Since going public, Singapore-listed Fortress Minerals OAJ has made significant strides in the mineral industry, doubling its production capacity since its listing in March 2019. It was the first iron ore company on the Singapore Exchange S68 (SGX), raising $15 million in gross proceeds.
Committed to becoming a top regional commodities player, Fortress Minerals consistently pays out dividends exceeding 20% annually, reflecting its dedication to investors. Its prudent capital management has enabled organic growth, ensuring long-term stability and expansion.
Speaking to The Edge Singapore, chairman and independent director of Fortress Minerals Chew Wai Chuen says: “We are one of the leading miners in Malaysia, and since the early 2010s, we have been producing iron ore. Today, we produce high-grade iron ore from two producing assets, the Bukit Besi mine in Terengganu and the Cermat Aman (CASB) mine in Pahang.”
The group focuses on maximising efficiency in its current assets. Dato’ Sri Ivan Chee, executive director and CEO of Fortress Minerals, outlines the group’s significant acquisition and production milestones. The group obtained the mining rights to Bukit Besi in 2016, initiating production in 2018. Fortress Minerals acquired Fortress Mengapur in April 2021, encompassing two mines: CASB and Star Destiny (SDSB) mine. The CASB mine commenced production in July 2022, while the SDSB mine is undergoing exploration.
In FY2020, which ended in February 2020, the Bukit Besi mine expanded its processing capacity with new machinery. The group improved production at the CASB mine in Mengapur, aiming for high-grade iron ore, copper and pyrrhotite concentrate. The group also emphasises disciplined cost management for business sustainability while investing in the group’s future for long-term shareholder value.
Delivering returns
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Fortress Minerals took home the highest return on equity (ROE) award under the mineral resources sector in this year’s Centurion Club by The Edge Singapore. Chee says: “Winning this award is a collective effort from the whole group, especially our ground staff. Every single person in the company has contributed meaningfully.”
Chairman and independent director Chew adds: “Since listing, we are happy to have provided shareholders strong returns on equity and dividend payouts which were in line or above our targets. At the same time, we have continued balanced and prudent through-the-cycle investing to capture opportunities and to support long-term shareholder value.”
For the past three final year periods (FY2021 to FY2023), the group has managed to sustain a dividend payout of over 20% to shareholders. This was despite earnings declining due to a lower average realised selling price and rising production costs driven by inflation.
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Chee says that while the group does not have a formal dividend policy, the form, frequency and amount of future dividends on the company’s shares will depend on several factors like the group’s earnings and operational performance, general market environment, dynamics and pricing of the commodities market and the macro environment, amongst others.
“We appreciate our shareholders’ trust and support in the group. We strive to balance dividend payouts with our business expansion plans to ensure that we have the financial strength to build a strong pipeline to support long-term shareholder value growth,” adds Chee.
In mid-2021, the group experienced a surge in its share price, peaking at 75 cents per share. This was due to various positive factors, such as robust iron-ore prices, heightened production volume, sustained demand, cost efficiency, and substantial revenue growth.
While the group’s share price stands at 27 cents, 28.6% higher than its IPO price, Chee is optimistic about Fortress Minerals’ future and aims to manage what the group can control, particularly their production costs.
Broadening horizons
The group’s outlook and foresight have paid off. In FY2022, they demonstrated strategic foresight by acquiring Fortress Mengapur, covering 951.68 hectares over the two mines. By effectively utilising their Mengapur and Bukit Besi operations, they have harnessed synergies, including expertise and downstream distribution lines, to meet their customers’ specific demands. Acquiring new prospecting licenses also helps diversify revenue streams and expand their commodities profile.
On March 6, the group announced that its subsidiaries — 65%-owned Saga Mineral and 51%-owned Kencana Primary — were granted new prospecting licences in the Telupid and Tongod areas of Sabah, East Malaysia, to prospect for nickel, copper and cobalt minerals. Chee adds that exploration at the Sabah projects commenced in May 2023, and the group continues to identify and quantify the economic minerals.
Growth prospects
Approving two new prospecting licenses in East Malaysia sets the stage for the group’s growth phase, targeting stable returns and enhanced shareholder value. The group’s sustainable portfolio expansion efforts further reinforce its growth prospects. “We are still in phase one and performing geological mapping, geochemistry and geophysical survey. It is still early days. We will update the market on the progress of our exploration as and when there are material developments,” says Chee.
Fortress Minerals also ensures resilience by actively and prudently pursuing growth opportunities for its commodities portfolio, emphasising regional acquisitions, joint ventures and mining services. “Strategic growth and diversification support our aim to become a significant regional commodities player. With our strong cash flow generation, we are well placed financially to pursue opportunities in a disciplined and prudent manner,” adds Chee.
Diversification remains a key part of Fortress Mineral’s strategy, which also plays into key themes such as the decarbonisation of the steel industry and the energy transition. As part of its expansion strategy, the group aims to diversify into various commodities like manganese, copper, nickel, cobalt, zinc, lead, tin, chromite, tungsten, gold, silver and other minerals.
“At the CASB mine, other than iron ore, there are significant indicated and inferred mineral estimates of copper as well. We are also looking for nickel, copper and cobalt at the Sabah projects. This diversification into various minerals enables the group to expand its revenue streams and broaden our growth prospects for the long-term,” says Chew, adding that the group’s diversification efforts provide it with opportunities for sustainable growth and adaptation to the changing market dynamics.
“I feel positive about our outlook. With our high-grade iron ore, the demand in Malaysia is more than the supply. Here, we supply iron ore to two domestic steel mills with which we have signed long-term contracts. They seem to take up the iron ore immediately after we produce,” adds Chee, despite pointing out current inflationary pressures and rising costs.
Their journey is inspiring for those pursuing growth, resilience and success. Their steadfast strategy, prudent investments and community engagement have paved the way to enhance shareholder value. With its robust capabilities and competitive edge, Fortress Minerals is confidently navigating the ever-evolving mineral industry.
