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I think they still distributed in line with their policy of distributing at least 15% of NPAT. Profits were lower and hence divi was lower. I get your point that they could have still paid a higher amount. Not sure why they need to preserve funds for Karo when they have repeatedly said that 2/3rd of the capex will be funded by ring fenced project finance so that means no more of Tharisa money? How much have they spent on Karo already? c$98m? Their equity element was c$130m I think so shouldn't really need cash for that unless they are planning to fund it all via equity?
If they don't do it now they will probably never do it. Generating $40m in OCF per quarter, over $160m per annum and got a market cap of £155m with £85m net cash (last reported). I have never seen a valuation so bonkers but the company is not doing much to help the share price here.
Surely Tharisa could afford to announce a buyback at the current price. Even if $10m can have a significant impact on share price. Can't say they are short of funds with chrome at $295/t. Now is probably the best time to do it, it will be value accretive.
Mister_Short, you are absolutely right. Don't buy just because I buy and don't sell just because I sell. Tharisa still fits the kind of businesses I would buy and still high on my watchlist that's why I am here on this board. The business is still generating c$40m in OCF per quarter thanks to their chrome operations. If they announce tomorrow saying they won't go ahead with Karo, the share price here will be north of £1. Market just doesn't like Karo in this environment and I see why. I bet the company with 42% family shareholding see this too but the fact they are still going ahead with it means they see something I don't otherwise why would you destroy value in your own business like this.
I sold out of Tharisa yesterday for a different reason but I agree with Stemis here. Tharisa was always going to fund its share of capex into Karo through equity investment into Karo Holdings. It doesn't affect anything else and they will not exceed on their committed equity (of c$130m). I think Stemis has clarified this point really well.
Thanks for clarifying Ilja, that is exactly what my understanding was. Rest of the capex dependant on Karo securing ring fenced project finance which is the protection we need as Tharisa shareholders.
Mike, I was of the impression that 2/3rd of the cost is not committed yet as they have not signed mining contracts yet and that would only be done once they secure ring fenced project finance. Maybe Tharisa could confirm
It is so strange for a company generating $40m in OCF per quarter ($160m p.a.) to be trading at an EV of £90m. I wonder what would it take for Tharisa to abandon Karo? If they write off their $100m invested so far and scrap the project, the share price will double from here. Ironic!
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 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.
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.
TerryMC, you are clearly a de-ramper with nothing valuable to add.
PAF produce gold, which you can find at a lot of other places. Tharisa produce PGMs and South Africa supplies 70% of the global PGM requirements. Now, Tharisa is an open pit mine and already has an advantage over the deep underground mines in terms of electricity usage. If Tharisa has to curtail production, so would the other PGM suppliers. What would happen to the PGM prices then in your opinion? Will they not compensate for any loss in production? Imo, yes!
Plus, Tharisa are now working their way towards getting their solar plant installed which should be completed by end of next year. That may just make them totally independent of Eskom.
Go de-ramp elsewhere.
Well Sotolo, using a $1600/oz PGM basket price and a $305/t Chrome price, and assuming 80k PGMoz and 800kt chrome produced in H2, I get to a $68m NPAT on a USD:ZAR of 1:19.3. That is certainly more than the $53m at interim,
DM me on twitter if you want to see the workings. Would have been good if you could run some numbers before speculating.
"Assuming these fall a bit more and chromium doesn’t rise further which is what I expect then second half will be lower. "
Can you post some numbers to prove this? How would H2 profits be lower if you assume Chrome at $305/t (doesn't rise further) and PGM basket at $1700/oz (assume it falls a bit more). Also take the current exchange rate. I will be interested to see.
Ragnar,
Tamesis are forecasting 112.9k PGMoz sold from Karo for the y/e 30 September 2025 FYI.
It may or may not complete on time but over the longer term it will be cash generative although I agree the IRR must have dropped significantly at the current spot prices. Having said that, I am a bit of a PGM bull and we will see where prices are in 3 years. ATB
moving on from sotolo, i found this interview really useful. phoevos clearly indicating that q2 issues are behind them and they are seeing an improvement in recovery rates. interesting comment on the mix of specialty chrome vs metallurgical chrome and the mix starting to improve again for specialty. with chrome prices sky high and pgms expected to bounce in h2 given sa supply issues, i think this is an excellent buying point. in other news pd up 4% today and pt up 1.5%. what happens if pgms recover and rand is where it is or deteriorates further?
https://*********************/media/tharisa-benefits-from-buoyant-chrome-market-as-it-progresses-with-plans-to-de-risk-its-business
Sotolo, I like how you mentioned the 20% drop in PGM basket but no mention of the 20% increase in Chrome spot? Also, what about further weakening of the Rand since H1?>10% down so that offsets a lower PGM basket?
Lower PGM production obviously hasn't helped with the allocation of fixed costs but find me another company with a $300m market cap that can generate $97m of net cash from operations in a 6 month period.
For context, Berenberg released a note maintaining their 290p target and Tamesis maintained 300p Target despite the lower PGM basket price. SA supply issues with come into play in H2, PGM basket will recover.
Sotolo, why don't you just sell and move on. I think this board can live without your needless pessimism. You are overly negative on PGM outlook and to say that Karo would be loss making is an outrageous claim.
I agree with Mike, Tharisa should make more in H2 vs H1. For context Chrome spot today is $305/t and has averaged over $285/t in H2 so far. Makes a massive difference to the bottom line, more than Rhodium falling by $3koz.