REG - Tharisa PLC - Tharisa Production Report Q2 FY2023

TharisaAnnouncement

13/04/2023 07:00

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RNS Number : 0153W  Tharisa PLC  13 April 2023

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 OF FY2023 ENDED 31 MARCH 2023

Tharisa, the platinum group metals (PGMs) and chrome co-producer dual-listed
on the Johannesburg and London stock exchanges, announces its production
results for Q2 FY2023 and cash balance as at the quarter end.

Quarter highlights

‒     Lost Time Injury Frequency Rate ('LTIFR') of 0.27 per 200 000-man
hours worked

‒     Mining volume recovery slower than expected with continued adverse
weather negatively impacting flexibility in open pit

‒     Contractor appointed on a short term basis to assist with waste
mining (starting 1 May 2023)

‒     Processing capacity maintained utilising ROM ore stockpiles and
strategic ROM ore purchases

‒     Chrome output increased 5.7% to 404.8 kt (Q1 FY2023: 383.1 kt)
with ROM grades up at 18.4%

‒     PGM output lower at 34.3 koz (Q1 FY2023: 42.7 koz) on reduced
recoveries due to sub-optimal ore mix

‒     Metallurgical grade chrome concentrate prices up 20.6% quarter on
quarter, and 52.0% up on Q2 FY2022

‒     Karo Platinum Project on track and on budget with ground clearance
and civil contractors having commenced work on site

‒     Successfully concluded a US$130 million debt facility with
Société Générale and Absa Bank Limited; undrawn

‒     US$5 million additional subscription received in the Karo Mining
Holdings Bond increasing total proceeds to US$36.8 million

‒     Cash on hand US$205.8 million (31 December 2022: US$213.9
million), with a net cash position of US$106.8 million (31 December 2022:
US$101.1 million)

 

Key Operating Numbers

                                                                         Quarter ended 31 Mar 2023     Quarter ended 31 Dec 2022     Quarter on quarter movement %    Quarter ended 31 Mar 2022     Half year ended 31 Mar 2023     Half year ended 31 Mar 2022
 Reef mined                                             kt               1 028.0                       1 081.5                       (4.9)                            1 419.7                       2 109.5                         2 833.6
 6E PGMs produced                                       koz              34.3                          42.7                          (19.7)                           44.1                          77.0                            91.8
 Chrome concentrates produced (excluding third party)   kt               404.8                         383.1                         5.7                              374.9                         787.9                           776.7
 Average PGM contained metal basket price               US$/oz           2 032                         2 360                         (13.9)                           2 806                         2 216                           2 592
 Metallurgical grade chrome concentrate contract price  US$/t CIF China  269                           223                           20.6                             177                           247                             175

 

 

Phoevos Pouroulis, CEO of Tharisa, commented:

"Tharisa continued to generate healthy free cash flow in the second quarter of
our financial year despite the significant impact of severe weather conditions
to our open pit mining operations. While chrome production was up, the ore mix
saw PGM output in January and February fall below expectations for the
quarter. With our operational improvement implemented during the quarter
already delivering results, and the additional flexibility that both new
equipment and the additional waste contractor will bring to the pit, the
second half of our financial year will see an improvement at our flagship
Tharisa mine.

Due to the challenges posed in December through to February specifically,
management took the prudent step of lowering full-year guidance by 10%. The
unique and unparalleled properties of our orebody, however, were once again
shown to reap rewards as the chrome price reached levels as high as US$300/
tonne and, while the PGM prices have pulled back recently, even at these
levels we continue to generate healthy margins.

Tharisa's Vision 2025 strategy of reaching optimal and sustainable production
from the Tharisa mine remains intact, and we will benefit from the significant
progress being made at Karo, our second tier one mine - which remains on time
and budget for first ore to the mill in H2 2024, as we continue to evolve into
a multi-asset/multi-jurisdiction PGM producer."

 

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 0.27 per 200 000-man hours worked

 

Market Update

‒     PGM prices came under pressure in the quarter as demand softened
and destocking took some shine off the strong pricing seen in FY2022. Rhodium
and palladium prices remain the most affected, with rhodium suffering from a
small, tight, illiquid market influenced by a single seller. With commodity
markets generally directionless in the quarter as macro events dominated
fundamentals, and a slower than anticipated economic uplift post easing of
COVID-19 restrictions in China, meant the PGM basket price was lower than most
analysts had forecast. However, the outlook for the PGM basket remains strong
as tight supply and strong demand will ensure prices strengthen, with platinum
the standout metal as the continued shift into a supply deficit becomes
evident

‒     Chrome prices remained robust following on from a strong first
quarter, with spot at around US$285/t at the time of writing. Stockpiles in
China continue to hover at historically low levels while demand for the
product from South Africa remains strong, supply is hampered by loadshedding
and inland logistics challenges affecting the industry. While we will see some
short-term interruptions in China as some furnaces undergo maintenance, the
long-term fundamentals for the metal remain firmly intact, in particular due
to the supply concentration and the operational challenges some competing
industry players have cited publicly, which will have an impact on the already
tight supply-demand fundamentals

 

Operational Update

‒     Total reef mined of 1 028.0 kt (Q1 FY2023: 1 081.5 kt) as
adverse weather impacted the in-pit flexibility affecting volume and reef mix

‒     Stripping ratio of 12.6 m(3): m(3) (Q1 FY2023: 10.6 m(3): m(3))
improved as waste was moved in areas recovering from in pit flooding

‒     Total reef tonnes milled for the quarter at 1 370.0 kt (Q1
FY2023: 1 427.8 kt), supplemented by stockpiles and strategic ROM ore
purchases

‒     Quarterly PGM production at 34.3 koz (Q1 FY2023: 42.7 koz)

‒     Rougher feed grade of 1.66 g/t (Q1 FY2023:1.66 g/t)

‒     Recovery of 61.9% (Q1 FY2023: 71.7%) as oxidised UG ROM ore was
also milled affecting PGM recovery

‒     Quarterly chrome production at 404.8 kt (Q1 FY2023: 383.1 kt)

‒     Grade of 18.4% Cr(2)O(3) (Q1 FY2023: 17.0%)

‒     Recovery at 66.6% (Q1 FY2023: 65.7%) as yield from the Vulcan
plant improved. Speciality chrome production was lower due to a planned spiral
replacement programme

 

Karo Mining Holdings Update

‒     Extensive earthworks proceeding to plan

‒     Civils contracts for the pouring of the foundations for all plants
and infrastructure at Karo have been awarded

‒     Contracts for high voltage power line (31 km EIA permission) and
all main transformers awarded

‒     Ordering of long-lead items for the project continuing as per
schedule

‒     Trial mining to commence

‒     30 kt of ore to provide further information on drilling, blasting,
grade control and processing

‒     150 employees and contractors on site in Zimbabwe, with majority
of Zimbabwe management positions filled

 

Cash Balance and Debt Position

Tharisa had a cash balance of US$205.8 million (31 December 2022: US$213.9
million) at the end of the quarter, and debt of US$99.0 million (31 December
2022: US$112.8 million), resulting in a net cash position of US$106.8 million
(31 December 2022: US$101.1million). These cash and debt numbers exclude the
recently concluded US$130 million facilities which are undrawn at the
reporting period.

 

Guidance

Due to lower than expected production in Q2 FY2023 production guidance is
reduced by 10% from the previous range of between 175 koz and 185 koz PGMs (6E
basis) and 1.75 Mt to 1.85 Mt of chrome concentrates.

Production Numbers

                                                                         Quarter ended 31 Mar 2023     Quarter ended 31 Dec 2022     Quarter on quarter movement %    Quarter ended 31 Mar 2022     Half year ended 31 Mar 2023     Half year ended 31 Mar 2022
 Reef mined                                             kt               1 028.0                       1 081.5                       (4.9)                            1 419.7                       2 109.5                         2 833.6
 Stripping ratio                                        m(3): m(3)       12.6                          10.6                          18.9                             12.7                          11.5                            11.9
 Reef milled                                            kt               1 370.0                       1 427.4                       (4.0)                            1 362.2                       2 797.4                         2 794.3
 PGM flotation feed                                     kt               1 039.6                       1 115.3                       (6.8)                            1 045.7                       2 154.9                         2 115.0
 PGM rougher feed grade                                 g/t              1.66                          1.66                          -                                1.74                          1.66                            1.74
 PGM recovery                                           %                61.9                          71.7                          (13.7)                           75.4                          67.0                            77.4
 6E PGMs produced                                       koz              34.3                          42.7                          (19.7)                           44.1                          77.0                            91.8
 Platinum produced                                      koz              19.7                          23.2                          (15.1)                           24.3                          42.9                            50.8
 Palladium produced                                     koz              6.1                           7.5                           (18.7)                           7.4                           13.6                            14.9
 Rhodium produced                                       koz              3.0                           4.2                           (28.6)                           4.2                           7.2                             8.8
 Average PGM contained metal basket price               US$/oz           2 032                         2 360                         (13.9)                           2 806                         2 216                           2 592
 Platinum price                                         US$/oz           1 004                         967                           3.8                              1 026                         976                             1 011
 Palladium price                                        US$/oz           1 563                         1 952                         (19.9)                           2 312                         1 763                           2 125
 Rhodium price                                          US$/oz           10 812                        12 951                        (16.5)                           17 023                        12 133                          15 189
 Average PGM contained metal basket price               ZAR/oz           35 801                        41 682                        (14.1)                           42 784                        39 094                          39 721
 Cr(2)O(3) ROM grade                                    %                18.4                          17.0                          8.2                              17.1                          17.7                            17.6
 Chrome recovery                                        %                66.6                          65.7                          1.4                              67.8                          66.2                            66.7
 Chrome yield                                           %                29.5                          26.8                          10.1                             27.5                          28.2                            27.8
 Chrome concentrates produced (excluding third party)   kt               404.8                         383.1                         5.7                              374.9                         787.9                           776.7
 Metallurgical grade                                    kt               365.3                         347.2                         5.2                              295.0                         712.5                           600.3
 Specialty grades                                       kt               39.5                          35.9                          10.0                             79.9                          75.4                            176.4
 Third party chrome production                          kt               45.8                          40.9                          12.0                             53.4                          86.8                            102.6
 Metallurgical grade chrome concentrate contract price  US$/t CIF China  269                           223                           20.6                             177                           247                             175
 Metallurgical grade chrome concentrate contract price  ZAR/t CIF China  4 827                         3 932                         22.8                             2 700                         4 387                           2 670
 Average exchange rate                                  ZAR:US$          17.8                          17.6                          1.1                              15.2                          17.7                            15.3

 

 

Paphos, Cyprus

 

13 April 2023

 

JSE Sponsor

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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 / Oonagh Reidy

+44 207 466 5000

tharisa@buchanan.uk.com

 

Broker Contacts:

Peel Hunt LLP (UK Joint Broker)

Ross Allister / Georgia Langoulant

+44 207 7418 8900

 

BMO Capital Markets Limited (UK Joint Broker)

Thomas Rider / 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 exploration, mining, processing
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 an 18 year pit life
and can extend operations underground by at least 40 years. Tharisa also owns
Karo Mining Holdings a low-cost, open-pit PGM asset under construction and
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).

 

 

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