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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
Personally, I'm content with these results, the guidance, and slowdown of the Karo project while PGM market uncertainties persist.
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
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.
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,
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)
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
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
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
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.
PGM production for the year slightly lower than I had expected although chrome slightly higher than I had expected. Reef milled the lowest for 3 years and reef mined as I expected, the lowest since 2015! Excellent news on net cash. I echo the sentiment that the delay on Karo is the right call and buys us some time.
My guestimate for FY 2023 is PBT $137m, PAT $103m, attributable to shareholders 97%, EPS 17 cents, total divi 5.65 cents so final divi 2.50 or 2.75 cents. Current PE 2.2.
The production guidance for 2024 is disappointing but understandable given that ROM stocks have been run down and that waste stripping will continue and presumably poor PGM recoveries will continue. Based on current prices, for 2024 I expect PBT of $105m and PAT $$78 m and chrome contributing 75% of turnover.
Thanks Mike -I have similar profit figures to you -however I think it would be very shortsighted/stingy to cut the dividend bearing in mind the net cash position of £100 million plus and the delayed capital expenditure in relation to Karo -the last thing the company will want is yet more knocked of the shareprice as a result of a cut dividend ..A total dividend of 7 cents would still be only represent approx 20% of the net profit for the year
The difference between a final dividend of 4cents and 2.75 cents is $3.75 million representing just 3% of the net cash in dollars
Agree, cutting dividend sends a terrible message and will result in further selling, so should only be considered if absolutely necessary. I don't see how it could be justified. I'd rather see Karo mothballed, frankly. Anyway, I'm pretty confident this won't happen so let's be a little more positive. Reasonable results today given the circumstances.
Moneyman/Seatank, I like your style but the Company has its stated payout policy which Is pretty clear and the PE is actually better now than it was 12 months ago.
Likewise I understand your comment about mothballing Karo but this is not a decision to be taken lightly given the other stakeholders involved. As I have said before let us wait for the updated Karo resource statement which will influence the decision either way.
Thanks Mike -I think the actual dividend policy is to pay out a “minimum of 15% net profit after tax” so I don’t think there is any good reason to stick to a final dividend of 4c bearing in mind
1-the total of 7c dividend for the year would only represent approx 20% of NPAT assuming the figure circa $100 million
2-the large net cash balance of circa $125 million
3-the negative message that a dividend cut gives to the market.
4- the capital cost of Karo being spread over a longer period
Sorry should read “no reason not to stick to a final dividend of 4c”
According to Johnson matthey rhodium now upto $5400 -hopefully Tharisa will benefit from the rise-
On JM figures basket is back near $1500 which is much better for Tharisa mine, however Karo being rh lighter, is still under $1300 tho improving
Last night close calc
Tharisa Basket Price
Platinum $895.00
Palladium $1 133.50
Rhodium $4 662.08
Gold $1 925.83
Ruth $396.47
Iridium $4 660.20
Karo USD $1 263.46
Tharisa USD $1 423.36
Tharisa ZAR R26 675.53
Rh has already risen further today on JMAT as has iridium making the basket over $1500 on their figures for first time in a while
Well I spoke a bit too soon, back near $1400 let’s hope a pullback and not a false dawn. Chromium stil staying flat and money must be rolling in at these prices