fellow directors, executives and partners in the room. It's a privilege to be here to talk to you about the business over the last 12 months and share with you some insights and highlights and a little bit about what's going on in the future. Well, that's [ right way ] of control. First slide is a little bit of a highlight. I'll let you read through. But really, if I just pick out some highlights and Ian has mentioned this before, an NPAT of 54 for the year, distributed a dividend, a nice healthy dividend almost $40 million in cash at bank at the end of the financial year. As Ian mentioned, we continue to be a low-cost producer and have brought our costs down again to $1.93 per dmtu. And I'll mention a little bit in the marketing update, but it has been a tough year and quite a volatile year from a manganese ore perspective, and everyone would know the impacts of various political issues, fuel issues around the world, which has seen freight costs soar over the year and those are the guys that have consumed a significant amount of our profit over the year. The marketing business continues to do well and outperforms the index quite often. So we deliver about $7.3 million there from the marketing fee. And as Ian mentioned before, cleaning up the Jupiter business by the demerger of the iron ore assets. Last year also saw the change in the Board and the introduction of new Board members and Chair, Ian. The briefly mentioned revised strategy is something that's been worse on with the Board and as Ian mentioned, will be something that Brad will really talk about in the coming future and land that for the next coming years. And one thing we have mentioned is the engagement of corporate advisers to assist us in strategy and looking at some of the opportunities in the manganese market at the moment. Awesome. Very handsome people there. I think you all know those.

[indiscernible]

Look, now a little bit more specific on the to asset itself. It's fair to say the asset is a terrific asset. We've been out there a few times now. And every time we find something new or something elsewhere we can see opportunity. But being on the ground, out of the site is terrific. The operations are going well, not without its challenges throughout the year of weather and various other impacts. We have got some work to do with [indiscernible] as a contract, and we're working very strongly with those guys over the last few months to set them up for the future, and there's a new gear coming into the contract, which is really going to aid us going forward but we hit our target, graded ore target for the year last year. The operational program is with [ Norman's ] to really improve some of those operational aspects, not only in the mining side, but in through processing and the materials handling. The high-grade ore production is on target, so facility there is going exceptionally well. One thing that is, and we are seeing is the low-grade market is deteriorating over the years. So we are stockpiling a lot of ore. We've got about 1 million tonnes of low-grade ore on stockpile at the market ready to penetrate into the market when the price is right. We find it's pretty marginal at the moment, if not loss making, if we do put it in because it does get trucked to port instead of rail to port. We preferentially put high grade on rail, obviously. The trucking capacity is there to ensure that we do meet our logistics target. I will mention there that there are issues remaining with Transnet in South Africa. We're seeing a sort of an 8% of what the Transnet infrastructure can deliver. So we're having to supplement that with additional trucking capacity to ensure we meet our shipping targets. But that's going well. It's a slightly higher cost, so we do see some slightly higher cost logistics through the system. Transnet issues, we expect to go to continue, but all of users in the [ Kalahari ] are working with Transnet to try and optimize and help that system improve. But again, we're not going to see next year being a complete -- solved that problem. It's going to be ongoing for a while. But we're quite innovative about our solutions, logistics to the port. So we've always got a solution there. We did ship our target of about 3.3 million, 1 or 2 vessels, sorry, were rolled into March, which would have increased that by another 90,000, but we had a good shipping year. And as I mentioned here before the costs in the mining and FOB essentially are pretty good at $1.93 and we continue to look for opportunities in and around the operation to continue to reduce that. One thing I will stress, though, is we're hitting our high-grade target. We have got good healthy stocks in the market. But what we've really deliberately done is made sure that we don't high grade the pit. We don't preferentially take graded ore to make sure we meet our targets. We are making sure we are mining at [indiscernible] strip ratio. So we keep a consistent cost through the operation, and we'll do so in the future. A mix of challenges initially and then some opportunities also help us and some challenges. Again, I mentioned the revised strategy. There is a lot of opportunity out there, consolidation of Kalahari, various other growth, our opportunities at Tshipi itself. But again, that strategy will be clearly highlighted in the coming time with [indiscernible] jobs on board and really is able to formulate that strategy and talk to us all about it. The capitalizing on growth opportunities. Again, the same as before, optimization of the logistics network to maintain lower haulage rates. We are looking at currently, we rail through Transnet system, we truck to the port, but we also have a hybrid that goes to Luderitz, which is a truck and rail solution, and that is a nice intermediate solution. So we're looking at how that can further assist us if we want to increase production. There's some nice opportunities on site with respect to materials handling. Just walking the ground, there are areas where we can see some cost to and efficiency to be gained just by virtue of spending a little bit of money, a little bit of capital into the materials handling. We can see some operating costs coming out of the project, which is great. The feasibility study, which was done a few years ago around the ramp up study up to 4.5 million tonnes is something where we've got on this year's budget. So we should see by the end of this year, a new study exists, some answers around ramp up. And that's a consideration of what the asset can do all the way through to what the market can take. So that will be a nice piece of information for us. Mining logistics operational improvements, talk about those a bit. Diversification of GP's customer base is something we've been working on 95-plus percent our product to China at the moment. So we are deliberately trying to diversify that customer base at the moment, just to give us some coverage on risk and find some new customers in different areas. The main 2 users of our ore is China and India and some other bits and pieces, [indiscernible] actually in France takes some product and various other pieces in Saudi areas. But India is a prime target for us to diversify and it's been going quite well. The opportunistic high-grade tonnes is something that we're -- what I mean by that is looking for opportunistic tonnes placed into the market when the price allows. It's quite a volatile price as you can see. But there's a trigger point that we've got home in at the moment that suggests if it hits a price and we can put more tonnes in which is really about short-term management of of our sales to take those opportunities when they arise. Suppose the challenge out there is just what I said around the volatile manganese price. It is volatile, and we've got beyond a way to it, varies from week to week from very -- a range of different things, political to whether all sorts of things. We've seen the manganese price just recently come off in around April, May and a rise up sort of around $5.40, $5.50, which is terrific, but it's slightly around $5 at the moment. And again, it's going to fluctuate. I can't predict that in the future, but it's something we manage quite closely. I suppose the good thing is, at the moment, our freight rates are coming down significantly. We saw those quite high, but they come off about 20% in the last few weeks. And that's largely because the fuel price has come right down and some of these logistics change out that the shipping channels are slightly organizing themselves from having to reroute with the political issues in Russia. Manganese market. If anyone can pick that, they'd be a very rich person, but it's a little bit about where does the mine, predominantly influenced by the steel production, obviously, which in 2022 was depressed largely around COVID, the Olympics and various things, but there was predicted to be a resurgence in calendar '23, obviously. And there was initially, but some of the lag and issues around COVID, some of the restrictions in China continued. We've seen some of the issues remain in India as well. So we are seeing some of the trailing impacts back that in manganese or the demand for manganese, essentially some of those plans in China and India continue to produce, even though they couldn't sell and the stockpiles grew quite significantly. So they're just running off at the moment. We expect to see that to uptick later in calendar '23. So although we've got slightly depressed manganese price at the moment, we're expecting that to sort of come back up. The good thing, as I said, is freight. I think it is going to remain where it is now in the sort of lower 40, still significantly higher than what we'd seen sort of 12, 18 months ago, but it's likely to come off the heights the $60 mark, which was quite high. In general, ferromanganese and steel production increasing become very important in -- for India. They're a new customer and a significant buyer of our manganese ore, which is great. And I think I've covered the last points down there. I suppose the very last point out there is that one of the things we are looking at is -- and the market is sort of starting to grab on to as the new development opportunities in manganese concentrate, high-grade manganese or in the battery sector. So that is something that's certainly out there in many of the participants are talking about. I think that's it. Thanks very much.

[indiscernible] questions.

I'll just read it out. "Hello. I see Tshipi paid a dividend of $54 million and Jupiter paid out $43 million, that is a difference of $11 million or around 20%. Can you tell me what value I get out of that $11 million? Why shouldn't shareholders get more of that dividend?" Right. $54 million from Tshipi was total to both JMS and [indiscernible]. So JMS gets half of that. JMS has a 94% payout ratio for FY '22. Thank you. No more questions? Done.

Thanks, Scott. Ladies and gentlemen, that's the end of the formal business of the meeting. The AGM is now closed, and I invite you all to join us for a drink, meet the existing Board and meet the incoming CEO and Managing Director, Brad, a week before he starts his job properly. Thanks, everybody.