Jupiter Mines Limited

Good afternoon, and I would like to welcome everyone to the Jupiter Mines second quarterly call. Today we have Jupiter Chief Executive Officer Priyank Sapriel to provide a brief update on the second quarter of the 2022 financial year, and then we will open up for some questions from callers. Thank you, Priyank. Please go ahead.

Thank you, Erica. Good afternoon, everyone, to Jupiter Mines second quarter call. As you must have seen from the report which was released a day or two ago, the second quarter had a couple of challenges. Firstly, it was to do with the mining where we, just like the first quarter, had substantial issues on the equipment breakdown, especially the excavators, and also the absenteeism which has been there since the COVID started. And the net impact of that was that we were about 1.1 million BCM behind on the mining volume. On the production side, we had close to 945,000 tons of production. Out of that, about 850,000 tons was on the high-grade side. About 100,000 tons was on the low-grade and the low-low-grade product side. The key theme which we also faced, just like most of the industry, was the low manganese price. And in light of the low manganese price and the reduced profitability on the low-grade products, we cut back substantially on the sales on the low-grade and low-low-grade product side. So of the 808,000 tons of sales, roughly 752,000 tons was on the lumpy side and only about 50,000-55,000 tons was on the fine side. In terms of the profitability, despite the challenging manganese price, we are still profitable. Our EBITDA is still close to 17% margin and on the net profit, we are close to 10% margin. But what that basically resulted in was that on the half-yearly basis, we are about 2 million tons behind on the mining side, which has necessitated us to basically start mining the barrier pillar from September of this financial year. That access to the barrier pillar will help us substantially in meeting our production targets, which we have still maintained for the full year at 3.45 million tons. If we now look at on the logistics side, Transnet has had some challenges. It's not something which is unique to Chippy. Cable theft has been a major issue. But what we have done is that whenever we have those sorts of setbacks, we have moved tons which were basically destined for the Transnet Rail network onto the road. It has had some impact on our profitability, but we have still been able to maintain our cost targets of close to $2.20, $2.30 FOB basis. In terms of markets, Again, I think the theme which played out in the first quarter has largely played out in the second quarter also. The steel production in China has slowed down a bit on the ferroalloy side because of the power curtailment. While the ferroalloy pricing is quite high, what that has led to is the ferroalloy smelters declining. preferring the higher-grade products so that they can maximize their value in use for the electricity which is basically allocated to them. And that has, again, had some impact on the semi-carbonate, which is the product which Chipie produces out of South Africa. The port stockpile still is close to 6 million tons. And from our perspective, we don't see that changing for the rest of this financial year. Again, I think on the CIF prices, while the prices are quite good, the impact has been severe on account of the shipping costs, which are still close to $1.65, $1.70 per DMTU. And again, we do not see that changing for the rest of this financial year because the ships which we are using to move our tons from South Africa to China are pretty much the same ships which the marginal iron ore producers are also using because iron ore price has been so high over the last three to six months. The other thing which we have seen is that from the production side, there has not been any impact out of South Africa. Historically, in the past, the tons have gone down, largely the trucking tons, but we are not seeing that in South Africa in the current quarter. That, I think, largely has to do with the fact that some of these marginal producers, which are lower-grade manganese, which rely on the trucks, have high iron content in their ore, and because of the high iron ore price, their net realization is not as low as what it would be when the iron ore price was low over the last few years. So, again, I don't think that is going to change over the next three to six months. We are basically planning our business in that scenario. But just to summarize, we are looking at close to 3.45 million tons production for this financial year. So I think that, in a nutshell, is a quick snapshot of the second quarter. But with that, I'm more than happy to answer any questions.

Thank you, Priyank. The question and answer session has now commenced. Guests are invited to ask questions by pressing star 1 on their telephone keypad now. You will hear a tone as you are joined to the queue. Please listen for your name and I will introduce you through to the call. That's star 1 on your telephone keypad now if you would like to ask a question. We have our first question from Mara Lombardo who is a shareholder. Please go ahead.