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Tharisa’s interims bolstered by high commodity prices

THARISA’S cash generation ability delivered a solid balance sheet for continuous investment.

THARISA’S cash generation ability delivered a solid balance sheet for continuous investment.

Published May 27, 2022

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THARISA, the platinum group metals (PGMs) and chrome co-producer, yesterday said for the six months ended March 31, 2022, it delivered another cash generative performance in light of high commodity prices.

Listed on the JSE and London Stock Exchanges, Tharisa flagged that PGM production had increased more than 22 percent to 91.8 ounces compared to last year’s 75.1 ounces. Chrome production increased by 6.3 percent, from 730 700 tonnes to 776 700 tonnes at an average metallurgical grade chrome price of $175 (R2 759) a tonne, up from $145/t in the first half of the 2021 financial year.

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The miner’s principal operating asset is the Tharisa mine, which is the world’s only co-producer of both PGMs and chrome concentrates, operates a mine near Brits in North West, and has two plants, Voyager and Genesis.

Tharisa maintained its production guidance at between 165 000 ounces and 175 000 ounces of PGMs, and between 1.75 million and 1.85 million tonnes of chrome concentrates.

This resulted in a 6.5 percent year-on-year increase in revenue, from $313.6 million to $334m, and a profit before tax of $124.3m, which increased from $104.6m in the previous comparable period.

Tharisa said the board proposed an interim dividend of US 3 cents per ordinary share, payable on June 29.

Chief executive Phoevos Pouroulis said: “Our flagship Tharisa mine increased its production of both PGMs and chrome, with significant progress delivered on our beneficiation strategy, which included the commissioning of chrome production from the self-funded Vulcan fine chrome recovery and beneficiation plant.”

Pouroulis said Tharisa’s cash generation ability delivered a solid balance sheet for continuous investment.

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“We have reinvested into the company’s targeted and strategic initiatives such as Karo Platinum and the Arxo Metals Beneficiation Site (AMBS) as well as towards continued investment in the Tharisa Mine, and we will also, and equally important, return capital to our shareholders with another interim dividend proposed,” he said.

In March, Tharisa acquired a controlling interest in Karo Mining Holdings Limited for about $29.5m to be settled through the issue of 13.69 million new Tharisa shares.

Pouroulis said the focus for the remainder of the financial year would be to maximise PGM and chrome production while curtailing as best as possible above inflationary costs.

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“Financial close of a funding package for Karo Platinum is well underway, and with a controlling interest in Karo Platinum in place now, we have a clear pathway to production within a 24-month time frame,” he said.

Tharisa said as regards PGM, the market was driven by two forces during the period.

“The first is structural, with solid demand resulting in strong prices for all metals as the market absorbed inventory overhangs from the last 12 months due to the growing global pipeline for automobiles, computer chips, and overall buoyant economic activity. The second force, unfortunately, was driven by geopolitical events including sanctions on Russia - a major PGM producing country, economic slowdowns and uncertainty over economic growth and inflationary pressures,” it said.

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The impact of the supply disruptions and, therefore, pricing, especially on palladium, as a consequence of the economic sanctions on Russia were still to be felt in the markets, Tharisa said.

Chrome prices continued to surge with logistical constraints impacting supply although severe Covid-19 lockdowns and slowing economic growth in China could weigh on prices in the near term.

“Logistics is an increasing impediment to the supply chain. Infrastructure, especially rail and ports, is severely constrained in South Africa, and more focus is being placed on road transport and the use of multiple ports including through neighbouring countries as a means of mitigating risk and safeguarding the group’s export products. Similar problems exist in China. Freight rates factor into increased oil prices, congestion, and waiting time at all ports,” the group said.

Tharisa said despite the continued logistical challenges, it was able to deliver on its order book and that prices remained healthy.

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