REG - Tharisa PLC - Production report for Q3 FY2022

TharisaAnnouncement

12/07/2022 07:00

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RNS Number : 0628S  Tharisa PLC  12 July 2022

Tharisa plc

(Incorporated in the Republic of Cyprus with limited liability)

(Registration number HE223412)

JSE share code: THA

LSE share code: THS

A2X share code: THA

ISIN: CY0103562118

LEI: 213800WW4YWMVVZIJM90

('Tharisa' or the 'Company')

 

PRODUCTION REPORT FOR THE THIRD QUARTER ENDED 30 JUNE 2022 1 

Tharisa, the platinum group metals (PGMs) and chrome co-producer dual-listed
on the Johannesburg and London stock exchanges, announces production and cash
balance numbers for Q3 FY2022.

Third Quarter Highlights

‒     Lost Time Injury Frequency Rate ('LTIFR') of 0.49 per 200 000-man
hours worked

‒     Achieved 6 million fatality free shifts

‒     Strong mining and milling throughput leading to:

‒     PGM production at 42.1 koz (Q2 FY2022 44.1 koz), at a normalised
rougher feed grade of 1.65 g/t (Q2 FY2022 1.74 g/t) with steady recoveries at
75.6% (Q2 FY2022 75.4%)

‒     Chrome production at 389.7 kt up from the previous quarter (Q2
FY2022 374.9 kt)

‒     Vulcan Plant ramp up reflected in steady improvement in chrome
recoveries - throughput recoveries of 80% expected to be reached by year end

‒     Strong commodity prices and steady production during the quarter
delivering strong cash balance increases

‒     PGM basket price of US$2 677/oz (Q2 FY2022 US$2 806/oz) down 4.6%

‒     Metallurgical grade chrome price up 39.5% at US$247/t (Q2 FY2022
US$177/t)

‒     Cash balance of US$112.6 million and a positive net cash position of
US$48.0 million

‒     Successful registration of solar power project for 40-megawatt peak
('MWp') with environmental and development authority to further de-risk the
operations from the dependence on the national power grid and reduce carbon
emissions in line with our carbon reduction strategy

‒     Growth strategy remains firmly on track

 

Key Operating Numbers

                                                                         Quarter ended 30 June 2022    Quarter ended 31 March  2022     Quarter on quarter movement %    Quarter ended 30 June  2021     Nine months ended         30 June  2022       Nine months ended         30 June   2021
 Reef mined                                             kt               1 357.1                       1 419.7                          (4.4)                            1 507.8                         4 190.7                                       3 975.3
 6E PGMs produced                                       koz              42.1                          44.1                             (4.5)                            39.0                            133.9                                         114.1
 Chrome concentrates produced (excluding third party)   kt               389.7                         374.9                            3.9                              379.7                           1 166.4                                       1 110.4
 Average PGM contained metal basket price               US$/oz           2 677                         2 806                            (4.6)                            3 804                           2 619                                         3 159
 Metallurgical grade chrome concentrate contract price  US$/t CIF China  247                           177                              39.5                             160                             201                                           149

 

Phoevos Pouroulis, CEO of Tharisa, commented:

"The team at Tharisa has completed a commendable quarter, maintaining strong
production output which, supported by the favourable commodity markets,
ensures a healthy balance sheet that will allow us to continue implementing
our strategy.

The global macrotrends are challenging but Tharisa Mine's life of more than
sixty years gives us a strong foundation and the necessary financial resources
to weather the headwinds of a tough economic climate, slowing growth, rising
inflation, and weaker commodity markets.

As always, our focus remains on safety, operational excellence, and
maintaining a low-cost profile. This quarter, our PGM and chrome output was
strong once again, driven by the volume extracted from the Tharisa Mine open
pit. Production from the Vulcan Plant is steadily increasing to nameplate
capacity, proving that Tharisa's proprietary technology is working well.

With our investment in almost 10 MW of standby power generation we have had
negligible disruption to our operations due to the challenges at Eskom and the
subsequent power curtailments.

Notwithstanding the rail and port infrastructure challenges, the logistics
team have successfully exported our chrome products via various channels and
modalities.

Beyond South Africa, our growth strategy remains on track with the detailed
engineering design work, upfront infrastructure, and placement of long lead
capital items for the Karo Platinum project continuing to progress in parallel
with the finalisation of the financing options.

Overall, this has been a supportive quarter for our organic and development
growth."

 

Health & Safety

‒     The health and safety of our stakeholders remains a core value to
the Company and Tharisa continues to strive for zero harm at its operations

‒     LTIFR of 0.49 per 200 000 man-hours worked

‒     Achieved 6 million fatality free shifts

Market Update

‒     The PGM market, while pricing overall lower compared to the
beginning of the year, is holding up well supported by the continued tight
supply-demand fundamentals of the various elements. Slowing economic growth
will influence the demand side, however, slowdown in supply and no major new
projects coming online within the next 24 months means any demand increase is
expected to lead to price increases. Recycling continues to slow requiring
shortfalls to be met from primary supply

‒     The quarter continued to be overshadowed by significant external
factors including the war in Ukraine, concerns about inflationary cost
pressures, supply chain constraints and zero Covid policy in China.
Nonetheless, higher prices were achieved during the quarter for chrome against
the backdrop of destocking of port inventory and robust ferrochrome &
stainless-steel production in China. We expect a price retreat in the next
quarter although implementation of various stimuli in China and / or supply
disruptions would reduce the extent of such a threat

Operational Update

‒     Total reef mined of 1 357.1 kt (Q2 FY2022 1 419.7 kt)

‒     Stripping ratio of 14.2 m(3): m(3) (Q2 FY2022 12.7 m(3): m(3))
ensuring flexibility is maintained and stockpile management optimised

‒     Tonnes milled maintained due to a strong mining performance while
ROM stockpiles stand at two months, in line with the current mine schedule

‒     PGM output at 42.1 koz (Q2 FY2022 44.1 koz)

‒     Normalised grade at 1.65 g/t (Q2 FY2022 1.74 g/t)

‒     Recoveries at 75.6% (Q2 FY2022 75.4%)

‒     Chrome production of 389.7 kt up 3.9% from the previous quarter (Q2
FY2022 374.9 kt)

‒     Cr(2)O(3) grade at 17.0% (Q2 FY2022 17.1%)

‒     Recoveries at 70.2% (Q2 FY2022 67.8%)

‒     Vulcan Plant technology proven to work well as overall chrome
recoveries increase

Karo Platinum Update

‒     Key management positions are being filled

‒     Orders for long-lead items are being placed

‒     ESIA for concentrator and infrastructure has been submitted to the
authorities

‒     Given inflationary pressures, the implementation team is reviewing
the capex budgets

‒     Financing discussions continuing with multiple funding solutions
being targeted

‒     National Project Status benefits being negotiated

Cash Balance and Debt Position

‒     Tharisa had a cash balance of US$112.6 million (31 March 2022
US$101.5 million) at the end of the quarter, and debt of US$64.6 million (31
March 2022 US$75.6 million) after an interim FY2022 dividend payment of US$8.8
million. The increased cash has resulted in a positive net cash position of
US$48.0 million (31 March 2022 US$25.9 million)

Guidance

FY2022 production guidance maintained at between 165 koz and 175 koz PGMs (6E
basis).  Guidance for chrome production is reduced by 10% to between 1.55 Mt
and 1.65 Mt due to lower chrome feed grade and slower Vulcan Plant ramp-up.

 

                                                                         Quarter ended 30 June 2022    Quarter ended 31 March  2022     Quarter on quarter movement %    Quarter ended 30 June  2021     Nine months ended         30 June  2022       Nine months ended         30 June   2021
 Reef mined                                             kt               1 357.1                       1 419.7                          (4.4)                            1 507.8                         4 190.7                                       3 975.3
 Stripping ratio                                        m(3): m(3)       14.2                          12.7                             11.8                             10.9                            12.6                                          11.3
 Reef milled                                            kt               1 367.1                       1 362.2                          0.4                              1 413.1                         4 161.4                                       4 171.9
 PGM flotation feed                                     kt               1 051.4                       1 045.7                          0.5                              1 072.3                         3 166.4                                       3 176.5
 PGM rougher feed grade                                 g/t              1.65                          1.74                             (5.2)                            1.52                            1.71                                          1.46
 PGM recovery                                           %                75.6                          75.4                             0.3                              74.4                            76.8                                          76.8
 6E PGMs produced                                       koz              42.1                          44.1                             (4.5)                            39.0                            133.9                                         114.1
 Platinum                                               koz              23.1                          24.3                             (4.9)                            21.8                            73.9                                          63.1
 Palladium                                              koz              7.2                           7.4                              (2.7)                            5.5                             22.1                                          17.7
 Rhodium                                                koz              4.0                           4.2                              (4.8)                            3.9                             12.8                                          11.1
 Average PGM contained metal basket price               US$/oz           2 677                         2 806                            (4.6)                            3 804                           2 619                                         3 159
 Platinum                                               US$/oz           958                           1 026                            (6.6)                            1 185                           994                                           1 105
 Palladium                                              US$/oz           2 100                         2 312                            (9.2)                            2 794                           2 117                                         2 588
 Rhodium                                                US$/oz           15 755                        17 023                           (7.4)                            24 232                          15 370                                        19 999
 Average PGM contained metal basket price               ZAR/oz           41 531                        42 784                           (2.9)                            53 801                          40 299                                        46 733
 Cr(2)O(3) ROM grade                                    %                17.0                          17.1                             (0.6)                            18.0                            17.4                                          17.9
 Chrome recovery                                        %                70.2                          67.8                             3.5                              63.0                            67.8                                          62.8
 Chrome yield                                           %                28.5                          27.5                             3.6                              26.9                            28.0                                          26.6
 Chrome concentrates produced (excluding third party)   kt               389.7                         374.9                            3.9                              379.7                           1 166.4                                       1 110.4
 Metallurgical grade                                    kt               307.0                         295.0                            4.1                              280.8                           907.3                                         832.2
 Specialty grades                                       kt               82.7                          79.9                             3.5                              98.9                            259.1                                         278.2
 Third party chrome production                          kt               47.4                          53.4                             (11.2)                           59.0                            150.0                                         170.6
 Metallurgical grade chrome concentrate contract price  US$/t CIF China  247                           177                              39.5                             160                             201                                           149
 Metallurgical grade chrome concentrate contract price  ZAR/t CIF China  3 900                         2 700                            44.4                             2 274                           3 112                                         2 220
 Average exchange rate                                  ZAR:US$          15.6                          15.2                             2.6                              14.1                            15.4                                          14.9

 

Paphos, Cyprus

 

12 July 2022

 

JSE Sponsor

Investec Bank Limited

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Investor Relations Contacts:

Ilja Graulich (Head of Investor Relations and Communications)

+27 11 996 3500

+27 83 604 0820

igraulich@tharisa.com (mailto:igraulich@tharisa.com)

 

Financial PR Contacts:

Bobby Morse / Ariadna Peretz

+44 207 466 5000

tharisa@buchanan.uk.com

 

Broker Contacts:

Peel Hunt LLP (UK Joint Broker)

Ross Allister / David McKeown / Alexander Allen

+44 207 7418 8900

 

 

BMO Capital Markets Limited (UK Joint Broker)

Thomas Rider / Pascal Lussier Duquette / Nick Macann

+44 207 236 1010

 

Berenberg (UK Joint Broker)

Matthew Armitt / Jennifer Lee / Detlir Elezi

+44 203 207 7800

 

Nedbank Limited (acting through its Corporate and Investment Banking division)
(RSA Broker)

Carlyle Whittaker

+27 11 294 0061

 

About Tharisa

Tharisa is an integrated resource group critical to the energy transition and
decarbonisation of economies. It incorporates mining, processing, exploration,
and the beneficiation, marketing, sales, and logistics of PGMs and chrome
concentrates, using innovation and technology as enablers. Its principal
operating asset is the Tharisa Mine located in the south-western limb of the
Bushveld Complex, South Africa. The mechanised mine has a 20-year open-pit
life and the ability to extend operations underground by at least an
additional 40 years. Tharisa also owns Karo Mining Holdings and Salene Chrome,
development stage, low-cost, open-pit PGM and chrome assets respectively,
located on the Great Dyke in Zimbabwe. The Company is committed to reducing
its carbon emissions by 30% by 2030 and the development of a roadmap is
continuing to be net carbon neutral by 2050. Tharisa plc is listed on the
Johannesburg Stock Exchange (JSE: THA) and the Main Board of the London Stock
Exchange (LSE: THS).

 1  Tharisa's financial year begins 01 October and ends on 30 September.

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