Jupiter begins trading; will it buy out minorities for Tshipi?

Jupiter Mines started trading on the Australia Stock Exchange (ASX) with all attention focused on its principle asset, the Tshipi manganese mine in South Africa. Jupiter has a 49.4% interest in the mine, with the remaining interest is held by Main Street 774, a B-BBEE.

Already, there are rumors that Jupiter would like to buy out the minorities. Recently the South African High Court ruled in favor of the once empowered, always empowered principle that entitles a company to keep its black empowerment status even if a black partner exits its stake in the mining firm.

Main Street 774 is 74% owned by Ntsimbintle, also a B-BBEE company, with the remaining 26% held by OMH.

Jupiter Mines is responsible for the marketing of the Jupiter’s portion of Manganese ore from Tshipi and earns a marketing fee commission based on the total value sold by Jupiter Mines S.A. The 3% marketing fee is calculated off free-on- board revenue and is considered a strong and stable revenue stream by Jupiter,

The mine, according to Jupiter has a cash cost of $2.09 per dmtu in fiscal 2018 vs. $2.20 in fiscal 2017.

Tshipi has a three year and six month contract with Transnet which has a guaranteed rail allotment of 2.1-million mbpy from in February 2018 until 2023. Tshipi has a track record of exceeding its allocated tonnage and in fiscal 2018 Tshipi expects to transport around 2.31-million mt via Transnet out of a total of 3.64-million mt. The remaining manganese ore is trucked to the ports.

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Ntsimbintle want to exit no doubt. They BEE shareholders have done well, and congrats to them. they now have two listed entities to choose from. OMH or JMS. There will also now be a market valuation on Tshipi in order to do corporate transactions – makes some things easier. Trick would OMH let JMS manage their stake? Would OMH preempt the sale by Ntsimbintle shareholders?