Tharisa shares in big leap as it posts best-ever quarterly production
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THARISA Minerals jumped 7.53 percent on the JSE yesterday as it posted the best-ever quarterly production in South Africa during the fourth quarter and three months ended September 2021.
Tharisa, the world's only co-producer of both platinum group metals (PGMs) and chrome concentrates, said quarterly PGM production was 12 percent higher at 43 700 ounces at the end of September, leading to an annual output of 157 800 ounces, within guidance.
The group's quarterly chrome output increased by 4 percent to a record 395 700 tons leading to a year-on-year increase of 12 percent in chrome output to 1.506 million tons, also within guidance.
Chief executive Phoevos Pouroulis said the fourth quarter of the group's financial year delivered the highest production of PGM and chrome concentrates in the history of the Tharisa Mine.
“This performance follows several strategic initiatives to optimise the operation, these have built a sustainable platform for Tharisa to deliver further significant growth over the long life of our open pit operations,” Pouroulis said.
In terms of the market performance, Tharisa said chrome prices improved by 4 percent compared to the June 2021 quarter and the company also saw a 10 percent increase on an annual basis, with spot trading at $165 (R2 472) a ton.
“Prices will need to remain at these levels for most producers to remain profitable and continue to invest, as shipping rates have dented margins, with the global logistic industries continuing to be impacted by the pandemic and challenges with supply chain management,” said Tharisa.
The group said despite some output cuts at stainless steel plants in China, output was nevertheless expected to increase close to double-digit percentage growth compared to 2020 as both domestic demand and export demand drives higher output levels in China.
“South African inland logistics issues have led to longer supply chains and thus increased pricing for products, while stockpiles of chrome at port level in China remain constant,” said Tharisa.
According to the PricewaterhouseCoopers 2021 Mine Survey released last week, chronic difficulties, particularly on Transnet's coal rail line from Limpopo and Mpumalanga operations to Richards Bay Coal Terminal, have crippled exports of coal and other commodities at a time when global commodity prices are booming. Tharisa said while the PGM basket price increased by more than 80 percent on an annual basis this was somewhat dampened by the softer PGM basket price in the last quarter, which saw the average basket price reduce by 25 percent quarter-on-quarter.
It said while substitution would take place between palladium and platinum in catalytic converters over time, it believed that the inability to substitute the minor metals, the largest of which is rhodium, ensured that the PGM basket price would remain robust for at least the next 5-year period.
The group had a cash balance of $83.4 million, up from $80.5m at the end of the June quarter, and debt was slashed to $35.5m from $38.7m in June, resulting in a positive net cash position of $47.9m, a significant portion of capital spent on the construction of the Vulcan plant being internally funded. The group expects to deliver on its goals of reaching 30 percent reduction in emissions by 2030 and carbon neutrality by 2050 through the adoption of leading technologies.
Tharisa PLC's share price closed 9.59 percent higher at R26.50 on the JSE yesterday.