Jupiter Mines continues to churn out cash from Tshipi, and shareholders are getting their fair share


What Jupiter does

Jupiter Mines LTD (ASX:JMS) jointly owns the single biggest mine in South Africa.

It’s a manganese mine called Tshipi, and it’s been in production for some years.

The Tshipi mine shipped its first ore in 2012, and has gone on to break production record after production record, such that in the last three years Jupiter has been able to hand back a whopping A$300mln to shareholders. A further R600mln was dished out in September 2019.

The cash should keep on coming too. For one thing, Tshipi has a 100 year mine life, so there’ll be no stopping it on that score.

What the chief executive says

“Whichever way you slice and dice it Tshipi’s been a great success,” says Priyank Thapliyal, Jupiter’s chief executive.

“The operation is very simple. We drill and blast, shovel the ore into a truck and take it to Port Elizabeth. There’s no blending, there’s no beneficiation.”

What’s the outlook?

This year, production is likely to hit 3.5mln tonnes, around 40-50% higher than was envisaged in the feasibility study. Costs are lower than predicted too, resulting in some chunky cashflow and, what’s more notable, a very sizeable dividend.

Historically, the company has been trading on a yield of around 20%, and that looks set to continue.

“Manganese is a play on steel,” says Thapliyal.

“Every tonne of steel requires manganese, it can’t be substituted. And the amount of manganese that’s legally required in Chinese rebar has just been raised.”

Meanwhile, major sources of manganese production from South32 are likely to cease operating within the next ten years, giving a strong underpinning to the mid-to-long-term price.

And in support, the company boasted US$133mln at the end of the three months to August 2019

Strong institutional support

When Thapliyal was seeking institutional investment, the fund managers were only too keen to get on board. At the time of listing, around A$215mln of the market capitalisation was accounted for by institutional investors, with just A$25mln available as free float.

That strong institutional endorsement is backed up by the support of some mining heavy hitters on the board too. Brian Gilbertson, famously the ex-chief executive of BHP Billiton, as it then was, is chairman.

Another director is Yeongjin Heo, the head of POSCO Australia, which holds a significant stake in Jupiter. And Andrew Bell, of Red Rock Resources PLC (LON:RRR) and Power Metal Resources PLC (LON:POW), also holds a seat on the board.

It’s an experienced team, running a company on a lean basis, with the focus on generating returns for shareholders.

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