Weak metal prices hurt Tharisa’s interim revenue

Picture: Chris Ratcliffe

Picture: Chris Ratcliffe

Published Jun 14, 2016

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Johannesburg - Tharisa Minerals, the platinum and chrome producer that made its debut on the London Stock Exchange (LSE) last week in an effort to boost liquidity, said yesterday its interim revenue was hurt by weak metal prices.

Read also: Tharisa turns its fortunes around

Tharisa’s chief executive, Phoevos Pouroulis, blamed the 27.4 percent drop in the average platinum group metals (PGMs) basket price coupled with the 42 percent fall of chrome concentrate price for the drop in revenue in the six months to March.

JSE-listed Tharisa reported that group revenue plunged 30.5 percent to $86 million (R1.3 billion) in the period from $123.7m in the previous period. Although metal prices had recovered since the beginning of the year, it noted.

“The six months under review were characterised by a challenging macroeconomic environment, where global commodity prices declined materially before recovering towards the end of the second quarter,” Pouroulis said.

He said revenues, profitability and the future rate of growth depended on the prevailing market prices of PGMs and chrome. “A sustained downward movement in the market price for PGMs and chrome may negatively affect the group's profitability and cash flows,” the company said.

Basic and diluted earnings per share for the period were unchanged at $0.01 a share.

Tharisa listed on the main LSE board under the ticker THS, with the primary listing remaining in Johannesburg.

The secondary listing was expected to boost its international profile and open access to a wider pool of investors and would improve trading liquidity by facilitating the participation of UK and European investors in the company.

Pouroulis said the listing was an important milestone for company. “We are a European-domicile company. We have a large international shareholder base. The listing went live last week, we have seen nice movement and hopefully this will lead to some liquidity,” he said.

Pouroulis said the group’s cost base benefited from the weakness of the rand against the US dollar, adding that certain “first time” costs were incurred with the inaugural share scheme awards to employees and consultants.

Tharisa, which operates the Tharisa Mine in the North West, suffered disruptions to production with the company losing 15.1 percent of mill throughput.

“A number of section 54 safety-related instructions in the first quarter of the 2016 financial year adversely impacted on mining production during the period, resulting in the run of mine (ROM) stockpiles being depleted and impacting on the feed grade into the processing plants,” the company said.

It said ROM stockpiles had subsequently been rebuilt with 212 000 tons of ROM stock and crushed ore being available ahead of the processing plants as at March 31.

It reported a profit before tax of $4.5m for the interim period, with net cash flows from operating activities of $18.2m – an improvement of 18.3 percent was reported.

Tharisa shares gained 6.25 percent on the JSE yesterday to close at R10.20.

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