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Thanks Tharisa -await with interest
The Karo question was answered at the AGM, I will transcripe and post, give me a few hours
Mike,
Thanks for the correction ref the 75%. That makes it even more extreme with the core of THS therefore being valued at c£45M.
Best wishes,
Prof
ElProf ,THS now own 75% not 70% of KMH.
Ilja, I agree it is totally up to Medway if they want to participate or not in additional new KMH shares for cash they do not have to explain . As Stemis has explained earlier, based on the share increase from 70 to 75% values KMH at $325 m , if you take the very last additional new share tranche of $37.7m on 31.07.23 increasing THS shareholding from 72.33% to 75% this values KMH at $351.7m. The crux of the discussion is how is the new share price set and by whom? It would help if this was transparent. Do we know what the cash injection will be when the 75% is increases to 80% later this year? As you can see the $325m or $351.7m is a big premium to the $210m value for KMH you mention below based on all capex flows, those capex flows only have a value when Karo is operational and at the moment are possible impairments . As ElProf mentions ,Mr Market values Tharisa which includes the 75% of KMH at around $215 m market cap, if the directors believe this is grossly undervalued then why are they not jumping in to buy, aside of transfers the last director share transaction was a sale in Jan 2023 and the last director purchase was in August 2022.Also as KMH only own 85% of Karo Mining this inflates these prices even more.
The company’s share valuation is perplexing and should be addressed by the Bod -Is it Karo ,the uncertainty of the upcoming election in SA ,PGM prices or is the company seen as a PGM producer with little consideration given to chrome production -still think a few million of share buy backs would help and maybe a couple of more cents in dividend
Hi Ilja,
Given THS own 70% of Karo then with Karo's valuation at c. $210M that puts THS' share at c$150M.
THS currently has a market cap of £170M which with a GBP to USD rate of 1.26 is c$215M. That would suggest that all of the rest of THS is valued at $65M or £51.5M.
Assuming my maths and logic are not wrong then is it that: 1. Karo is significantly overvalued at $210, 2. The core of THS is of really limited value, 3. The market is fundamentally wrong?
I know it is a bit of an unfair question but that is what is going on in my head. Are you able to venture any thoughts please?
Best wishes,
Prof
Thunderbuddy, your inference is incorrect, making assumptions about what Medway wishes to do with their holding and why and why not they are participating in the capex, the same statements you made in the mail to me, and you had time to register as I mailed you back the details immediately on Thursday at lunchtime, which were in the AR which was released before Xmas.
Average valuation for Karo (100% basis on all the capex flows) is around $210m
The recent rights offer undertaken by Karo Mining Holdings raised $65 million. The Company’s shareholding in Karo Mining Holdings was 70%. Tharisa followed rights, and maintain shareholding required ~$45m. Medway did not follow and Tharisa took up the renounced rights moving up to 75%
Is there anyone attending (either physically or virtually) the AGM on Wednesday? I applied too late and missed the deadline …
Could we get a report back on the board’s comments in relation to the recent Karo new share subscriptions in the AR footnotes please? Specifically why the board thought the Karo valuation (at c. $350m) was reasonable for a currently non-profitable not-yet-developed venture, when Medway Developments obviously didn’t think it was worth that much hence they didn’t participate in the subscription.
There will be much concern if they avoid addressing this point. Currently it appears the minority shareholders of Karo Holdings are the beneficiary of overvalued subscriptions using our (Tharisa) cash.
It's actually Tharisa. He may not appreciate you calling him Theresa.
Amplats results for last year out today. Headline earnings down 71% YOY. The group cash operating costs in 2023 were R17,859 or about $943/ PGM oz. Have announced possible job cuts to cut the cash operating costs to R 16,500-17,500 or $871 to $923/PGM oz. and all-in sustaining costs to $1050/oz. Production guidance is unchanged at 2.1 to 2.3 million ozs for 2024-2026.
Implats results out around 29th Feb.
I also don't have a problem with Karo. I'm also very happy with the input from Theresa around the times of RNS release. It is very rare to get that, and I very much appreciate it.
Will be looking to top up when funds come in, assuming we haven't climbed up quite a bit. Very undervalued on the assets owned IMO.
GLA
At the moment it's pretty much all about chrome. Production in Q1 was pretty good and price looks stable so I'm not expecting any surprises. Personally I don't have a problem with Karo.
We will see what comes out of the AGM next Wednesday but I believe the Tharisa mine is still performing extremely well, it is just the Karo concerns that is pulling this down. The JSE Tharisa price today is down 10% to ZAR 12.60 which currently converts to 53p.
I sold my shares. Karo is a bad investment that the market never liked from day one. I presume that people are selling out as results are due soon and it will be dire.
Can see it both from the company point of view and the posters point of view -but not good to accuse the company of not being open without understanding all the facts.
On the JLP board there is a certain poster who accuses the company of not being truthful with investors on a daily basis and name calls anyone who is remotely positive on the company’s prospects -yet the company seems never to even challenge him
Given an (ex) shareholder with a fairly high social media following got out & announced it at a similar time it’s very possible their sale + followers doing likewise was responsible for the increase in volume of sales.
Whilst I’m all for IR interacting on public forums to update shareholders, it would be beneficial if this was done in a positive manner with the intent of assuaging Such fears & not in a negative manner that could be construed as an attempt to shut down free debate and allowing complete transparency.
What nonsense - when there are statements on bulletin boards erroneously stating corruption and getting valuations / accounting wrong by multiples of 4/5, I would expect a company to protect its interests and that of its shareholders.
Discussions on the viability of Karo is fair game, with Mike and others posing some key concerns, but not the former issues. It clearly caused many PIs to sell as they attested to themselves on LSE and ADVFN.
IR is key for any company - people constantly and rightly moan about most AIM companies not performing any IR or PR. I personally think it has performed and continues to perform a valuable service in offering clarifications when posters inadvertently or maliciously post incorrect details, or simply respond to clarifications. I for one hope THS/ Ilja continues their ad-hoc posts. I'm sure it did not help that the THS team likely were at Indaba Mining Conference when the whole sorry affair occurred on here.
When aim businesses start to threaten investors on free bulletin boards, it smacks of desperation. Tomorrow I shall be selling my THS shares first thing at a loss. I’m not impressed.
FAO Tharisa.
As a shareholder I'd rather you completely focus your attention on the business and ignore defamatory or other factually incorrect posts on internet forums.
As I'm sure your legal team will agree It is notoriously difficult to claim and be compensated for defamation. Essentially you'll need to prove the posts in question caused the business damage. The bar is very high.
Corrected his calculation and erro but teh damage was done and can be construed as manipulation as the post was put out without checking the fcats, which lead to a massive swing in vol/SP on the day, but he still accuses the Company of corruption (I see this post has been deleted but I have a hard copy of it)
We are not paying another group Company, we are provding equity capital (130m into Karo, in return for new shares in Karo, while the other party has chosen not to provide capital, and they are thus being diluted as clealry stated in our reuslts presentation of 14/12 (Current equity stake increased to 75%, on flow of balance of Tharisa equity commitment will increase to 80% , we have always said we will provide 130m in equity and the rst of the funding Karo is responsble for and ring-fenced, hence ECIC etc
Thanks for replying Ilja/Tharisa.
I think you imply that I missed your point - which is the original poster miscalculated the Karo valuation and so you would like action taken against them. In defence of the poster, I would say that they have later acknowledged and corrected their calcs.
The underlying issue remains however and you have not addressed it. This issue is that Tharisa appear to have used our business’ money to subscribe for new shares in our partially owned subsidiary, Karo, valuing this subsidiary business at double Tharisa’s market cap, at a price which appears to me to be highly unattractive. This has then been relayed to us shareholders in the footnotes without proper comment or rationale leaving a void for us to speculate and fill in the blanks. You appear not to be happy with the ‘filling of the blanks’.
Not sure anyone has mentioned the word corruption specifically. I would point out though that hypothetically should additional Karo shares be overpaid for by Tharisa, then the other Karo owners would therefore benefit disproportionately. And there seems to be overlap with Pouroulis both owning Medway Developments (who have minority interest in Karo) and controlling Tharisa, which you no doubt can see might lead to speculation over conflicted actions.
We’d like management to explain the rationale of the business decision and why the extra subscription is deemed in our business interest. If it has been explained previously please kindly point out where so we can put this matter to bed.
Thanks Mike -very clear that Karo’s viability is totally dependent on the recovery in PGM basket price and that the feasibility calculations used a high PGM basket price compared to historic norms
Moneyman64 I agree that we are now far away from the original justification for Karo based on a PGM basket of $2140/oz and a cash cost of $1096/oz (excluding royalties). The other main assumptions were a base metal basket $15,099/tonne (contributing about 20% of revenue), initial PGM recovery of 78-82% and PGM production of 190,000 oz/year .The base metal basket has also dropped, I calculate about 13%, so that is holding up much better than PGM's.
To reduce that cash cost per PGM/oz, Karo is now looking to produce nearer 200,000+ oz/ year by improving the recovery to nearer 82% (some S African PGM mines are actually at 85% or better) and greater plant optimisation particularly the concentrator with the same 980 people(we know that at Tharisa, the Voyager and Genesis concentrators have been running consistently above nameplate capacity for many years). They could look at re-planning the open pit mine to avoid some of the deeper more expensive ore to reduce costs but this would also reduce the open pit LOM, similarly with the phase 2, underground. Additional PGM/base metal benefication could also help .All of this might reduce the cash costs by say 10% but then we have inflationary delays admittedly offset by some gain from the stronger USD. So overall with these potential savings I still believe the cash cost is around $1050-1100/oz and grows with every year the project is delayed. We know that the capex cost has increased from $391m to nearer $430m so the excluded non-cash costs such as depreciation will be higher and current interest rates are now higher. There are possible savings to be made by giving Karo internal investment (such as cash payments from Tharisa for new shares) and this saves Karo paying around 10% financing/year at current rates (the VFEX bond is costing 9.5% interest/year plus costs) but there is an opportunity cost in this for Tharisa.. So as I have mentioned before, in my opinion the break-even cost is nearer $1700 oz PGM other things being equal.
Anyhow if the project is 100% reliant on ECIC external funding of $160m then we await the decision.
Thanks Mike your posts are very helpful
2fartcatz the Head of investors relations is Ilja Graulich who posts on this chat as Tharisa. He has not answered anyone's questions or concerns but instead threatened us all with legal action for asking questions. I really don't think emailing him is going to result in a better response than what we have received on here, perhaps you should go first.