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J#43 – There’s disagreement in the boardroom at Jupiter Mines. Should we be concerned? Let’s wait for a full information set before making a decision on our investment.

Disagreement in the boardroom at Jupiter Mines

Jupiter Mines’ (‘Jupiter’) share price fell 4.2% today on news that a substantial shareholder, AMCI Group LLC, is seeking to remove the Managing Director, Mr Priyank Thapliyal, from the board. This follows the results of the Annual General Meeting held on 30 July 2021, which saw the surprise removal of two existing directors (Mr. Murray and Mr. Winter), the appointment of two new nominee directors, and the rejection of the Remuneration Report by an overwhelming majority (95%+) of shareholders.

The ASX’s announcement of the AGM’s results can be read here.

Jupiter was one of my early recommendations and I have bought shares for my investors in Double Digit Dividends Fund. The company accounts for about 12% of our portfolio (excluding cash). So needless to say, I am following events closely.

The resolution to remove the Managing Director is to be considered at a shareholders’ Spill Meeting to be held on or about 19 October 2021. The ASX announcement relating to the meeting requisition can be read here.

This is the 4th year running that the shareholders have lodged objections to the Remuneration Report, with the vote against it increasing each year.  Mr. Thapliyal was quoted in a 16th August article by Peter Ker of the Australian Financial Review’s as stating:

“ ….. he could not be certain why the protest vote was so large, but suspected some big shareholders may be motivated to spill the board in an attempt to take control of Jupiter without paying a premium for control.”

The Australian Financial Review goes further to state:

“Those comments (Mr Thapliyal) are a veiled reference to Jupiter’s biggest shareholder with 19.9 per cent, Ntsimbintle.

Aside from being a substantial shareholder, Ntsimbintle is Jupiter’s joint venture partner in Tshipi, given it owns 37 per cent of the mine.

Ntsimbintle has signaled in South African media reports that it sees merit in combining its stake in the mine with Jupiter’s mine stake.”

Peter Ker’s 16th August article Australian Financial Review can be read here.  The full article is only available to paying subscribers.

The reasons for the recent change in directors, the rejection of the Renumeration Report and, today’s proposed resolution to remove Jupiter’s Managing Director, Mr Priyank Thapliyal, are still unclear.  Is there an attempt to take control of Jupiter?  Are shareholders simply unhappy about the Directors and Executives’ remuneration?  Are both issues inter-linked? Is there more to this than what has been said so far? We don’t know.

As a shareholder, I have reached out over the last week to Jupiter Mines by phone and email to get more clarity on the situation.  They did not provide me with a reply.  I am therefore disappointed as companies ought to be shareholder friendly. After all, we are the owners.  That said, it is likely that they need the breathing room to work through the current situation before informing ALL shareholders of what is transpiring and their recommended course of action.

What is clear is that there is a group of activist shareholders that are not happy.  It has resulted in the removal of directors and the appointment of new directors.  It is likely this has resulted in a split within the Board of Directors and this is not good for Jupiter as key decisions could potentially be mired in boardroom politics.

Mr Thapliyal owns just over 3% of Jupiter (approximately AUD 17 million).  He has plenty of ‘skin in the game’ and has played an instrumental part in Jupiter’s success since its inception.  I believe his removal, should it occur, would have a material bearing on Jupiter’s future success.  That said, let’s see how all of this plays out and what steps are taken by Jupiter in the event that Mr. Thapliyal steps down.

Nothing fundamentally has changed in terms of the Jupiter’s underlying business.

They still are mining and selling manganese.  All shareholders, including us, will have a say at the upcoming Spill Meeting, so let us wait for the full set of information so that we can make an informed decision.

Let’s keep a close eye as the situation evolves.  In the meantime, and for what it is worth (as we are long-term investors in Jupiter), the ASX’s order book for tomorrow is reproduced below.  Today’s stock price closed at AUD 0.285.  Those who bought when I first recommended it are just about at breakeven in terms of share price but have pocketed AUD0.03 in dividends (or a 10% yield net of withholding taxes), while the Double Digit Dividends Fund position is slightly down, by 6%.

Based on the order book, there are 1.224 million buyers at AUD 0.285, another 1.9 million at 0.28.  In contrast, there 0.803 million sellers at AUD 0.29 and another 0.581 million sellers at AUD 29.5.  There is plenty of price support at Jupiter’s current price.

Jupiter Mines' stock order book for 19 August
Source: Commonwealth Securities

Regards,

Peter 

A Message for My Children

As in most situations in life:  Don’t panic.  Assess the Situation.  Get a complete ‘information set’ before making a decision. But when you do decide, act swiftly and with conviction.