REG - Tharisa PLC - Tharisa Q4 FY2023 Production Report
17/10/2023 07:00
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RNS Number : 2755Q Tharisa PLC 17 October 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 FOURTH QUARTER AND YEAR ENDED 30 SEPTEMBER 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 Q4 and financial year ended FY2023 1 (#_ftn1) and cash balance as
at the year end.
Quarter highlights
‒ Lost Time Injury Frequency Rate ('LTIFR') of 0.11 per 200 000-man
hours worked
‒ Annual output
‒ Chrome production for the year at 1 580.1 kt (FY2022: 1 582.7 kt)
with Q4 at 413.4 kt (Q3 FY2023 378.8 kt)
‒ PGM production for the year at 144.7 koz (FY2022: 179.2) with Q4
at 30.7 koz (Q3 FY2023: 37.0 koz)
‒ Strong increase in reef mining volumes quarter on quarter, up
27.5% to 1 158.9 kt (Q3 FY2023: 908.8 kt)
‒ Average annual metallurgical grade chrome concentrate prices up
26.2% at US$263/t (FY2022: US$209/t)
‒ Significant quarter-on-quarter PGM price decrease of 21.5% to US$
1 331/oz (Q3 FY2023: US$ 1 695/oz) (6E basis) accelerated the annual price
retreat of 26.1% with average prices received at US$1 893/oz (FY2022:
US$2 564/oz)
‒ The continued weakening of PGM prices and macro economics has
resulted in a prudent and strategic decision to extend the Karo Platinum
Project timeline for commissioning by 12 months to June 2025, with the
opportunity to accelerate the timeline as markets become more favourable
‒ The Karo Platinum Project has progressed well, and the revised
timeline is aligned to funding availability and provides flexibility
‒ Group cash on hand increased to US$268.8 million (30 June 2023:
US$242.6 million), and debt of US$142.2 million (30 June 2023: US$101.1
million), resulting in a net cash position of US$126.6 million (30 June 2023:
US$141.5 million)
‒ Production guidance for FY2024 is set between 145 koz and 155 koz
PGMs (6E basis) and 1.7 Mt to 1.8 Mt of chrome concentrates
Key Operating Numbers
Quarter ended 30 Sep 2023 Quarter ended 30 Jun 2023 Quarter on quarter movement % Quarter ended 30 Sep 2022 Year ended 30 Sep 2023 Year ended 30 Sep 2022 Year on year movement %
Reef mined kt 1 158.9 908.8 27.5 1 314.7 4 177.3 5 505.4 (24.1)
Reef milled kt 1 310.2 1 302.2 0.6 1 446.8 5 409.8 5 608.2 (3.5)
PGMs produced (6E) koz 30.7 37.0 (17.0) 45.3 144.7 179.2 (19.3)
Chrome concentrates produced (excluding third party) kt 413.4 378.8 9.1 416.2 1 580.1 1 582.7 (0.2)
Average PGM basket price US$/oz 1 331 1 695 (21.5) 2 400 1 893 2 564 (26.2)
Average metallurgical grade chrome concentrate contract price - 42% basis US$/t 291 292 (0.3) 226 263 209 25.8
Phoevos Pouroulis, CEO of Tharisa, commented:
"The divergence in commodity prices could not have been more visible than the
past quarter which saw us touching 52-week highs in the chrome market based on
solid fundamentals, but these fundamentals were distinctly lacking in the PGM
market, which saw prices drop more rapidly and lower than the market
anticipated, resulting in broad based challenges for the PGM market on the
supply side.
While current markets are volatile and unpredictable, we believe in the medium
term outlook for PGMs underpinned by a supply side constrained economy, this
supported by a robust chrome market driven by stable demand.
At Tharisa, our co-product model showed its resilience once again, supported
by a strong recovery in chrome production in the second half of the year and
benefiting from a 26% increase in price. The earlier operational mining
challenges and resulting ore mix from our own ore and purchased ore did have a
negative impact on PGM recovery and thus production, however, this was
supported by a strong focus and recovery in chrome in the second half of the
year. The waste contractor is now firmly in place, and we see a recovery in
waste mining volumes for FY2024, however, we remain cautious on our production
outlook as evidenced by our guidance for the coming year.
Our margins remain strong due to our mechanised low cost operations, with a
continued disciplined capital allocation strategy, ensuring investment in our
existing businesses, providing sustainable growth and return to shareholders.
Given the current PGM basket price weakness and uncertain global economic
outlook, we have taken the measured decision to extend the Karo Platinum
timeline out to commissioning by June 2025, with the opportunity to accelerate
the timeline as markets become more favourable. The Karo Platinum Project has
progressed well, and the revised timeline is aligned to funding availability
and provides flexibility to navigate volatile market conditions.
Our growth strategy remains firmly intact, with continuous optimisation at the
Tharisa Mine, investment in downstream beneficiation, and our commitment to
the development of the multi-generational Tier 1 Karo Platinum Project."
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 0.11 per 200 000-man hours worked
Market Update
‒ The chrome market continues to support sustainable pricing which
is driven by supply-demand fundamentals. Reduced port inventory in China
highlights the tight market balance underpinned by the growth in Chinese
domestic ferrochrome and stainless steel industries. Supply chain complexities
are exacerbated by constrained rail and port logistics in South Africa
together with the effect of erratic electricity supply from Eskom
‒ PGM market remains under continued pricing pressure with
uncertainty of the macro global economic outlook having a direct effect on the
demand for the precious metals. This is overlain by further indecisiveness on
the future of the internal combustion engine (ICE). During the latter half of
Q4 FY2023 with the steep decline in PGM prices, analysts have cautioned that
higher cost producers within the PGM industry are not profitable at these
commodity prices. The 'higher for longer' concerns of the global interest rate
market have impacted prices for now and we see muted upside in the short term
for PGM prices. In the medium to longer term demand drivers including the
hydrogen economy, possible supply cuts at unprofitable PGM producers, project
delays and capital discipline versus demand for the ICE, will require a
recovery in PGM prices to ensure demand is met by supply
Operational Update
‒ Improved quarterly reef mined of 1 158.9 kt (Q3 FY2023: 908.8 kt)
‒ Annual reef mined down 24.1% to 4 177.3 kt (FY2022: 5 505.4 kt)
due to inclement weather and constrained pit flexibility
‒ Total annual reef tonnes milled flat at 5 409.8 kt (FY2022: 5
608.2 kt) as strategic ROM ore purchases supplemented own mine production with
Q4 FY2023 milling at 1 310.2 kt (Q3 FY2023: 1 302.2 kt)
‒ Annual chrome production at 1 580.1kt (FY2022: 1 582.7 kt)
‒ Grade of 17.9% Cr(2)O(3) (FY2022: 17.4%)
‒ Recovery at 67.6% (FY2022: 68.3%)
‒ Quarterly chrome production at 413.4 kt (Q3 FY2023: 378.8 kt)
‒ Grade of 18.7% Cr(2)O(3) (Q3 FY2023: 17.8%)
‒ Recovery at 70.0% (Q3 FY2023: 67.9%)
‒ Vulcan contributing to strong chrome recovery
‒ Annual PGM production at 144.7 koz (FY2022: 179.2 koz)
‒ Rougher feed grade of 1.64 g/t (FY2022: 1.70 g/t)
‒ Recovery of 66.5% (FY2022: 76.6%) as a result of ore mix from
oxidised material and purchased ROM impacting recoveries
‒ Quarterly PGM production at 30.7 koz (Q3 FY2023: 37.0 koz)
‒ Rougher feed grade of 1.57 g/t (Q3 FY2023: 1.67 g/t)
‒ Recovery of 62.7% (Q3 FY2023: 69.0%)
Karo Platinum Update
‒ One LTI recorded on the project for the year under review
‒ The PGM price environment has necessitated a review of the
commissioning timeline of the Karo Platinum Project
‒ First ore in mill (FOIM) now planned for June 2025
‒ Project team has divided major workstreams into smaller
commitments to ensure continued development aligned with funding availability
‒ Manufacturing of key long-lead items nearing completion
‒ Revised workstreams designed to accelerate the project
implementation should the PGM market become more favourable
‒ Pilot mining is continuing as planned to optimise mining design
‒ Additional current resource to reserve conversion underway
Cash Balance and Debt Position
Tharisa had a cash balance of US$268.8 million (30 June 2023: US$242.6
million) at the end of the quarter, and debt of US$142.2 million (30 June
2023: US$101.1 million), resulting in a net cash position of US$126.6 million
(30 June 2023: US$141.5 million).
Guidance
Production guidance for FY2024 is set between 145 koz and 155 koz PGMs (6E
basis) and 1.7 Mt to 1.8 Mt of chrome concentrates.
Any forward looking statements have not been reported on or reviewed by
Tharisa's auditors.
Production Numbers
Quarter ended 30 Sep 2023 Quarter ended 30 Jun 2023 Quarter on quarter movement % Quarter ended 30 Sep 2022 Year ended 30 Sep 2023 Year ended 30 Sep 2022 Year on year movement %
Reef mined kt 1 158.9 908.8 27.5 1 314.7 4 177.3 5 505.4 (24.1)
Stripping ratio m(3): m(3) 14.0 14.2 (1.4) 13.3 12.8 12.8 -
Reef milled kt 1 310.2 1 302.2 0.6 1 446.8 5 409.8 5 608.2 (3.5)
PGM flotation feed kt 970.6 996.5 (2.6) 1 108.1 4 122.0 4 274.5 (3.6)
PGM rougher feed grade g/t 1.57 1.67 (6.0) 1.67 1.64 1.70 (3.5)
PGM recovery % 62.7 69.0 (9.1) 76.2 66.5 76.6 (13.2)
6E PGMs produced koz 30.7 37.0 (17.0) 45.3 144.7 179.2 (19.3)
Platinum produced koz 17.3 20.9 (17.2) 25.0 80.3 99.0 (18.9)
Palladium produced koz 5.2 6.6 (21.2) 7.9 24.8 30.0 (17.3)
Rhodium produced koz 3.0 3.4 (11.8) 4.4 13.5 17.2 (21.5)
Average PGM contained metal basket price US$/oz 1 331 1 695 (21.5) 2 400 1 893 2 564 (26.2)
Platinum price US$/oz 940 1 034 (9.1) 887 981 968 1.3
Palladium price US$/oz 1 227 1 441 (14.9) 2 077 1 594 2 107 (24.3)
Rhodium price US$/oz 3 841 6 959 (44.8) 13 746 8 992 14 962 (39.9)
Average PGM contained metal basket price ZAR/oz 24 842 31 544 (21.2) 40 850 34 107 40 437 (15.7)
Cr(2)O(3) ROM grade % 18.7 17.8 5.1 17.3 17.9 17.4 2.9
Chrome recovery % 70.0 67.9 3.1 69.6 67.6 68.3 (1.0)
Chrome yield % 31.6 29.1 8.6 28.8 29.2 28.2 3.5
Chrome concentrates produced (excluding third party) kt 413.4 378.8 9.1 416.2 1 580.1 1 582.7 (0.2)
Metallurgical grade kt 338.4 306.0 10.6 325.9 1 356.9 1 233.2 10.0
Specialty grades kt 75.0 72.8 3.0 90.3 223.2 349.5 (36.1)
Third party chrome production kt 58.9 56.2 4.8 38.2 201.9 188.2 7.3
Average metallurgical grade chrome concentrate contract price - 42% basis US$/t 291 292 (0.3) 226 263 209 25.8
Metallurgical grade chrome concentrate contract price ZAR/t CIF China 5 273 5 519 (4.5) 3 867 4 840 3 345 44.7
Average exchange rate ZAR:US$ 18.7 18.7 - 17.0 18.2 15.8 15.2
Paphos, Cyprus
17 October 2023
JSE Sponsor
Investec Bank Limited
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to get further news and updates about our business.
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)
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
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 Platinum, 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).
1 (#_ftnref1) Tharisa's financial year is from 01 October to 30 September
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