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Mike my basket using JM figures is still falling, yesterday $1370 for Tharisa mine and $1285 Karo . However you are right that the Tharisa figure is now lower than JM, $1258 for Tharisa mine and $1226 Karo, but they is because have $800 less for rhodium per oz and $65 less for Palladium, which may be more realistic especially given. spreads. I can understand why they have stopped shouting about it on twitter. Quite agree chromium is great, just wonder if there could be a temporary cut in Chinese use with the building crash, but I think it will be quite a while till hydrogen economy replaces cat use, and rh price may still stay low, luckily Karo is now only a little over 10% dependent on rhodium profit with 75% from platinum and palladium and near 15% for gold
Sotolo, I fully agree that the future PE is a very guessed metric. With 2 weeks of the current financial year to go using the last low PGM price of $1266 and chrome of $297.5 I am expecting 2023 Profit Before Tax of 97m. Then for 2024 using the same prices around $100m. 2024 looks highly variable as you point out due to the performance of Karo (but don't forget we only pay for 70% of the costs) .
Again I agree that PGM demand is still highly reliant in ICE sales but I still expect them to have a long tail and you are not even allowing for any positive pickup from PEM hydrogen technology that will certainly benefit platinum and iridium (nice car by the way-enjoy) .
Yes, we are highly dependent on chrome but I think the structural benefits of stainless steel are here to stay so i see that as a positive rather than a negative.
Yes, great management but the Karo timing looks like going against them buy again that could completely change around and the Karo production model might have to be scaled back which could reduce the life of mine. A sign of that great management will be how they deal with these issues going forward.
By the way I was disappointed with the reported Tharisa PGM basket price reduction on Monday with lower platinum, rhodium, ruthenium and iridium prices while Johnson Matthey had the platinum price down they showed absolutely no change in the same period?
Indeed Mike, but the question is what is our future PE; if/as Karo starts producing how much could its losses increase the PE, none of us know. However I am just placing an order for a Fisker Ocean a BEV this morning. I understand much of the world doesn’t have that option but a marginal difference in demand can affect the PGM prices significantly as we see! Of course a lot of our future PE depends on chromium staying up at current levels or even rising further but if the Chinese pull back accelerates will it? So with this company future PE is a very guessed metric. I prefer to go for the great management and just wish they hadn’t done Karo just now in which case the share price would have been be a lot higher imho. SLP share price now back above unloved THS
Moneyman/Affan, having spent years getting the Karo concession and then having organised the plant, contractors and like Tharisa have passed the point of no return and now have to see the investment through and make the best of it they can. Tharisa will not want to overtly tell us how badly the project is going but in the Sept 2022 accounts they they allowed $16.8m for the Zim government to take up their option of more shares in Karo. with falling PGM prices this was reduced to $7.6m in the March 23 interim accounts and I am expecting this to be reduced to zero when the full year accounts are out.
Because of its size, the market always seems to discount Tharisa compared to the bigger PGM producers. To answer Affans question on valuation i believe that Tharisa should be trading at a minimum of 3.5 future PE , and minimum 60% of NAV or EV which are cheap metrics but the market says even lower. But the market is slowly starting to reflect the better profit outlook for Tharisa compared to the big boys. Since the start of this year , in ZAR the Tharisa share price is down 10% but both Sibanye Stillwater and Northam Platinum are down 44%, Anglo American down 59% and Implats down 61%.
Agree -fingers crossed for a PGM price recovery over the coming months -would imagine some of the SA producers are in loss making situation at the current PGM prices .Also a combination of reduced production due to load shedding and increased demand for platinium could easily move PGM prices by 20% come next July.
Thank Mike for the extra detail
Also bearing in mine that they have got $45m contingency and $45m for working capital for Karo. Excluding the two the build cost was c$300m. It would also not take a lot for Karo to be profitable btw. Need a c20% recovery in PGMs and things will look different.
The Pouroulis family owns >40% of this company. Surely they see something here which is why they consider investing in Karo. I agree Mike that in the worst case scenario the whole Mine could shut down and Tharisa could lose all its investment in Karo. Lets imagine that happens. Tharisa invests the whole $400m and get nothing out of it and shuts down the mine. How do you value the rest of the business based on the current price?
Hi Moneyman, as you say the cash production cost was $1096/6E oz based on certain by-product prices which are lower today so that $1096/z will be higher today plus there will be the capex ex costs to pay off, on the Tharisa website today they have the Karo PGM basket as $1266.59/tonne.
Also that $1096/oz cash cost was based on production of around 190,000 ozs/year which is based on a 6E ROM of 3.0 grams/tonne, but the last Karo Mineral Resource and Mineral Reserve Statement has a 6E of only 2.31g/tonne which is 23% less, based on this figure the costs would increase exponentially about 23%. that $1096/oz also assumes a recovery of 78-82% which is achievable but could easily be 75-80%.Karo will have a massive stripping ratio of 21.6 m3 ,more than double the Tharisa number ,and Karo could go down to a maximum 130 metres (which is considerably deeper than Tharisa). If severe weather has a massive effect on the Tharisa numbers then think what it might do at Karo which is must deeper and has largely a contractor workforce compared to the own well trained labour force at Tharisa.
Affan , I can understand that the EV at Tharisa could be $450m but remember if things went fully wrong at Karo for various reasons then the $39million investment at FOIM in July next year could easily be $400-500m 12 months later and if the mine was closed/mothballed then Tharisa would be responsible for around around two thirds of this Leto Settlement the rest, the Zim government has a 15% free carry which means that Tharisa/Leto has 100% of the risks but only 85% of the potential profit) which could reduce that $450m EV to under $200m. This financial year Tharisa might have a PAT attributable to shareholders of say $98m but could easily right-off 2 or 3 times this amount if things go totally wrong at Karo. It is worth remembering that the Karo site was once controlled by Zimplats but under pressure from the Zim government they gave it up.
The Zimplats Ngezi mine next to Karo was originally Hartley Group which started aa an underground mine in 1997 having cost $289m to develop only to close 2 years later due to operational problems. Zimplats reopened the operation in 2001 as an open pit mine but in 2001 the open pit was closed and the mine went underground.
With lots of "ifs" and "maybes" including the PGM price recovering this does not happen and Karo is a complete success.
But is just goes to show that we are playing a massive high stakes game of poker! I do not want to be negative but we have to be aware of the risks. Look what happened at Salene Chrome, the investment is made and we are months away from a profitable operation when the Zim government moves the goal posts and the operation has to be mothballed.
The risks at SLP are severely less , the tailings are already there, the contents are known and their production costs even up to 10 years forward are pretty known so the only big unknown is the chrome and PGM price and SLP has a track history of this
Hi -agree that at the current PGM prices the Karo project appears to be a huge white elephant -just thinking about the large dividends that could be now being paid to longterm shareholders instead of perhaps having to reduce dividends to finance Karo that at the moment loss making project.
The projected cash basket production cost at karo I believe is $1096 and the current basket price is $1352 per PGM ounce so some cash will be generated towards the capital costs-is management looking to reduce these cash costs per Pgm ounce -the cash cost per ounce seems on the high side for an open pit operation?
There is continued talk of large platinium deficits upcoming which is yet to be reflected in the price and continued disrupted production in SA which will hopefully lead to a platinium price increase -the Karo basket is very much platinium weighted -so fingers crossed for a higher basket price in 10 months time
Hi Mike, I agree with your sentiments on Karo. I am not a big fan of it either and I don't see how management can justify spending $390m on a mine which is currently projecting to be loss making (obviously I am talking of spot prices, if future PGM prices recover then that's another story). But its def taking on a lot of risk for not so much reward at present. I initially sold Tharisa after the Karo announcement at c160p but started buying back again when the shares dropped to the ridiculous 100p level. I find 75p even more ridiculous despite Karo and all its risks.
To put that into context, even after Karo is built, I do not project Tharisa to be on a EV of more than $450m. Tharisa Mine itself is worth way more than that and that's the point I am trying to raise here. Sylvania paying $32m for a 2mt chrome (200kt p.a.) resource (really its just the chrome there that matters and not the 95k 6E PGV over 10 years so much). Tharisa currently produces 8x more chrome per annum with a much larger LOM.
Hi Affan, I am 99%+ with you but to be devils advocate, there are still questions on the Tharisa production numbers for this year, profitability next year based on the low PGM price environment and particularly massive concerns on the big Karo investment, if the Karo production numbers will even be achieved and at current PGM numbers how loss making Karo will be. Although Tharisa is financing a chunk of the development itself, the external borrowings will hurt in this high interest period. Karo is extremely reliant on PGM prices recovering where they where 6-12 months ago. or more. So there are big risks with Karo and some of these factors are outside of Tharisas control.
SLP is considerably more de-risked and has a track history of being a low cost producer, tacking on these incremental projects and making money even with low PGM prices.
But ,as I say, I am 99% with you!
A few days back, SLP paid $32m for a 2mt chrome resource and 95k 6E PGMoz starting production in 2025.
Tharisa Mine has 171mt of Chrome resource and 40moz in contained 6E PGM. Don't even count Karo
How do you value Tharisa then? Its a £220m market cap. Interested in knowing some answers.
Exactly right, we get compared on the PGM cost curve but all the analysts ignore that we are a co product producer, so cost per ton is what counts
H1/2023 (Jan-June) accounts for Sibanye Stillwater out yesterday. Says the S African PGM operations had a AISC 4E of USD 1083/oz and for the FY expect USD 1156 -1211/oz (based on USD ZAR 18.00). On P.15 there is a Southern Africa PGM industry cost curve (cash cost including capex) produced by Nedbank. The most expensive mines are Northams Zondereinde mine, Implats Styldrift mine and Anglo American Mototolo mine. Tharisa is just in the cheaper half (although this looks like they have ignored the co-product , chrome and since then PGM prices have fallen and the chrome price increased).
Hi, as you know, some 25% of our output is specialty, so we just cross reference where those Turkish prices trade, they obviously not what we actually get but as I said, a good reference
Thanks Ilja. Also could you tell me which of the chrome prices is most important to you, and by roughly how much, presumably the Turkish one is least
We announced on Friday that we would take a break from twitter for a while, chrome prices as per the tweet are on the website every Monday under investor section
Should have read 7 share trades, not traded, dratted auto correct, but even if a bit more as you say, amazingly thin at just 33000 shares. An LSE PM miner like Centamin with a similar ball park share price and profit, albeit 4 times higher PE, can trade around a million shares a day, Tharisa currently lies in a creek barely visited and waiting, also as shown by th paucity of posts here and even fewer over on ADVFN. Hopefully as the Chromium profits become more apparent in the finals in November the share will become a bit more noticed and even loved, and then when Karo comes on stream if PGM’s recover. But somehow Ilya it would be helpful if you could alert and excite Mrs Market to your attractions, as she seems utterly uninterested just now
Visitor, I just opened this to ask the same question. Last Monday Tharisa didn’t seem to tweet the weekly PGM basket and chromium prices as usual, and this week can’t even find a tharisa or tharisa_sa Twitter/X account at all??
Hi Ilja - are you able to comment on why Tharisa twitter account is down?
Friday's trade
Tharisa closed flat at 74p having traded 33k shares. Today's volume equates to 25% of the 3 month trailing average daily volume of 128k shares.
This share is extraordinarily thin, can there really only have been 7 shares traded in London yesterday and all under £10,000?
Yes, I am expecting the chrome price to be $300+ tomorrow. Despite the lacklustre Chinese economy and cutbacks in basic steel production, stainless steel production continues to be busy. In July China imported 1.338 million tonnes of chrome concentrates from S Africa, up np 43.6% YOY..
Chrome will account for about 70% of turnover at Tharisa this financial year and probably more next year. Tharisa Q4 Production Report will be out on 11th October. Don't forget that a big chunk of the improved cash position this year has been due to reducing ROM stock which must be running very low at the moment given the hiccups in mining so the cash position at 30/09 will be lower due to this and that we are now in the big capex spend period for Karo. I particularly want to see if the Mineral Reserve and Mineral Resources Statement for Karo will improve.
I agree on current PGM prices, we seem to be in a period of consolidation, if platinum can remain above $900/oz and palladium above $1200/oz ,then it is starting to build a solid base for higher prices when the macroeconomic picture improves.
Listening to the interview with Jubilee metals Ceo Leon Coetzer yesterday he sees a high chrome price for the rest of the year at least -he stated that the chrome price has made up for the lower PGM prices as far as Jubilee profitability is concerned .I know that Jubilee has a completely different operating model to Tharisa but it will be very interesting when we get the production figures to 30/09/2023 and the yearly accounts thereafter -I am very interested to see the cash position at 30/9 and the Karo spend which is clearly holding back the shareprice .
Very hard to see where PGM prices are going because every article I read has a different opinion
Chrome price is increasing again this week.