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NAV Per Share: ZAc 562 (as at 30 June 2016)

Steel Making Materials

Manganese is a key component in steelmaking, removing impurities and increasing the strength and impact resistance of steel.

For more information on Jupiter, please visit: www.jupitermines.com
For more information on Tshipi, please visit: www.tshipi.co.za

steel-making-icons

High Sales Volume

Tshipi sold over 1.5 million tonnes of manganese ore in its financial year up to 29th February 2016.

Cash Flow

Despite the very difficult price environment, rigorous cost management has helped Tshipi to achieve positive cash flows in every quarter.

Investment Strategy

In 2007, Pallinghurst identified the raw materials needed for steelmaking as having attractive investment fundamentals. Steel is an important driver of the global economy and has shown consistent growth through a number of economic cycles, in particular when developing economies expand rapidly.

Manganese is a key component in steelmaking, removing impurities and increasing the strength and impact resistance of steel. Global manganese resources are concentrated within South Africa, with approximately 80% of the world’s known economically mineable manganese deposits located in the Kalahari Manganese Field (“KMF”) in the Northern Cape Province.

Investment History

Investment In Tshipi

In 2008, Pallinghurst assembled a consortium of Pallinghurst Co-Investors, including the Group, to acquire a 49.9% interest in Tshipi é Ntle Manganese Mining (Pty) Limited (“Tshipi”)*, an early stage manganese exploration opportunity within the KMF. The property is situated adjacent to Samancor’s Mamatwan manganese mine that has been in operation since 1964, and its deposit is an extension of the same ore body.

POSCO Acquisition

In 2010, South Korea’s POSCO, one of the world’s largest steel producers, acquired a stake in Tshipi from the existing Pallinghurst Co-Investors. This transaction introduced to Tshipi the skills and expertise of a leading manganese end-user. In 2011, Jupiter Mines Limited (“Jupiter”), then an ASX-listed company in which the Group already held an investment, acquired the Pallinghurst Co-Investors’ 49.9% interest in Tshipi. Jupiter delisted from the ASX on 10 January 2014.

Tshipi Borwa Commission

In 2011, following the granting of the necessary administrative approvals and licenses, the decision was taken to construct Tshipi Borwa, an open-pit manganese mine. Rapid commissioning of the mine and related infrastructure enabled Tshipi Borwa to mine, rail and export its first manganese ore by the end of 2012.

Load Out Station

Tshipi’s state of the art rapid load out station was commissioned during 2014, enabling the loading of bulk trains in less than four hours and skiptainers in less than two hours, much faster than most of its competitors. This rapid loading ability positions Tshipi Borwa well to be supplied with additional trains when there is spare capacity on the network. Tshipi’s eight kilometre rail siding is also the largest in the KMF, capable of accommodating over 200 wagons.

* The balance of 50.1% of Tshipi’s shares is held by Ntsimbintle Mining (Pty) Limited (“Ntsimbintle”), a broad-based BEE consortium (consisting of Safika Resources, Nkojane Economic Prospecting and a number of national and local economic development and community organisations and social trusts), and OM Holdings Limited (“OMH”), an Australian Securities Exchange (“ASX”) listed integrated manganese mining and trading house. The Pallinghurst Co-Investors provided exploration funding, proving a 189 million tonne manganese deposit at an estimated average grade of 37%.

The year has been difficult for manganese producers, with significant price declines as a result of slowing demand from China. Despite the very difficult price environment, rigorous cost management has helped Tshipi to achieve positive cash flows in every quarter.

In response to the low manganese prices, several producers have either temporarily shut operations or have announced significant cutbacks in production. In December 2015, Tshipi announced that it would cut exports by 35% in the first quarter of 2016. Tshipi’s manganese stockpiles will be utilised for export whilst mining operations will take place only on already exposed ore. This action will involve significant job losses but should enable Tshipi to withstand the prevailing market conditions even if low prices remain for a sustained period. In the year to 29 February 2016, Tshipi Borwa sold over 1.5 million tonnes of manganese ore.

From The Directors

Community Development

Environment, safety and corporate social responsibility.

Education

Health

Safety

Tshipi is committed to contributing to the development of the community in which it operates. In conjunction with the Joe Morolong Municipality, Tshipi provided a local waste management company with vehicles, office space, mentorship and training, and committed to a one year contract for waste removal at the mine. Tshipi supports education in the local community by awarding internships and bursaries to local students.

Tshipi has provided funding for a water infrastructure project which provides the local Maphiniki Community with a sustainable water supply, the construction of a health care clinic and the improvement of local services within the Joe Morolong Municipality. Tshipi also continues to provide free health screening and medical surveillance to employees, and actively promotes sustainable mining by replanting trees, creating an onsite nursery and the establishment of a wildlife conservation area.

Tshipi Borwa is a surface, open-cut mine, which typically is the safest mining operation. Tshipi adds to this structural advantage with its strong emphasis on worker safety programmes and procedures. No fatalities have ever occurred at Tshipi Borwa and this strong safety record continued with only two reportable lost time injuries during 2015, an impressive achievement over a twelve month period.

Jupiter’s Central Yilgarn Iron Ore Assets

jupiter-logoJupiter holds two iron ore exploration assets in the Central Yilgarn region of Western Australia, the Mount Mason Direct Shipping Ore (“DSO”) hematite project and the Mount Ida magnetite project. Mount Mason has a measured/indicated DSO resource of 5.9 million tonnes at a grade of 60.1% Fe (iron) and has the potential to produce two million tonnes per annum. Mount Ida has a JORC- compliant inferred resource of 1.85 billion tonnes at 29.48% Fe and has the ability to produce ten million tonnes per annum of high grade magnetite concentrate.

As a result of the current low iron ore price, Jupiter has placed its Mount Ida magnetite and Mount Mason hematite projects on care and maintenance. Jupiter continues to monitor the iron ore market and is ready to restart work on these projects once market conditions are favourable.

Outlook

Despite the current low manganese prices, the medium to long- term supply/demand fundamentals remain favourable. Tshipi has established itself as a significant, low-cost player in the South African manganese ore industry and is well placed to benefit when the market recovers.