Jupiter Mines Limited

The conference is now being recorded.

Good afternoon, and I would like to welcome everyone to the Jupiter Mines Q1 call. Today, we have Jupiter Chief Executive Officer Priyank Kapil to provide a brief update on the first quarter of the 2022 financial year. After the update, we will open up to questions from the callers. Thank you, and please go ahead, Priyank.

Thanks, Erica. Good afternoon, everyone, and welcome to the first quarter 2022 Jupiter Mines conference call. Let me start off by saying that the first quarter of this financial year posed a couple of challenges. The major one being that both the Northern Cape, where the mine is located, and Hauteng, where the head office is located, went through the third wave of COVID, which was much more worse than the first and the second wave. And that had some impact on our operations. The wave in the Northern Cape is now tapering, but the wave in Hauteng is still going very strong. So that has some implications on the day-to-day running of the operations. The good thing is that as all of us know, Chippy's success relies on Transnet and most of the Transnet operations are located in the Eastern Cape and Eastern Cape has till now been immune to the third wave. So while the operations have had the impact on account of COVID, the logistics, the Transnet has pretty much been going as per normal. And that is reflected in the numbers. In terms of mining volumes, we mine about 4 million BCMs, but we had substantial hiccups on account of mining efficiencies, which led to a loss of around 1 million BCMs of mining production. So those losses were largely on account of mining efficiencies. The blasting was not done properly, which resulted in big boulders in the mine, which resulted in inefficiencies in terms of transporting it from the mine pit to the primary crushing, where we had to use the pecker to break it down into smaller products before it could be fed into the primary crusher. So that was largely the reason why we had these losses. What we have done since then is instituted three work streams. First work stream is to look at the mining efficiency where we are looking at the blasting technique, the inefficiency in terms of the trucks and the excavators, the maintenance philosophy, and Lately, we have seen a surge in absenteeism, people using COVID as one of the reasons for being absent. So the shift contingent has been smaller than what we have had historically. So we are looking into all those techniques, all those work streams to see like what we can do with the mining contractor to increase the efficiency. What we are also contemplating is looking at making new equipment on the site. More than the mining contractor has received funding approval to do so. So we are now factoring that into our medium term mining plan to see what sort of OPEX we can achieve with the new mining equipment and also how the efficiencies and all will improve. That said, the efficiency has improved since we have instituted this project, even with the old equipment. But with the new equipment, it will be much, much better. Three out of the five excavators can potentially be replaced with the capital which has been allocated to Moolman. So we are looking at that. And we are also looking at owner mining as one of the options. We believe that all these work streams should be finalized over the course of July, August, and at that time we should be in a position to take a decision on what we need to do on the mining front. So that is as far as the mining is concerned. On the production side, we produced about a million tons of material. 800,000 tons of that was on the high-grade product, and 250,000 was roughly the low-grade product. What we are also looking at is bringing the secondary crusher, what we've called, like, the GP500 plant in-house. That will result in some cost savings, which was always the plan. It was outsourced, and once everything was stabilized, we were planning to bring it in-house. So we are now at that stage, and we are looking into that just as an option of further cost reduction. In terms of logistics, we railed close to 860,000 tons to the port. Out of that, about 560,000 tons was on the rail and 300,000 tons was on the road. And in terms of sales, we shipped about 845,000 tons of product. Again, 630,000 tons was primarily the high-grade lump and fine, and the remaining was the low-grade product. So that's how the operations have basically phased out. Suffice to say that even at these low manganese prices, the operations have been cash positive, and that is depicted in the numbers. In terms of logistics, a couple of things that have happened. Now we have stabilized the 60,000 tons per month run rate through Ludrit, 720,000 tons over the course of the year, which against the previous option where we had to truck it, results in almost 65 to 70 million rands of cost savings. And what we are also looking at is the co-loading of these Ludrit vessels through the port of Koka against the previous option of through Port Elizabeth. And that should result in bigger shipment sizes and should lead in cost reduction on account of logistics. We are also looking at options of increasing the shipment size from other ports from 44,000 to 55,000 to 60,000 tons. And that, again, is one of the options for cost reduction. So all these options are basically being looked at, and as I said, we should have finality on these over the course of July and August. In terms of the market, I think it's fair to say that over the five or six years of operations on the FOB basis, the average price, which we have realized in the first quarter, has been the lowest. That said, on the CIF basis, the price is still pretty strong, so the major theme which has basically been faced by the manganese industry is the high freight cost, and that is largely on account of the competition the ships are facing from other commodities, which have basically been trading at very high and robust prices. In the past, our shipment cost to China would have been something like 60 to 70 cents per DMTU, and right now we have to pay close to $1.25 to $1.30 per DMTU. And I do not think this is going to change over the course of the next three to six months. The good thing is that we are seeing slight reduction on account of the trucking tons coming out of South Africa. but again, we have only seen that over the course of May, so we will be following and tracking what goes over the course of the next few months to see whether there has been a genuine downturn in terms of trucking tons out of South Africa. So I think that, in a nutshell, is what I would like to highlight as The major achievements are focused over the course of the first quarter and what we plan to do over the next three months. And with that, I'm more than happy to answer any questions.