Australia’s Jupiter Mines is looking for an opportunity to increase its ownership of one of SA’s biggest manganese mines as it moves to remove iron ore from its portfolio.
Jupiter, which is chaired by mining veteran Brian Gilbertson, one of the brains behind the formation of BHP, is the 49.9% owner of Tshipi é Ntle Manganese Mining and holds half the marketing rights over the mineral coming from the Tshipi Borwa mine.
Tshipi regularly produces and sells more than 3-million tonnes a year of manganese, a mineral used in steel manufacturing, and is busy with an investigation into ramping up production to 4.5-million tonnes a year.
Jupiter’s board agreed on Tuesday that its iron ore assets in Australia be spun out of the company during the next three or four months, leaving it a pure play on manganese, CEO Priyank Thapliyal said on Wednesday.
Speaking at the company’s annual general meeting, Thapliyal said the board was unanimous in agreeing to spin off the Mount Ida and Mount Mason iron ore prospects in Western Australia.
“If we are able to do that, it not only optimises the value of our iron ore assets but it gives the assets to a new team and management who we hope will be entrepreneurial and do justice to these projects,” Thapliyal said.
An independent valuation of both the assets valued them at between A$5.6m and nearly A$18m.
“It cleans up Jupiter and positions it as very strong half owner and half marketer of one of the best manganese assets in the world,” Thapliyal said, adding it would make Jupiter an attractive investment for shareholders and corporates.
Jupiter would like to own more of Tshipi, he said. The mine is one of the five largest in the world.
“We would like to increase our stake, but it has to be on terms that are accretive to Jupiter shareholders,” he said.
Tshipi paid more than R2bn to its shareholders and Jupiter paid almost all its share to shareholders, resulting in a dividend yield of 15% and a 92% payout ratio.
Tshipi exported 3.4-million tonnes of manganese ore in the 2010 financial year to end-February but will fall short of its targets for the 2021 financial year because of the coronavirus pandemic and the temporary shutdown of SA mines and disruptions to rail transport in the country.
Tshipi is expected to produce between 2.6-million and 2.7-million tonnes of ore in 2020, which is up to 400,000 tonnes less than planned. However, Tshipi, which places as much low-grade ore on the market above its 3-million tonnes sales target, will endeavour to do so again during the year, Thapliyal said.
Tshipi anticipates moving 1.7-million tonnes of ore by rail to the coast, which is about 400,000-500,000 tonnes less than it normally rails, while trucking will account for about 1.4-million tonnes.
Tshipi has railed 30,000 tonnes of ore through Luderitz port in Namibia as a fresh export channel and in June doubled that to 60,000 tonnes.
Every tonne moved to rail from road results in a A$30/tonne saving, Thapliyal said, noting that Luderitz would feature heavily in the group’s expansion plans.
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