Mabwe Minerals, a natural resources company engaged in the mining and commercial sales of industrial minerals and metals, today presented its 2014 Corporate Road Map. As previously reported, Mabwe Minerals in July received its Environmental Impact Assessment Certificate clearing the way for WGB Kinsey to commence operations at the Dodge Mine project. Today, management updated its shareholders on the current status at Dodge Mine and Mabwe Minerals’ road-map moving forward, incorporating the company’s recently formed strategic partnerships with Steinbock Minerals and Yasheya Limited.
To view the latest edition of the MabweMessage Newsletter, visit http://dtg.fm/mbmi-letter-11-13.
Corporate Road Map:
Mabwe Minerals, along with Steinbock Minerals and its affiliate Yasheya Limited, is setting a new course toward ensuring MBMI shareholder value. Prior to collaborating with the new partners, Mabwe Minerals had only one key customer supporting the oil & gas drilling sector, which consumes the majority of the annual demand for barite. This is an extremely important and ideal customer for any development mining company emerging as a new source of raw material sorely needed in a supply line chain of increasing demand and dwindling supply sources. The downside of only having one customer, however, is the risk associated with placing all your eggs in one large basket, so to speak.
To the benefit of our shareholders, Steinbock Minerals has paved the way for Mabwe Minerals to gain immediate access to an established barite customer base. Transitioning from a single-source/single-grade customer to a multiple-source/multi-grade barite customer base is obviously beneficial for all of our shareholders. Mabwe Minerals will take the time to coordinate with new customers, establish specifications to address their market application, and provide qualification lots for final acceptance. Our new customers are eager for a fresh source of supply. The impact of this new access is time-based regarding the rate at which Mabwe Minerals had previously forecasted its initial production pace.
We are pleased to report that Steinbock Minerals has already issued a purchase order for the very purpose of providing qualification lots to a series of targeted customers. Steinbock Minerals is the premier global barite distributor favorably entrenched in the chemical-grade sector. On-the-ground mining updates suggest that Dodge Mine barite is ideally suited for this market with additional grades suitable for the paint and automobile industry as well as barite to support the oil & gas drilling sector.
We are also pleased to announce that Steinbock Minerals is providing direct technical support to WGB Kinsey, leveraging its first-hand experience in mining its own barite assets and bringing them on-line into its supply line chain. Nearing the third visit to Dodge Mine in the last few months, Steinbock Minerals is sharing its barite mining expertise, including both good and bad experiences, helping WGB Kinsey improve production efficiencies based on experience rather than potentially costly trial and error.
With direct assistance from Steinbock Minerals:
1. WGB Kinsey established a barite grading and sorting system, stockpiling Dodge Mine barite into different grades based on Steinbock Minerals’ knowledge of its diverse customer base.
2. WGB Kinsey established a sample testing program utilizing industry recognized, third-party test labs accumulating test data in order to finalize Dodge Mine barite data sheet specifications.
3. WGB Kinsey is finalizing lot qualification procedures in-line with industry standard practices.
4. WGB Kinsey will install a Dodge Mine test lab to correlate key barite specifications with all third-party test labs and provide continuous real-time production site sample testing.
Steinbock Minerals is also providing technical assistance in defining key processing systems aimed at salvaging large percentages of barite contained in halo zones outside the primary veins in a similar manner, as established at its barite mining operations. The company is also assisting WGB Kinsey in finalizing equipment systems to optimally process Dodge Mine bulk barite prior to lot qualification. All parties are working together to integrate these systems, accelerating WGB Kinsey’s production efficiencies over the next few quarters.
We are also pleased to share the unique value to our shareholders with regards to the delivery arm of the company, Yasheya Limited. Optimizing maritime traffic, tracking/scheduling on-time deliveries and reducing vessel hull costs is an art form all unto itself in this industry. Maritime logistics materially affect the costs of any company’s product. In addition, mishandling of Dodge Mine barite or any industrial mineral could result in quality disputes. Yasheya is the answer for all our shareholders.
Yasheya prides itself on the worldwide shipment of industrial minerals and will be providing door-to-door services to our customers. Together, with Steinbock Minerals, Yasheya is a leading global shipper of bulk barite. There is an art to optimizing hull volume space in vessels to lower logistic costs that Mabwe Minerals did not earlier have access to. Tons of barite loaded into a hull take-up a very small percentage of space compared to lighter materials that require larger percentages of the same hull space. Yasheya specializes in hull optimization, further reducing Mabwe Minerals’ shipping cost by combining barite with larger volume, lighter products, thereby co-sharing the cost for the same space within a given ship’s cargo bay. Yasheya has established state-of-the-art maritime web-based freight supervision software that ranks as the industry’s model for monitoring maritime traffic.
Mabwe Minerals’ relationship with both partners is transparent in that all parties share information regarding the costs of each other’s areas of responsibilities.
What more could any company ask for?
Well, plenty. The benefits of these partnerships do not end there. Steinbock Minerals purchase orders based on customer forecasts, paired with Yasheya’s INPLAN Maritime Navigation and Minerals tracking software, enables Mabwe Minerals to track each Yasheya vessel in real-time matching multiple customer orders by barite lot loaded into individual hulls.
We must acknowledge that the Port of Beria has its challenges. The port’s current draft and channels into the harbor do not allow for Panamax vessels and their larger capacity. While the port authorities continue their port expansion and dredging projects aimed toward accommodating Panamax vessels, Mabwe Minerals must be realistic in the geographical markets served until the port authority’s expansion plans are completed. Again, the beauty of Mabwe Minerals’ relationship with Yasheya is that the company has the experience to utilize the port’s inefficiencies to everyone’s advantage. With established shipping routes and cargo management practices, Yasheya is ideally suited to support the demands of Mabwe Minerals’ customer base in Europe and the Middle East. With no known competitors within the region, Mabwe Minerals is optimally situated to support the demand of South Africa and the massive oil & gas discovery off the coast of Mozambique. Mabwe Minerals’ initial focus will be in these geographical sectors while continuing to work with our key oil & gas customer under a long-term Master Supplier Agreement.
Mabwe Minerals is also pleased to report that by working with these two partners, we are in the process of establishing an inventory and forecasting plan based on real-time production at Dodge Mine. For example, WGB Kinsey may enter into a vein that is dominated by chemical-grade barite for extended periods while other veins may produce bright-white barite for shorter time periods. Steinbock Minerals will be looking at Mabwe Minerals’ various inventory pads and near-term inventory in the ground issuing purchase orders based on real-time inventory management; in parallel, Yasheya will coordinate shipping vessels to align with on-time delivery. Will there be developmental hick-ups? Naturally, as for the first time, all parties are collectively working together. Consistent repetition with initial trial shipments to Mabwe Minerals’ new customers will help streamline inventory management as all parties coordinate resources to increase volume production at Dodge Mine and across all logistical routes during 2014 focused at increasing inventory turns.
Our current shareholders and potential investors are eager to hear more about Mabwe Minerals’ revenue objectives heading into 2014. However, we believe management must first address prior forecasts in order to help our shareholders better understand the impact of moving from a single-source/single-grade customer to a diverse customer base requiring multiple grades. Prior forecasts were based on supporting Mabwe Minerals’ API customer who has already qualified Dodge Mine API barite setting specifications that allow the use of all barite grades. Obviously, it is much easier to forecast and much faster to ramp production volumes for a larger, single-sourced customer. Diversifying Mabwe Minerals’ customer base among those who purchase multiple grades of barite is any shareholder’s or management’s dream, but requires adjusting initial production forecasts.
Looking forward over the next few quarters, our shareholders should anticipate:
1. Finalization of Dodge Mine barite product specification sheets with continuous co-sample testing by third-party industry recognized test labs.
2. Initiating lot qualification processes and procedures to support volume orders.
3. Commencement of small lot shipments to multiple customers steering the way for final customer acceptance.
4. Establishing a Dodge Mine testing lab to correlate data with third-party test vendors and providing real-time production site testing with samples direct from the mining site.
5. Integrating new capital equipment focused on the continuous reduction of mining costs.
6. Integrating into land transportation systems and processing through the Port of Beira.
7. Increasing shipments to medium lot sizes to ensure continued compliance with customer post-delivery qualification requirements.
Notably, new barite sources of supply, as reported by DownHoleTrader, failed miserably moving too fast into the supply-line chain leading to post-deliver quality disputes. Coupled with experienced advice from Steinbock Minerals and Yasheya, the Company’s approach will be more disciplined in that Mabwe Minerals will incrementally increase volume shipments with its customers to ensure full compliance over a series of shipments before engaging in much larger shipment volumes.
Mabwe Minerals’ revised revenue forecast is under construction and will be announced this quarter. As we continue to expand our customer base the next few quarters, we will utilize Steinbock Minerals’ experience to grow production volumes at a rate that ensures Dodge Mine barite enters the market as a reputable emerging source of supply.
Our Zimbabwe partner, PHI Commodities, owns its own fleet of rail wagons, graciously providing Mabwe Minerals with exclusive rights to outbound loads back to the Port of Beira. PHI Commodities’ current capacity represents 140,000 tons annually. Provisions are in place to add additional rail wagon capacity as WGB Kinsey expands Dodge Mine production along with trucking companies readily available to create dual sources of land transportation direct to the port. This is another journey on its own merit. What our shareholders should expect over the course of next year is Mabwe Minerals growing into this readily available rail wagon capacity and continuing to add capacity as the company transitions from an emerging new source of barite into an experienced mining and global provider of barite from the world-class deposits at Dodge Mine.
Mabwe Minerals management has worked tirelessly for our shareholders. What shareholders should expect as WGB Kinsey continues to build Dodge Mine infrastructure and continues to expand Dodge Mine production is an increase in production costs offset by initial lower volume shipments as described earlier. Over the next few quarters, you will see the Company’s production costs continue to decrease as WGB Kinsey integrates equipment systems and processes that will improve production efficiencies. In parallel, our shareholders should anticipate quarter-to-quarter incremental increases in Mabwe Minerals’ production volumes as the Company transitions into larger economical shipments with an expanding customer base throughout next year.
We are just as excited about our future as our investors are. While expecting mining production and land transportation logistic challenges on our new endeavors, we are blessed with strategic partners with proven experience and patience, developing new sources of barite with a long-term measurable track record. Mabwe Minerals will mirror our strategic partners’ proven business models, capitalizing on their wisdom and experiences for the benefit of our shareholders.
Sincerely,
Al Pietrangelo
MBMI President & CEO
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