The move will allow Jupiter to focus on its cash generative manganese mines in South Africa.
Jupiter has also confirmed that it is paying out just over US$19mln in dividends in relation to production from the Tshipi mine during the six months to August 2020.
“Demand for manganese continues strong, with Chinese steel production for the first nine months of the year running 6.8% above 2019 levels,” noted Red Rock’s chairman Andrew Bell.
“Jupiter has been able to recover fast from Covid-19-related stoppages as Transnet, the South African rail and port utility, was back to normal operation levels by the end of Jupiter’s half year reporting period to August.”
Bell was also sanguine about the dividend, which has been reduced to provide room for manoeuvre in the face of coronavirus uncertainty.
“As noted in the announcement of 7 September, a cautious view was taken by Tshipi in considering its dividend declaration, given the prevailing uncertainties, and this is reflected in turn in the money available for payout by Jupiter at this interim stage. Jupiter has a dividend policy of a 70% payout and has historically exceeded this, paying out around 90%.”
And he was enthusiastic about the proposed demerger of the Yilgarn iron ore assets.
“Red Rock welcomes the planned demerger of Jupiter’s iron ore assets, and to receiving its share of the in specie distribution of NewCo shares,” he said.
“As the holder of a royalty over Jupiter’s Mt Ida iron ore asset, Red Rock would be a major beneficiary of any success by NewCo in the development of this Resource. After the recent appreciation of the company’s holding in Power Metal Resources PLC (LON:POW), the company’s listed holdings, which include the holding in Jupiter, have a current value of approximately £2.75m.”