REG - Tharisa PLC - Production report Q4 FY2022

TharisaAnnouncement

11/10/2022 07:00

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RNS Number : 3833C  Tharisa PLC  11 October 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 FOURTH QUARTER AND YEAR ENDED 30 SEPTEMBER 2022 1 
(#_ftn1)

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 Q4 and financial year ended 2022.

Quarter and year-end highlights

‒     Lost Time Injury Frequency Rate ('LTIFR') of 0.4 per 200 000-man
hours worked

‒     Achieved seven fatality free years and six million fatality free
shifts

‒     Continued focus on sustainable in pit mining led to consistent
milling throughput resulting in:

‒     Quarterly PGM production increasing to 45.3 koz (Q3 FY2022: 42.1
koz), at a rougher feed grade of 1.67 g/t (Q3 FY2022: 1.65 g/t) with
recoveries at 76.2% (Q3 FY2022: 75.6%)

‒     Annual PGM production up 13.6% at 179.2 koz (FY2021: 157.8 koz)

‒     Quarterly chrome production increasing to 416.2 kt (Q3 FY2022: 389.7
kt) at a grade of 17.3% Cr(2)O(3) (Q3 FY2022: 17.0%) and recovery at 69.6% (Q3
FY2022: 70.2%)

‒     Annual chrome production up 5.1% at 1 582.7 kt (FY2021: 1 506.1 kt)

‒     Strategic commodity portfolio and robust pricing supporting the
Company's capital allocation and growth ambitions:

‒     Quarterly PGM basket price of US$2 400/oz (Q3 FY2022: US$2 677/oz)
down 10.3%

‒     Annual PGM basket price of US$2 564/oz (FY2021: US$3 074/oz) down
16.6%

‒     Quarterly metallurgical grade chrome price of US$226/t (Q3 FY2022:
US$247/t) down 8.5%

‒     Annual metallurgical grade chrome price of US$209/t (FY2021:
US$154/t), up 35.7%

‒     Cash balance of US$143.4 million and positive net cash position of
US$78.6 million

‒     Karo Platinum project on schedule with 'ground-breaking' due
December 2022

‒     Production guidance for FY2023 is set between 175 koz and 185 koz
PGMs (6E basis) and 1.75 Mt to 1.85 Mt of chrome concentrates

 

Key Operating Numbers

                                                                        Quarter ended 30 Sep 2022    Quarter ended 30 Jun 2022    Quarter on quarter movement %    Quarter ended 30 Sep 2021    Year      ended   30 Sep     2022          Year      ended   30 Sep     2021          Year on year movement %
 Reef mined                                                     kt      1 314.7                      1 357.1                      (3.1)                            1 404.7                      5 505.4                                    5 379.9                                    2.3
 PGMs produced (6E)                                             koz     45.3                         42.1                         7.6                              43.7                         179.2                                      157.8                                      13.6
 Chrome concentrates produced (excluding third party)           kt      416.2                        389.7                        6.8                              395.7                        1 582.7                                    1 506.1                                    5.1
 Average PGM basket price                                       US$/oz  2 400                        2 677                        (10.3)                           2 854                        2 564                                      3 074                                      (16.6)
 Average metallurgical grade chrome concentrate contract price  US$/t   226                          247                          (8.5)                            167                          209                                        154                                        35.7

 

Phoevos Pouroulis, CEO of Tharisa, commented:

"Operationally, this has been a rewarding year that will translate to a strong
set of financial results, despite the macro challenges that have impacted
global supply chains, inflation, and the mining sector. This operational
performance is built on key decisions we made some years ago with the goal of
accelerating our growth strategy and thus building a highly innovative,
stronger, and more sustainable company.

Central to our success has been the continued efficiency at our flagship
Tharisa Mine, where production increased across the board, with the Vulcan
Plant contributing to increased production resulting in improved recoveries.

One of Tharisa's core values is maintaining a strong health and safety record.
This was again achieved during the year, delivering seven fatality free years
and six million fatality free shifts. We continue to strive to be a zero-harm
company.

On the corporate front, we have simplified our structure through fully
aligning our long-term BEE partners as shareholders in the broader Tharisa
business. We have advanced our position in Karo Platinum, which is on track to
become the second world-class asset in our portfolio. The next major milestone
is 'ground-breaking' at the Karo site in December 2022, as this PGM asset
moves into the construction phase, with inaugural production planned for
within the next 24 months.  Tharisa remains firmly committed to its strategy
of delivering sustainable growth and value to all its stakeholders despite the
current volatility in the global markets."

 

Health & Safety

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

‒     LTIFR of 0.4 per 200 000-man hours worked

‒     Achieved seven fatality free years and six million fatality free
shifts

Market Update

‒     Although PGM prices are trading in the lower half of their 12-month
range, driven by the economic slowdown, prices have not retreated as much as
anticipated. Demand-supply fundamentals, particularly for palladium and
rhodium, which remain in deficit, with platinum projected to be in a deficit
within the next 18 months, according to consensus market analysis. While
supply from Russia is difficult to predict, primary supply from South Africa
is slowing, driven by lack of development, rising costs and electricity
curtailments, affecting deep level mines in particular. At the same time, the
increasing importance of PGMs for the future of the hydrogen economy underpins
our conviction that the fundamentals for these precious metals remains strong

‒     Chrome prices were volatile during the quarter where they retreated
in line with expectation, mostly due to stainless steel and ferrochrome
production curtailments in China. Consequently, port inventory rose slightly,
albeit off a very low base.  Inflationary cost pressures, supply chain
constraints and the Covid policy in China remained key macro issues to the
market. Towards the end of the quarter, increased demand stimulated a higher
price environment as production of steel and alloy normalised. Policy
announcements from the Party Congress on 16 October 2022 in China relating to
the relaxation of Covid policies, and more stimulus packages being announced,
would bode well for demand of Tharisa's chrome concentrates. We believe that
supply disruptions will mitigate a price retreat, in the face of pricing risks
and slowing economies heading towards a recessionary environment

Operational Update

‒     Total reef mined of 1 314.7 kt (Q3 FY2022: 1 357.1 kt) bringing the
total reef mined for the year to 5 505.4 kt (FY2021: 5 379.9 kt)

‒     Stripping ratio of 13.3 m(3): m(3) (Q3 FY2022: 14.2 m(3): m(3)) with
the annualised stripping ratio at 12.8 m(3): m(3) (FY2021: 11.6 m(3): m(3)),
all ahead of Life of Mine requirements

‒     Total reef tonnes milled for the quarter a record at 1 446.8 kt (Q3
FY2022: 1 367.1 kt) and the year 5 608.2 kt (FY 2021: 5 600.0 kt)

‒     Quarterly PGM production at 45.3 koz (Q3 FY2022: 42.1 koz)

‒     Rougher feed grade of 1.67 g/t (Q3 FY2022: 1.65 g/t)

‒     Recovery of 76.2% (Q3 FY2022: 75.6%)

‒     Annual PGM production up 13.6% at 179.2 koz (FY2021: 157.8 koz)

‒     Annual feed grade 1.70 g/t (FY2021: 1.49 g/t)

‒     Annual recoveries of 76.6% (FY2021: 77.6%)

‒     Quarterly chrome production at 416.2 kt (Q3 FY2022: 389.7 kt)

‒     Grade of 17.3% Cr(2)O(3) (Q3 FY2022: 17.0%)

‒     Recovery at 69.6% (Q3 FY2022: 70.2%)

‒     Annual chrome production up 5.1% at 1 582.7 kt (FY2021: 1 506.1 kt)

‒     Grade of 17.4% Cr(2)O(3) (FY2021: 17.9% Cr(2)O(3))

‒     Recovery at 68.3% (FY2021: 63.3%)

‒     Vulcan Plant running at full throughput capacity with continued
optimisation of output to achieve planned chrome recoveries

Karo Platinum Update

‒     Ground-breaking planned December 2022

‒     Key management positions have been filled, including Project
Director and Finance Director

‒     ESIA for concentrator and infrastructure approved

‒     Long lead items ordered to meet timelines

‒     Mining contractor selected

Cash Balance and Debt Position

‒     Tharisa had a cash balance of US$143.4 million (30 June 2022
US$112.6 million) at the end of the quarter, and debt of US$64.8 million (30
June 2022 US$64.6 million). The increased cash has resulted in an improved net
cash position of US$78.6 million (30 June 2022 US$48.0 million). The Company's
strong balance sheet enables the Group to execute its growth strategy.

Guidance

Production guidance for FY2023 is set between 175 koz and 185 koz PGMs (6E
basis) and 1.75 Mt to 1.85 Mt of chrome concentrates.

 

Production Numbers

                                                                         Quarter ended 30 Sep 2022    Quarter ended 30 Jun 2022    Quarter on quarter movement %    Quarter ended 30 Sep 2021    Year      ended   30 Sep     2022          Year      ended   30 Sep     2021          Year on year movement %
 Reef mined                                             kt               1 314.7                      1 357.1                      (3.1)                            1 404.7                      5 505.4                                    5 379.9                                    2.3
 Stripping ratio                                        m(3): m(3)       13.3                         14.2                         (6.3)                            12.3                         12.8                                       11.6                                       10.3
 Reef milled                                            kt               1 446.8                      1 367.1                      5.8                              1 428.1                      5 608.2                                    5 600.0                                    0.1
 PGM flotation feed                                     kt               1 108.1                      1 051.4                      5.4                              1 071.6                      4 274.5                                    4 248.2                                    0.6
 PGM rougher feed grade                                 g/t              1.67                         1.65                         1.2                              1.59                         1.70                                       1.49                                       14.1
 PGM recovery                                           %                76.2                         75.6                         0.8                              80.0                         76.6                                       77.6                                       (1.3)
 6E PGMs produced                                       koz              45.3                         42.1                         7.6                              43.7                         179.2                                      157.8                                      13.6
 Platinum produced                                      koz              25.0                         23.1                         8.2                              23.6                         99.0                                       86.7                                       14.2
 Palladium produced                                     koz              7.9                          7.2                          9.7                              7.2                          30.0                                       24.9                                       20.5
 Rhodium produced                                       koz              4.4                          4.0                          10.0                             4.3                          17.2                                       15.4                                       11.7
 Average PGM contained metal basket price               US$/oz           2 400                        2 677                        (10.3)                           2 854                        2 564                                      3 074                                      (16.6)
 Platinum price                                         US$/oz           887                          958                          (7.4)                            1 016                        968                                        1 080                                      (10.4)
 Palladium price                                        US$/oz           2 077                        2 100                        (1.1)                            2 295                        2 107                                      2 513                                      (16.2)
 Rhodium price                                          US$/oz           13 746                       15 755                       (12.8)                           16 721                       14 962                                     18 860                                     (20.7)
 Average PGM contained metal basket price               ZAR/oz           40 850                       41 531                       (1.6)                            41 727                       40 437                                     45 336                                     (10.8)
 Cr(2)O(3) ROM grade                                    %                17.3                         17.0                         1.8                              17.9                         17.4                                       17.9                                       (2.8)
 Chrome recovery                                        %                69.6                         70.2                         (0.9)                            65.0                         68.3                                       63.3                                       7.9
 Chrome yield                                           %                28.8                         28.5                         1.1                              27.7                         28.2                                       26.9                                       4.8
 Chrome concentrates produced (excluding third party)   kt               416.2                        389.7                        6.8                              395.7                        1 582.7                                    1 506.1                                    5.1
 Metallurgical grade                                    kt               325.9                        307.0                        6.2                              309.3                        1 233.2                                    1 141.5                                    8.0
 Specialty grades                                       kt               90.3                         82.7                         9.2                              86.4                         349.5                                      364.6                                      (4.1)
 Third party chrome production                          kt               38.2                         47.4                         (19.4)                           52.4                         188.2                                      223.0                                      (15.6)
 Metallurgical grade chrome concentrate contract price  US$/t CIF China  226                          247                          (8.5)                            167                          209                                        154                                        35.7
 Metallurgical grade chrome concentrate contract price  ZAR/t CIF China  3 867                        3 900                        (0.8)                            2 435                        3 345                                      2 284                                      46.5
 Average exchange rate                                  ZAR:US$          17.0                         15.6                         9.0                              14.6                         15.8                                       14.8                                       6.8

 

Paphos, Cyprus

 

11 October 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

+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  (#_ftnref1) Tharisa's financial year begins 01 October and ends on 30
September.

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