Jupiter Mines set to benefit from manganese price strength
Manganese specialist Jupiter Mines (ASX: JMS) has seen its share price surge dramatically since late March when news broke that South32’s (ASX: S32) leading global manganese-producing mine on Groote Eylandt in the Northern Territory had been severely affected by tropical cyclone Megan.
Soon after the cyclone caused extensive damage across Groote Eylandt, South32 confirmed it had withdrawn guidance for its Australian manganese unit after its operations in the Northern Territory were heavily impacted.
The company had forecast that Australia Manganese would produce 3.4 million wet metric tonnes for FY 2024.
However, it was forced to temporarily suspend the Groote Eylandt Mining Company (GEMCO) operations due to damage caused by the tropical cyclone.
Strong rally
This incident and a forecast of a major impact on global supplies saw manganese prices double in a very short period.
This provided an immediate benefit for Jupiter Mines and its Tshipi project in South Africa.
Jupiter holds a 49.9% interest in the Tshipi mine, one of the five biggest producers of manganese in the world.
In its latest quarterly report released at the end of April, Jupiter reported that the March 2024 quarter saw spot manganese ore prices rise from six-year cyclical low levels seen in the December 2023 quarter.
The spot price at the end of the March 2024 quarter was $4.54, with an average of around $4.40, compared with an average of $4.14 for the December 2023 quarter.
Continued price support
The increasing prices are expected to take effect during the current quarter, as Jupiter’s March 2024 quarterly included revenue and associated earnings based on the lower sales prices during the November 2023 to February 2024 period.
Given the significance of GEMCO to global manganese supply, Jupiter told shareholders it expects manganese ore prices to continue to be supported in the near term.
South32 (GEMCO’s 60% owner) recently gave a preliminary estimate that normal production would be restored in the March 2025 quarter with the possibility of earlier, partial ore export capability.
Tshipi recorded an EBITDA of $15.5 million and net profit after tax of $10.4m for the quarter, an increase from $13m and A$10.2m on the previous quarter.
The increase was mainly due to increased sale volumes compared to the preceding quarter.
Jupiter stated that Tshipi sales will remain on track to achieve expected financial year volumes of between 3.3 and 3.4 million tonnes of shipped ore.