Jupiter Mines Limited (ASX: JMS) owns 49.9% beneficial interest in manganese mine Tshipi Borwa, located in the manganese rich Kalahari Manganese Field, North Cape Province, South Africa. Tshipi is flagged as one of the largest and lowest cost manganese exporters globally. The company is operating Tshipi mine at a cost of A$100m on a debt free basis with strong cash generation capabilities.
Australia based Jupiter mines possess the rights to market 49.9% of Tshipi production, earning a 3% marketing fee commission calculated off free-on-board revenue. In the fiscal year 2018 the company sold 1.7Mt of manganese which generated marketing fee income of A$10 million. Whereas in H1 2019 it sold 0.9Mt, earning a marketing fee income of A$6.5 million. Tshipi free-on-board cost of production was ~US$1.96 per dmtu and ~US$2.28 per dmtu in FY18 and FY19 year-to-date, respectively. Whereas, current spot manganese price at 37% FOB PE is US$6.22 / dmtu.
Recently, Tshipi has negotiated a 5-year rail contract with Transnet under which the allocated tonnage is 2.1 mtpa effective February 2018 with expiry date of 2023. Jupiter’s total production from Tshipi was 2.33 million tonnes in FY2017 out of which 2.29 million tonnes was transported via Transnet. In FY2018 Tshipi’s total production increased to 3.64 million tonnes, including 2.31 million tonnes transported via Transnet.
In FY19 half year starting from 1 March 2018 to 31 August 2018, Tshipi’s net profit after tax was USD162 million whereas in FY18 NPAT was USD145 million. Earnings, before interest tax, depreciation and amortization was USD205 million in 1H FY19 period to 31 August 2018.
With primary focus on cash returns to shareholders, Jupiter distributed $98 million H1 2019 dividend to its shareholders on 10 October 2018. This dividend that equates to $0.05 per share represents the dividend yield of 16.1% H1 2019.
The share price of Jupiter Mines has fallen by 1.538% or $0.005 to $0.320 on 16 October 2018. Since its listing in April 2018, the stock has seen a performance change of -18.75% over the past six months.
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