Mantengu hails Blue Ridge project as corporate finance dream

By
David McKay
-
Mantengu Mining CEO, Mike Miller

MINING tailings is lucrative business for those who get the technology right. DRDGold is the established brand in the industry, but rivals such as Jubilee Metals and Sylvania Platinum are in its slipstream. Copper 360 and Rainbow Rare Earths have also entered the market, introducing new technology or techniques to reprocess mineral waste that the market suddenly wants.

Mantengu Mining, a chrome producer, is another player in the sector. It reported a R2.96m net profit in the six months to end-August on 33,000 tons of chrome concentrate — only a few months of production. It has almost matched that output in September and October alone, says CEO Mike Miller. Though the chrome price has fallen about $30/t to $270/t towards the end of the year, Miller expects far better second-half earnings.

The company is adding a new plant at Langpan in Limpopo and has ramped up a second operation, Meerust in North West. In October Mantengu bought Blue Ridge, a platinum group metals (PGMs) mine in Limpopo that was once operated by tireless octogenarian mining entrepreneur Algy Cluff. That was in the early 2000s, before Blue Ridge passed into the hands of Aquarius Platinum, which was acquired by Sibanye-Stillwater in 2016.

Mantengu will run the rule over Ridge Mining’s UG2 deposit — an underground mine — but really the value for Mantengu is the near-term burst of cash it can release by mining its tailings.

“Not one part of our investment mandate or risk-reward requirement relates to the underground mining,” says Miller. “For us, that’s a decision we will make down the line if the results are positive and we feel like we want to. If we don’t, we’ll look at flipping it to a major.”

There’s an estimated 375,000 tons to 400,000 tons of chrome to be extracted from the tailings, and some PGMs. Blue Ridge has an assessed tax loss of R3.2bn, but a R95m rehabilitation liability. “From our perspective, it’s an absolutely wonderful play; a corporate finance dream,” says Miller. Based on an initial forecast, mining the tailings will generate R1.5bn in free cash flow.

Mantengu’s share price has been mauled since a reverse takeover in 2021. As reported previously, Miller believes the stock has been doctored. Entreaties to the JSE don’t seem to have satisfied him either. Followers of the stock can expect news on this front before long. Miller points to the firm’s recently acquired Sublime Technologies, a silicon carbide distribution business, which has a NAV that is R100m more than Mantengu’s market capitalisation of R165m.

Nonetheless, the stock is starting to gain traction amid a rise in investor interest, up by a factor of five or six in the past 18 months. Trading volumes total about 800,000 shares daily on average, compared with 150,000 previously.

“The interest is definitely picking up,” says Miller. “A number of my stakeholders get insanely irritated with me when I make the following comment, but it’s important I make it so you understand what the board is battling with.

“We’re still dealing with the back-end of share manipulation and for us it’s clear we’ve been put in a position where we are sitting at, call it a 90% discount.”

A version of this article first appeared in the Financial Mail.

Get our free daily news alerts

RELATED ARTICLESMORE FROM AUTHOR