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We have load curtailment and not load shedding, and given we are a low user of power, on site, we have been fine as evidenced by our milling numbers, the solar far, we are not building, we are merely a sole user of the plant, and will enter into a PPA, there was an update by our partners on Friday, also posted on this chat site,
Is the wider situation in South Africa. For example at the micro level the mine is still exposed to blackouts even though it is not in the same situation as other such as Goldplat having a more direct connection to the grid. It would have helped to know whether as far as THS is concerned the situation is getting better or worse. Worse I suspect as I believe one of the Eskom bigwigs resigned the other day. The other useful update would have been progress on the solar plant. Now that's one piece of capital expenditure likely to pay dividends. At least for the SA mine.
Also the main macro reason is the social/political situation in SA. Just imagine what happens if J Malumba and Co get in.
I suspect Mr Market is imagining just that and hence the ridiculously low price.
Tharissa - what say you?
Agree Seatank-ever since Karo was commenced the shareprice has gone in one direction -the cash costs for Karo at over $1000 per PGM ounce seemed to be very high .
Agree the dividend should be maintained but I fear Karo will be used as an excuse to cut it despite some $125 million net cash.
Also I would encourage the management to set aside say $10 million to undertake some sort of share buy back.
I was not suggesting a sale “at a fraction of asset price” but anything circa £2 per share should be considered
I don't know their financial situation but highly doubt the Pouroulises would sell Tharisa at a fraction of its asset value, so being acquired is extremely unlikely, in my view. The market value being ascribed to Tharisa does however send a message to management regarding Karo - why invest in a new mine that will be valued by the market at a fraction of its capital cost, not to mention barely be profitable at lower PGM price levels? In my view Karo should be mothballed for the time being and cash flow diverted to paying down debt and raising the dividend.
it seems to be general stock market conditions -any announcement is seen as an excuse to further mark down a shareprice -anything negative is pounced on and anything positive ignored.
so with cash in the bank exceeding £100 million the market in its wisdom is valuing the sa tharisa mine operation at £80 million (less than one years profits?) still a very profitable operation at current chrome price which would cost at least $500 million to build today (and that of course does not include finance costs)
if i was in charge of a large miner’s m and a department i would be seriously looking at tharisa well this is below the radar-any bid under £2 per share is a complete bargain and of course could be undertaken by a share for **************-glencore perhaps?
I am surprised that the stock is down on today's production update. PGM production was short of course and guidance for next year has been reduced, but the miss was not huge, and certainly not very material in the context of PGM profitability at current PGM basket price levels, and also a portion of the PGM reduction has been tactically sought in order to support chrome volumes. Personally, I am delighted to heart that Karo is being pushed out, as this is not the right market to load up on debt to build a mine that is high on the cost curve. I woud dearly like management to address the cost competitiveness of Karo because I frankly question the wisdom of building it with such a murky medium term outlook for PGM pricing. But that aside, THS is managing a difficult market very well in my view, and maintains a strong balance sheet and capacity to meet dividend expectations.
Tamesis:
Key points:
• PGM production below – despite quarterly reef mined ticking up well in Q4 (up 27% q-o-q), overall PGMs produced came
8% below our total year forecast. We note that the main driver of this difference in this quarter was due to the lower grade
feed and PGM recoveries as a result of RoM being purchased from 3rd party suppliers (which is still planned for next year as
waste stripping continues in Fy24 albeit at a lower rate). Management are guiding to a lower PGM output in Fy24 as result.
Despite the tougher interim mining environment (& PGM market), Tharisa cleary are not looking to reduce processing
capacity. The company does operate on the lower quartile of the cost curve compared to its peers, and can be expected to
weather a softer market. In turn this also ensures the full production levels of chrome for Fy24 (guidance up ~8% to 1-7 –
1.8mt). This being said, any improvements in reef mined will only have upside for the company as they reduce the margin
loss on PGMs from cost of the purchased RoM (and grade recovery depending on the RoM materials available).
• Chrome concentrate production being delivered into a strong market– chrome production this quarter is largely in
line with our forecast at 413.4kt, with strong q-o-q increase of 9.1%. Speciality chrome production up q-o-q at 75kt (Q3
FY2023: 72.8kt). Full year production was in line and the company is guiding to a c.8% increase in FY24. Recovery rates
are hitting c.70%, reflecting Vulcan’s performance amongst other parts of the operation. Chrome spot price holding up well
at $291/t vs our modelled price of $280/t and we believe the company is well placed to continue taking advantage of the
expected strong pricing environment in Fy24 driven by supply demand fundamentals.
Must be vulnerable to a predator, especially with that cash pile.
And final dividend in March 2024?
March 23 was 4 cents March 22 was 5 cents
Good to see a high cash position maintained, coupled with a slow down in Karo seems prudent given current pgm prices.
Although current guidance has been missed for pgms I don't see that as an issue if they had exceeded guidance with low prices that would look like a race to the bottom.
Under current circumstances chrome is key good to see it's significant contribution.
Although looking at the price action the market doesn't see anything good while I see competent management.
How much has Tharisa spent on Karo so far in monetary terms, has this extension on commission allowed the group to hold onto a significant amount of cash that would otherwise be spent on Karo? If so i think it's a good tactical decision. Is the decrease in net cash due to Karo spend, now commission is extended what are we to see spent on Karo in FY24 ? What is the breakeven basket pgm price for Tharisa as current basket price is 1 331?
To build Tharisa,in today's terms will be $500m, never mind the $530m that we have spent on capex to keep the mine going, on capital, while Karo is being extended, we are spending money, but in smaller chunks, so think of it as instead of buyign a Lego box with all parts, we are buying smaller parts where we can and ensure that in 12 months later time, we are ready to assemble it all, big contract outstanding is the mining one but we are of course talking to parties and have detailed terms etc, but with a mining contrcator, the upfront mobilizations is key and the capex spent on that, so that is one area where we have not as yet committed in terms of monies
Thank you Tharisa-there seems to be a total disconnect between the company’s financial position (cash and assets) and the company’s shareprice .
It would persumably cost hundred of millions of dollar to set up the chrome and Pgm operation in South Africa -could not a few million dollars now be assigned to a share buyback -this could help the shareprice significantly
Makes perfect sense to delay karo until PGM prices recover.
Chrome is the major cash cow for Tharisa. For me its all about cash flows rather than production figures.
Cash at hand is up to $268million / £220million gpb.
Net cash $126.6mil / £104million gbp a decrease of $14mil / $11.4mil - given capex i think this is a great result.
Mcap £190 million. So minus cash the assets including both mines are being valued at just £86million by the market.
We have spent and committed, ie, signed contract etc of over 1/3, which is a lot given the major spend is the mining contractor, which we have not as yet signed, so good progress on the spend
Be interested to know what the total spend on Karo is to date and how much more will need to be spent to production (how has the prudent delay impacted on the cost of the project)
On PGM, remember, we still building up to vol again in the pit with the waste contractor, so have been buying in ROM material from other chrome producers, which is oxidised ore, which is great for chrome output and visible in our recoveries, but not so good for PGm production, again, visible in the recoveries, so the guidance is prudent to where we would have been had we had our own ore in totality, rather than a mix of our own ore and buying in other material,
In comparison to the share price of 63.5p, it's a very good result. However THS have missed their revised guidance which was 10% less than original guidance of PGMs 175-185k oz and Chrome 1.75 - 1.85mt, which would be 157.5k PGMs and 1.575mt chrome. so they've hit the lower chrome guidance, but not PGM.
FYE Sept 2024 production guidance for chrome is great at 1.7 - 1.8mt, however would like to understand the revised guidance of PGMs 145-155k oz, in comparison to last year's original guidance and the "Vision 2025" post Vulcan Fine Chrome project of 200k oz PGMs and 2mt Chrome.
On Karo, whilst prudent to extend and felt this is what most PIs here wanted:
1) Does it not merely also increase capex costs by extending the project by a year, with more standby costs, labour costs, plant rental/contractor costs, inflation, interest on loans etc. etc. over 24 months.
2) Are the Zim Government on board with the extension? Karo is in a Special Economic Zone (SEZ) with a number of significant tax benefits and exemptions, but I seem to remember some were time limited by a certain date. Does this date also get pushed back by 12 months?
This is still all in the context of a 63.5p share price which is just crazy for this size PGM + Chrome producer and the THS asset + open pit LoM, notwithstanding the current depressed PGM prices.
So the current MCAP is £190m and we hold around £100m in cash? So the effective valuation the market is placing on us is £90m. I find that quite unbelievable.
Many thanks. Another good year. Worth saying net cash has increased from $78.6m at end of Q4 2022, an increase of $48m. This is excellent after paying dividends and Karo costs last year IMO
Personally, I'm content with these results, the guidance, and slowdown of the Karo project while PGM market uncertainties persist.
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 26.3% 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 26.2% 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
https://www.overend.co.za/download/sens-rns-tharisa-q4-fy2023-production-report-final-with-logo-17oct23.pdf
If the price of any commodity falls significantly for a prolonged period the natural market reaction is for the higher cost producers to stop producing as they're making a loss, and for producers as a whole to cease investing in new projects as the metrics are no longer attractive.
Then eventually a shortage of the commodity, driven by lower availability will force up prices, and those who weathered the storm and are still in the game do very well out of it.
So my thoughts are where does THS rank compared with its peers in its costs? Certainly it ranks well in terms of debt, or lack of it. I've always thought of it as a low cost producer?
Https://www.miningweekly.com/article/r1bn-solar-energy-project-on-track-to-supply-tharisa-mine-by-end-2024-2023-10-13
I note Ilja had a word with Mining Weekly. (There is also a solar array to the west of the mine.)
It follows an earlier announcement about the agreement for the existing installation on the roof of Constantia's Pick 'n Pay supermarket.
SA now has solar panels everywhere: Enren is being slow.