Jupiter Mines Limited

The conference is now being recorded.

Welcome to the Jupiter Mines quarterly update call. I would now like to introduce your host, Scott Winter. Please go ahead, Scott.

Thanks very much, Erica, and welcome to all those that have dialed in. I look forward to taking you through today the Jupiter Mines quarterly update for the operation and what Jupiter's been up to. I'm going to take you through just a few highlights and then a little bit of detail around the operation itself, how it's performed, the production, some logistics, a little bit of a marketing outlook, and then talk about what we're doing from a corporate sense in regard to the board and executive roles plus strategy. I look forward to your questions, so we can do that near the end. that I'll kick off with some of the highlights for the business. Obviously, we've had a pretty solid quarter. No LTIs for the quarter, which is terrific, and that brings the business for no LTIs for a year to date. Tremendous result. The business achieved around 255,000 cubic metres of grade at all for the quarter, which is on target and going well. Somewhat less waste movement but we'll get into the detail around that when I talk through that in a moment. Logistics is slightly behind but as expected there are some issues we're managing with planned outages on the rail network and I'll talk to you about some of the road transport that we're bringing back online to assist with that. We've got a solid cash balance attributable to Jupiter, both in Jupiter and our share of Chippy. So we're sitting at about 76 million by the end of the quarter. And I suppose what we've been through from a corporate sense, we've obviously had a change to the board with Peter North joining, myself joining, and Patrick Murphy joining with Peter acting chairman, myself as acting CEO. and we're really getting our hands into the business at the moment. So I'd just like to take you through some of the detail now. As I said, graded ore production was on target for the month, slightly behind, but we're happy with where we're heading and we will be by the end of the year. We have had a really good look at the mine and the mine plan through to the end of the year. The contractor performance which we've highlighted before, we're working with them on some performance issues that we seem to be getting on top of now. But we have done a review of the medium term mine plan that has dropped some of the waste out of the operation and that has meant two of the fleets have been stood down. We did have a particularly wet October but November's results are showing ahead of target and that stands us in a really good position for the next quarter going forward. We did implement some operational efficiency measures with Moomins earlier in the quarter and they seem to be paying dividends with availability and some of the utilisation of the equipment which is terrific. You'll see in the results again that you'll continues to be one of the, if not the lowest cost producer in the region with a cost of production around $1.75 US per DMTU. Again, low cost, long life asset which is terrific for Chippy and certainly going forward when we start to talk around strategy and consolidation of manganese in the region. It has been a focus on the barrier pillar, which has brought about a few bonuses. So we have brought forward some production there to help. That has reduced the strip ratio. It's actually helped with lowering some of the waste costs, again, and bringing forward some of the graded ore, which is really helping us. It has meant more high-grade ore and less low-grade ore. I'll talk about that in a moment. in regard to low-grade and low-grade sales. But we did see some slightly higher fines come through just because there's a higher fines content in that particular part of the oil body. So mining all round is heading in the right direction. We're happy with Normans. I suppose their performance improvements are recent and we expect those to continue going forward. Logistics and sales, the railing over the quarter has been lower than expected and that is primarily a result of some planned maintenance and some other infrastructure delays in the area. There was a derailment which has caused some delays but mainly the planned maintenance. There are expected to be some further maintenance going through in the next quarter so we've looked at how we can ensure sales are achieved and we get tons to the port. So we will be bringing through some more road transport to make sure that those tons move from site to the port. With low-grade ore really being, I wouldn't say sub-economic, but really pushing the economics, we have reduced the low-grade ore sales into the market. That's freed up some of that road transport to really make sure the hydro gets through to port and we can get it onto the ships. So we're happy with where that's going. As you'll see, we achieved a shift pricing around $4.64 to quarter. That has certainly moved around From the start to the finish, we're starting to see a softening at the back end of the quarter. Just a little bit on the market. It's quite interesting. Obviously, the market is influenced heavily by the crude steel production in China. We are seeing China holding firm on their expected production for their year. They don't want to exceed 2020 levels and we're seeing that that's absolutely occurring and they're managing those levels. And that obviously flows through to the federal alloy market and for a lower demand in that particular area. Interestingly, the federal alloy market was affected by some of the power constraints that that China put on the back end of this year. So again, some of those federal alloy producers, some of them even stopped producing because of the high costs of power and they had marginal production. So you did see earlier in the quarter some price improvements for the manganese ore, obviously, but it has softened at the back end of the quarter. I suppose a slight linking to expected forecast of of price for manganese into the future. The silica manganese price has plateaued. We've seen it over the last three months, I suppose, in that window come down significantly, but in November it's actually plateaued, which is a good sign for manganese itself. And I suppose into the future we're expecting China to come out of their... those constraints put on the crude steel production and start to increase that again. And we're seeing the rest of the world have buoyant sort of steel production. So we see that as a positive for the manganese price going forward. That steel will increase. Ferro alloys will start to increase and we can start to see a slight improvement in price. But it's just linking to also freight, which obviously has been a significant impact to everyone. We have seen it quite volatile, but of recent, over the last few weeks, we've seen that freight rates actually starting to come down. Ships are freeing up. Some of the ships are being allowed to hit berth and unload cargoes, and that's freeing ships up in the market for us to use. So we do see freight coming off going forward and again looking forward at freight we can only see that being a slight positive for margins for Chippy. That's pretty much a wrap on the operational side of Chippy and let's look at the corporate As I said, we hold about 76 million of cash which is great. As I mentioned earlier in the highlights, the board is somewhat changed obviously with Peter and Patrick and myself joining and I suppose what we are actively doing at the moment is and have engaged Korn Ferry but we're actively looking for a chairman for the business and a new CEO for the business. That is progressing exceptionally well. We've engaged a little while ago and we're working through that process. I will say we're not going to rush to make sure that we put a chair and a CEO in place just for the sake of that. We will look at the right person to fit what Jupiter is today and where we want it to go in the future. and we need the right people to do that. But that's working quite well going forward. The piece around what the board is currently working on at the moment is obviously the strategy. I'm sure you're very keen to understand where we're going there. As we mentioned, the focus of the board has currently been on making sure, I suppose, The board is stable, the business is well led and we set it up for the right leadership going forward and leadership and governance going forward. But at the same time we are looking at the strategy of the business and how we can optimise that going forward. So some of the things that we are looking at is obviously how we can bring operational excellence through into the chippy operation at the moment and I mentioned part of that before with the discussions we're having with Millmans. We will be looking and reviewing the feasibility study that we had put through to the market a while ago around the expansion of chippy but we're also looking at the opportunities out there with consolidation of ownership in the Kalahari with some of the other manganese producers and even partners. So that's quite exciting. We see that as a priority and we've started that work already. There is a lot of opportunity there for us to investigate and work through. Similarly we have got open eyes as to how we can diversify the business as well. We are looking at other commodities out there and in particular how we may participate in the battery mills supply chain. But again, it's a big wide world out there and we're certainly doing a lot of investigation and we'll be sort of getting some expert advice as to where we point the business and how we do participate. But certainly initially our priority is around operational performance, Chippy. settling down the board and making sure we've got that right support and looking at the partners and your neighbours in the Kalahari about growing the manganese business. And with a low cost, long life asset that Shippy is, we stand in a very good position to do that. Certainly being listed and in Australia we have a great position going forward. That's my summary of where Jupiter currently sits. I'm really open now to any questions that you may have, so please feel free. Thank you.

Thank you so much, Scott. We're going to open up for questions now. If any guests would like to ask a question, it's star one on your telephone keypad now. That's star one on your telephone keypad now, and we'll take a moment and I'll introduce you through to the call. Just a reminder again, if any guests would like to join the Q&A queue to ask a question, that is star 1 on your telephone keypad now. We have some questions coming through now. Scott, just one moment as I get the guests' names. I won't be a moment.

Okay, thank you.

We have our first question from Trent Barnett. Trent, please go ahead.

Hi, Scott. Okay. I have a question. Are you able just to elaborate on the, what you're talking about, the consolidation in the Kalahari? Can you elaborate on that at all?

Yeah, Trent, I can. But I suppose I'll do it to the extent we currently have done the work. Look, we are partners at Chippy with Easton Bentley, obviously, and there are neighbours with South 32 and various other players, participants in the Kalahari, I suppose. So our aspiration is to be a larger manganese producer and a low-cost, long-life, larger manganese producer in the market. So that is, I suppose, an opportunity for consolidation. I suppose to elaborate, the work needs to be done to look at what is the right fit for the next step with Jupiter. Do we look at adding partnering? All of those opportunities are currently sitting in the window for us to investigate and really find the right path forward.

Okay, thank you.

Thank you, Trent. Again, if any guests would like to join the Q&A queue, it's star 1 on your telephone keypad now. We have our next question from Nick Worrell. Please go ahead, Nick.

Good day, Scott. I was just waiting for the call when the last question was asked. My question was, we've heard about consolidation in the colour hiring for some time now. What's the different approaches you're going to take to your predecessor?

Look, I suppose I'll just reiterate that the shareholders and I've certainly given advice to the board to look at something that's slightly different to participating in, sorry, paying out all of the dividends. So really what we're doing is investigating further what opportunities there are in the Kalahari for consolidation and that is participants that want to To join, merge, partner, that's what I mean. The strategy has to be clear and the board's working through exactly what that will be and that'll, I suppose, dictate what we do and how we do a consolidation or whether we do one at all. But certainly that is the direction we're pointing and looking at it quite strongly.

Okay, and so of course the first logical step is potentially 100% ownership of the shipping. I presume that's first on the agenda.

I won't say what is first on the agenda at all. They're all currently in a list of opportunities that we'll investigate but it's a logical one to review but certainly we're early stages in how we're running through it.

Alright, thank you.

Thank you Nick. If there are any other questions at this time, please press star 1 on your telephone keypad now. We have our next question from Paul Hannan. Please go ahead, Paul.

Good day, Scott. Paul Hannan here. Hi, Paul. Just a quick one. Obviously, business is transitioning away from old management. Chair. Chair. I guess my question was, are there any deals or any arrangements that are in place that have to be undone or haven't yet been unwound as a result of that transition?

No, we've got a very clear direction forward.

Everything that was, I suppose, that has progressed over the last few months has been with appropriately and managed appropriately and we're looking to the future and it's pretty exciting looking forward and really that's why I suppose we have got a really solid eye at making sure we bring in a chair and CEO that really has got a good deal of energy to look at growing Jupiter going forward and as I said we've already started to form the skeleton of the strategy So no, we're certainly not shackled very clearly going forward.

And did I hear that you said that you might consider the previous 100% payout arrangements to allow the business to obviously accumulate some capital and participate in some of those growth opportunities that you're referring to?

We'll consider what we're doing with that, absolutely. You know, we're about growing value for Jupiter, and we'll want to do that in the right way, and we can do it in a number of ways. But, look, that'll be part of the strategy, and we'll let the team know when that's formed. Yeah, so I can't say one way or another.

Yeah. I guess you've got to, before you start doing deals, you've got to get some currency in your share price which your business doesn't exactly have. So how do you build that before you create the capability of doing deals which are accretive?

Yeah, no, you're exactly right. I think we've As I mentioned before briefly, it's important we make sure Chippy continues to be solid, not only in today, and it has been, so we're making sure that it's solid going forward. So you need a great operating asset to continue into the future. So that's a primary objective of us, making sure that's robust. And then we, as a Jupiter company, need to have the right people and strategy to actually execute. And I think, yeah, you're right. We don't have track record other than doing a chippy deal and listing, which is a great track record, but going forward doing other deals, we've got to get ourselves ready for that. So getting the right governance and the executive team to do that is really important, along with getting, I suppose, a great operating asset And then it's about execution. Then it's really about execution against that strategy.

So we are very, you know, in the infancy of that at the moment.

Yeah, thank you, Peter. I appreciate that. I guess my point was that the business is run reasonably well. It's operationally, it's done reasonably well. You know, obviously you've had 100% payout ratio. There you go. but it's never been able to create, never been able to generate a market rating, you know, currency to deal. So I guess my question is, you know, I appreciate you've got to make sure the business continues to run because that's got to be the bedrock, but that seems to be going well. How do you create a rating for this business, you know, that actually gives you a currency to go and, you know, to participate in, you know, rationalisation or consolidation or do deals which are, you know, shareholder accrued?

I'm not sure I'll be able to answer your question 100%, but a strategy that clearly outlines, you know, growth and consolidation, we'll start to do that. Other than that, as I said, we've got to come back to execution. We've actually got to lay a strategy, sorry, we've got to lay a plan down for what we do want to do and then execute on those. And at that point, a synergistic value add will start to show that, will start to creep in and we'll start to get a better rating. in that regard. I'm not sure I can answer your question completely.

No, no, I'm not trying to trick you or anything, Scott. It's just that this thing's never been afforded a big rating by the market. It's never been able to capture the attention of the market, and that's probably because it never had a great strategy. Now it does with you and your team, and the mandate that the UMD is going to be given is to grow the thing, so hopefully that does But I guess you have to go into marketing first to re-engage with investors, which has never occurred before.

Yeah, I think that's probably a good point in itself. Rebranding a business that actually is pointing in a slightly different direction that will get the attention. So, yeah, that will be part of it. But no, thanks for your question. I appreciate it.

No, I appreciate that. I'm not trying to pick you up. It was more a point of... that you haven't been able to attract the attention. It's not your issue. It's the way that things have run previously. So I appreciate the fact that you guys are saying that you are going to re-engage. You realize that has to occur as part of the steps.

Yeah, I appreciate it. Thank you.

Thanks. Bye for now. Appreciate that.

No worries. Cheers.

Thank you. We have our next question from Ben Hamley. Please go ahead, Ben.

Thank you. Hi, Scott. I was just wondering, there's a comment around looking at participation in the battery and mineral supply chain. Is that potentially via other commodities, or are you looking at the suitability of the shippy ore to be adaptable for that application?

We're not specific. I mean, manganese does play a part. You don't need a lot of ore. Manganese ore has participated in the battery market, so we've got plenty of ore. But it will constitute reviewing other commodities for sure.

Thank you. No worries.

Thank you, Ben. We don't appear to have any other questions in the queue at this time, so if you're happy, Scott, I can hand back over to yourself and close the Q&A for now.

Yeah, that's terrific.

I really appreciate the questions. I suppose it's a pretty exciting time for us at the moment. We've got a multiple number of things we're doing at the moment, and we'll be doing a hell of a lot next year. you know, continuing to, as I said, work through what the new strategy is, bed the new exec and government, sorry, and boarding. So it's an exciting time. It's a good time to be with Jupiter. I look forward to the next time we run through the end of year results, but we've got Christmas and New Year's before then, so I wish everyone a happy and safe Christmas with family, friends and others. And... I hope you have an enjoyable and lovely Christmas.

Cheers.

Thank you, Scott. That now concludes the Jupiter Mines quarterly updates call. Thank you for attending and please enjoy the rest of your day.

Cheers. Thanks.