REG - Tharisa PLC - Production Report Q2 FY2022

TharisaAnnouncement

12/04/2022 07:01

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RNS Number : 0071I  Tharisa PLC  12 April 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 SECOND QUARTER ENDED 31 MARCH 2022( 1 )

Stable mining and PGM output as Vulcan Plant comes online

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 Q2 FY2022.

Second quarter highlights

‒     Lost Time Injury Frequency Rate ('LTIFR') of 0.72 per 200 000
man-hours worked

‒     Mining rates maintained with mining blend optimised for PGMs,
resulting in slightly lower chrome grade

‒     Steady recoveries, despite secondary mill breakdowns, resulting in
slightly lower quarterly production in Q2 compared to the record Q1:

‒     PGM production of 44.1 koz, down 7.5% (Q1: 47.7 koz) at an
improved average PGM basket price up 17.2% at US$2 806/oz (Q1: US$2 394/oz)

‒     Chrome production of 374.9 kt, down 6.7% (Q1: 401.8 kt), at an
improved average metallurgical grade chrome price up 9.9% to US$177/t
(US$161/t)

‒     Gradual ramp up of Vulcan Plant production with plant
commissioning

‒     Consistent production into rising commodity prices further
strengthened the Company's balance sheet

‒     Cash balance of US$101.5 million and a positive net cash position
of US$25.9 million

‒     FY2021 final dividend payment of US$14.1 million on 16 March 2022

‒     Announced acquisition of remaining 26% shareholding in Tharisa
Minerals in a landmark BEE transaction

‒   Acquired controlling interest in Karo Mining Holdings with exercise
of farm-in option at a discount to the project NPV for a purchase
consideration of US$27.0 million

‒     Appointed Bernard Pryor as MD of Karo Mining Holdings post quarter
end

 

 Key Operating Numbers

                                                                         Quarter ended 31 Mar 2022     Quarter ended 31 Dec 2021     Quarter on quarter movement %    Quarter ended 31 Mar 2021     Half year ended         31 Mar 2022          Half year ended         31 Mar 2021
 Reef mined                                             kt               1 419.7                       1 413.9                       0.4                              1 233.2                       2 833.6                                      2 467.5
 6E PGMs produced                                       koz              44.1                          47.7                          (7.5)                            35.8                          91.8                                         75.1
 Chrome concentrates produced (excluding third party)   kt               374.9                         401.8                         (6.7)                            358.4                         776.7                                        730.7
 Average PGM contained metal basket price               US$/oz           2 806                         2 394                         17.2                             3 290                         2 592                                        2 823
 Metallurgical grade chrome concentrate contract price  US$/t CIF China  177                           161                           9.9                              155                           175                                          145

 

Phoevos Pouroulis, CEO of Tharisa, commented:

"Another safe and strong mining performance in what is traditionally our
toughest operating quarter. Mining rates remain at record levels with
production being impacted by certain secondary mill challenges which have
since been addressed. These challenges dampened throughput and in turn
production. This quarter's output, though slightly lower, needs to be measured
against our record breaking quarterly run rate and our step change to higher
output remains intact on an annualised basis. Despite these challenges, on a
half year comparable basis to 2021, PGM and chrome concentrates production
increased by 22.2% and 6.3% respectively.

With continued focus on grade and throughput and the ramp-up of the Vulcan
Plant production, we remain confident on achieving market guidance.

As Tharisa maintains its growth strategy, we have taken significant strides in
simplifying the Group structure, through the consolidation of our ownership of
Tharisa Minerals in a landmark BEE transaction, benefiting all shareholders.
We also progressed our much anticipated cross border step by announcing our
plans for developing the tier 1 Karo PGM project, doubling our PGM production
within 24 months.

The transformation of Tharisa into a multi-asset, multi-commodity and
multi-jurisdiction business, combined with strong PGM and chrome prices, as
well as the further production upside from initiatives including the ramp of
the Vulcan Plant at the Tharisa Mine, provide a very healthy outlook for the
prospects of the Company in the second half of the year, and beyond."

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 0.72 per 200 000 man-hours worked

Market Update

‒   The PGM market was driven by two forces, one structural, where demand
for all metals remained strong, pushing prices up as the market absorbed
potential inventory overhangs from the last 12 months, as the global pipeline
for automobiles and computer chips grew, as economic activity was lifted. The
second force, unfortunately, was driven by geopolitical events, that saw
buyers ensuring access to metal supply due to uncertainty of supply from
Russia. These concerns are warranted as the latest sanctions by the London
Platinum and Palladium Market on certain refiners indicates the market will
tighten, although demand from certain countries still trading with Russia is
being met by that output, for now. Any operational shortfall by the major
producing country, South Africa, will assist in the tight demand supply
balance supporting prices and, unless there is a significant drop in economic
activity, prices and the outlook for the next 24 months and the longer term
remain firmly intact.

‒   Higher chrome prices were in line with global trends for commodities.
Strong demand was supported by lower pipeline inventories and increased
consumption. Despite the continued logistical challenge, both inland and sea
freight, Tharisa was able to deliver into its order book with inventory on
hand at normal levels. Prices remain healthy but we are of the view there are
too many headwinds to incentivise new production thus maintaining the current
supply/demand balance, which at this stage, may be weighted to a slight
deficit.

Operational Update

‒     Total reef mined 1 419.7 kt, flat quarter on quarter

‒     Stripping ratio increased 13.4% to 12.7 m(3): m(3) as the mine
continues to enhance its in pit flexibility with the increased life of the
open pit

‒     Tonnes milled reduced as a consequence of secondary mill issues
since resolved

‒    H1 PGM production up 22.2% to 91.8 koz and down 7.5% at 44.1 koz
QoQ due to lower milling and lower recoveries due to secondary mill by-passing

‒     H1 chrome production rose by 6.3% to 776.7 kt and fell almost 7%
QoQ to 374.9 kt due to the lower milling and lower feed grade

Vulcan Plant ramp-up slower than forecast, however reaching higher levels in
March 2022, with the daily target output due to be reached within this quarter

Zimbabwe update

‒   As previously announced, Tharisa has increased its shareholding in
Karo Holdings to 66.3% and this was completed post quarter end

‒     Implementation study at Karo Platinum proving the robust economics
of the first phase of the project while still presenting significant growth
opportunities

Salene Chrome plant commissioning underway, production due to commence in Q3
FY2022

Cash balance and debt position

‒    Tharisa had a cash balance of US$101.5 million (31 December 2021
US$79.1 million) at the end of the quarter and debt of US$75.6 million (31
December 2021 US$54.7 million) after a final FY2021 dividend payment of
US$14.1 million. The increased cash has resulted in a positive net cash
position of US$25.9 million (31 December 2021 US$24.4 million).

Guidance

‒    FY2022 production guidance of between 165 koz to 175 koz PGMs (6E
basis) and 1.75 Mt to 1.85 Mt of chrome concentrates is maintained.

 

                                                                         Quarter ended 31 Mar 2022     Quarter ended 31 Dec 2021     Quarter on quarter movement %    Quarter ended 31 Mar 2021     Half year ended         31 Mar 2022          Half year ended         31 Mar 2021
 Reef mined                                             kt               1 419.7                       1 413.9                       0.4                              1 233.2                       2 833.6                                      2 467.5
 Stripping ratio                                        m(3): m(3)       12.7                          11.2                          13.4                             11.8                          11.9                                         11.5
 Reef milled                                            kt               1 362.2                       1 432.1                       (4.9)                            1 345.2                       2 794.3                                      2 758.9
 PGM flotation feed                                     kt               1 045.7                       1 069.3                       (2.2)                            1 023.9                       2 115.0                                      2 104.2
 PGM rougher feed grade                                 g/t              1.74                          1.75                          (0.6)                            1.41                          1.74                                         1.42
 PGM recovery                                           %                75.4                          79.3                          (4.9)                            77.1                          77.4                                         78.1
 6E PGMs produced                                       koz              44.1                          47.7                          (7.5)                            35.8                          91.8                                         75.1
 Platinum produced                                      koz              24.3                          26.5                          (8.3)                            19.8                          50.8                                         41.3
 Palladium produced                                     koz              7.4                           7.5                           (1.3)                            5.4                           14.9                                         12.2
 Rhodium produced                                       koz              4.2                           4.6                           (8.7)                            3.5                           8.8                                          7.2
 Average PGM contained metal basket price               US$/oz           2 806                         2 394                         17.2                             3 290                         2 592                                        2 823
 Platinum price                                         US$/oz           1 026                         997                           2.9                              1 164                         1 011                                        1 063
 Palladium price                                        US$/oz           2 312                         1 941                         19.1                             2 399                         2 125                                        2 374
 Rhodium price                                          US$/oz           17 023                        13 522                        25.9                             21 521                        15 189                                       18 354
 Average PGM contained metal basket price               ZAR/oz           42 784                        36 897                        16.0                             49 273                        39 721                                       43 051
 Cr(2)O(3) ROM grade                                    %                17.1                          18.1                          (5.5)                            18.0                          17.6                                         17.8
 Chrome recovery                                        %                67.8                          65.6                          3.4                              62.4                          66.7                                         62.6
 Chrome yield                                           %                27.5                          28.1                          (2.1)                            26.6                          27.8                                         26.5
 Chrome concentrates produced (excluding third party)   kt               374.9                         401.8                         (6.7)                            358.4                         776.7                                        730.7
 Metallurgical grade                                    kt               295.0                         305.3                         (3.4)                            272.8                         600.3                                        551.3
 Specialty grades                                       kt               79.9                          96.5                          (17.2)                           85.6                          176.4                                        179.4
 Third party chrome production                          kt               53.4                          49.2                          8.5                              49.5                          102.6                                        112.4
 Metallurgical grade chrome concentrate contract price  US$/t CIF China  177                           161                           9.9                              155                           175                                          145
 Metallurgical grade chrome concentrate contract price  ZAR/t CIF China  2 700                         2 471                         9.3                              2 304                         2 670                                        2 203
 Average exchange rate                                  ZAR:US$          15.2                          15.4                          (1.3)                            15.0                          15.3                                         15.3

 

Paphos, Cyprus

 

12 April 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 / James Husband

+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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