Jupiter Mines Limited

All participants are in listen-only mode. Now for the presentation, followed by a question and answer session. If you wish to ask a question, you will need to press the star key or the number one on your telephone to ask. I would now like to hand the call to Mr. Brad Rogers, Managing Director and Chief Executive Officer.

Please go ahead.

Well, thanks, Carly, and thanks, everyone, for joining. As usual, I've got Ian Murray, our Chairman, on the line, as well as Melissa North, our CFO. As usual, I'll just give a few opening remarks and then we'll throw the line open for any questions that might be up there. So I'll be providing the key comments summarised from the September quarter that was released to the market this morning. And for those that have had a chance to read that quarterly, you will have seen that the September quarter was not particularly strong quarter operationally. We had sales of 1.04 million tonnes in the quarter, which was actually 3% down on the June quarter, which was a very strong quarter, capitalising on high manganese prices in that quarter. But the September quarter figure I just mentioned was 12% up on the prior comparative period, the same quarter last year. From a production perspective, volumes were even higher than that, That represented, in the month of August, a record achievement out of the production circle, which was obviously pleasing as we were pulling through our strategy and took out the capacity of Chippy to potentially do more on a sustainable basis. That represented a run rate from the sales system of over 4. So strong sales, even stronger production. The strong production, and the production being higher than that sales level I just mentioned, was intentional and targeted towards building finished product stockpiles, which will stand us in good stead ahead of potential weather disruptions, which at SIFI occur between about November, about now, and January. some wet weather events at the mine that may flood the pit, then we'll be prepared with finished product stockpiles to continue the desired run rate notwithstanding any wet weather interruption. I will say though with evading magnitude prices, and I'll talk about that in a moment, we should expect volumes for the current December quarter to go lower and the very strong sales and production figures that I've just I talked before about how sales work at TIPI. One of the reasons why sales were still elevated during the September quarter, notwithstanding stock manganese prices reduced through the quarter, was that those sales were volumes that had been priced in the June quarter. So as we come through September quarter, manganese prices are reducing, which we expect to see somewhat lower volumes when we're talking about the December quarterly post-calendar year end. Mining was strong in the quarter as well, 4.1 million PCMs, representing a strong mining performance, and that was 27% up on the last quarter. So from a health production mining perspective, all very strong figures, and that was pleasing for the quarter. The G6 was down slightly from 10% volume-wise down on last quarter, and that was reflecting lower volume, given the manganese price environment. Obviously, road haulage is the most expensive way of getting our ore from mine report. FOB costs of production at 233 US per BNPU was 7% down on last quarter, and broadly in line with where I've sort of been guiding where we're expecting for these costs to come in. given inflation and also given exchange rates. The Lebanese market for the quarter was softer than last quarter, reasonably significantly smaller. Average spot risk prices were US$4.24 per DMTU compared to $5.50 per DMTU from June quarter. By the end of the September quarter, so 30 September, The price has reduced further to $3.74. Prices have stabilised through September and October. Today the price is $3.71. So relatively low level, but it has stabilised at those sorts of levels through September and October. The FOB price today is $2.97. So the prices have just been quoted were CIS prices. And the FOV price, to give you a feel, has varied between about $2.90 and about $3.05, pretty much for September, October. So relatively low levels. The kind of average FOV price in the last five or six years is around $3.80. So the price has stabilized at a much lower level than that. But it has stabilized and has kind of continued to shut down when it was on October. through the course of August. So that's good, but reflecting in price that we saw through August and the reason why it's much lower than average today really is a function of Chinese demand, which has softened, and sentiment around Chinese production and the profitability of steel mills and those sorts of factors. has driven steel-making material prices to pretty majorly lower. There has also been, through July, August, September even, an increased level of manganese ore exports, mostly from South Africa, and some of the volume from South Africa. but supply has exacerbated that. Lower manganese prices prevailing, as we just discussed, through August, September, October, there has been a correction on the supply side. So you have manganese ore sales through October, November, and I guess just the next few months being at lower levels than we've observed through July, August, September. that will take a while to flow through to China. And so we see the supply side correction below these prices, as you'd expect, already coming through. As you can see in our quarterly that were observed through the 17th quarter to be what's possible, and that's generative, that's what the Manganese lines are. And so naturally those lines in that situation pull back on their own production, and that helps to support and stabilise the Manganese, Shipping rates were lower through the quarter, and that's good, that helps, and you'll see in the quarterly shipping rates today are around US$27 a tonne for our shipping, and that compares to US$30.60, which was the average through the June quarter. Looking further out, looking at next calendar year, we included in in steel production with a demand of 1.2% comparing to a contraction of 0.9% this year and so most people are expecting that factor on the demand side as well as moderating the legal supply to start to import, improving these prices over the coming months and as we move into 2021. From a financial perspective, as made out in the quarterly, as you'll imagine, our financials were mainly driven by the May 25 score around quarter, so earnings and cash were both positive, both lower in their generation than in the June quarter. From a cash perspective, students' cash increased to 97 million Australian dollars. There were some accounts receivable unwound, unwinding that, but Casus evil is still relatively elevated and that's not surprising given the high volumes of all ships through the second quarter and so that accuses evil on why it should be a factor in the coming quarter or quarters as well. That increase in cash that should be to $97 million occurred notwithstanding, as I mentioned before, there was a inventory build during the quarter when we produced more manganese ore during the second quarter that we sold and so that was a good outcome that we saw an increase in the cash balance and that occurred notwithstanding low manganese prices and notwithstanding a bit of an inventory build as well. We did this cashless down to $0.9 million quarter on quarter but that was entirely because of the So in summary, strong quarter for Chippy operationally in some areas, very strong. And again, Chippy demonstrates itself extremely well in a weak manganese price environment and has been around for a long time and has performed well through the cycle and it's performed well again in the September quarter across the areas that I mentioned, let's say, poor manganese price backdrop. quarter has stabilised and we are expecting based on the observed metrics that I mentioned a moment ago, a stronger steel band according to World Steel but also we can see moderating manganese ore supply that manganese prices have commensurately stabilised with the increase in support over the forward pit. We're obviously focused on the execution of our own corporate strategy and we are planning to provide an update on where we're at in relation to the strategy to shareholder support. So those are the key points I wanted to draw out of the recording. Again, feel free to go through the greater detail in your own time, but Carly, I'll see if there are any questions on the line now, please.