Jupiter Mines Ltd (“Jupiter”), an Australian unlisted public company in which Red Rock owns 27,324,375 shares, has announced that its 49.9% owned associate Tshipi é Ntle Manganese Mining Proprietary Ltd (“Tshipi”) has resolved to distribute ZAR 1 billion to its shareholders in respect of the year ending 28 February 2017, subject to there being no material change in production and market conditions for the rest of the financial year. Jupiter has resolved on receipt of its portion of this payment to distribute US$55m to its own shareholders.
· US$55m distribution by Jupiter means a US$658,350 (c£530,000) distribution to Red Rock
· Distribution will be payable in March 2017
· Jupiter expects further distributions in 2017 if manganese price continues strong
• Production in year to February 2017 will comfortably exceed near 2m t target
· Tshipi distribution repays shareholders 50% of capital cost of mine with over 60 years mine life remaining
· Jupiter to pursue “strategic options” for its investment
Share Talk spoke with Red Rock Chairman Andrew Bell this morning. Hear what he had to say here on our Audioboom channel:
Red Rock Chairman Andrew Bell comments: “The last 12 months have seen all-time lows in the manganese market and more recently record prices in South African Rand. Tshipi had already shown itself to be significantly profitable at prices below $3 per DMTU, and when prices were low Tshipi tightened its cost structure further, making it one of the most efficient and low cost operators. Tshipi now takes its place as a world class mine and a major force in the manganese market, with profits to match. We anticipate a continuation of stable-to-favourable market conditions, from which Tshipi is well placed to benefit, as it enters what the Jupiter Chairman calls the “value optimization phase”. Red Rock has patiently held this investment, confident in its underlying quality, and continues to see significant upside.”
The Tshipi mine is in the Kalahari Manganese Basin of South Africa, thought to contain some 80% of the world’s metallurgical grade manganese. Tshipi is one of the five largest manganese operations globally, and one of the three largest in South Africa.
The Tshipi mine has been in operation as an open pit mine over three full years. In these years, to February 2016, the average manganese price for the 37% ore that Tshipi is producing has been US$3.06 per DMTU (Dry Metric Tonne Unit). The manganese price has been in decline over the period, reaching lows of US$1.32 per DMTU towards the end of the last financial year. There has been a recovery since, with the price trading for much of this year between US$2 and US$3 per DMTU and recently at levels up to and at times exceeding US$6 per DMTU.
The Tshipi mine is in the lowest cost quartile of global manganese producers. Classified Resources of the Bottom Cut, which is currently being mined, were stated to be 163m tons at 37.1% in the Independent Technical Report announced by Jupiter on 6 July 2010. It was noted that down dip from the open pit design, the Resource was open and there was scope for significant increase in the Classified Resource base. Resources in the Upper Cut, currently mainly being stockpiled, were stated to be 145m tons at 31.75%.
Production capacity was 2.4m tons per annum and is increasing to 3.6m tons per annum. Production in the three years to 28 February 2016 was 0.94m t, 2.11m t and 1.54m t respectively, with the target for the current year initially set at just under 2m t but now expected to be comfortably exceeded.
Red Rock holds 27,324,375 shares in Jupiter, equivalent to approximately 1.2% of the issued share capital. The carrying cost of this investment in the books of Red Rock at the date of the last audited accounts, 30 June 2015, was £1,304,646.
Further details of the distribution planned are available on Jupiter’s website at www.jupitermines.com
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.