Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Hi Sotolo, At H1 we knew that they were still left to pay c$40m+ for Vulcan in H2. In addition they also paid a dividend in H2 which was c$12m. They have paid some amounts for Salene Chrome + Karo DFS (Although I am unsure of the exact sum). Do remember that they were sitting at $25m net debt at the beginning of FY21 and still ended up with c$48m net cash, that is a $73m positive swing despite paying $105m in CAPEX ($55m one-off on Vulcan) and $23m in dividends in this financial year. Lets wait for the FY results to see their debtors position which I am sure would be significant.
Do also remember that they get paid c90 days after, so for bulk of the 43.7kPGMoz produced, cash will come in the next quarter.
Sotolo, there is yes!. Q3 basket price was mu higher than Q2 so the FV adjustment wld have been positive for the quarter followed my a negative one for Q4. Lets see what the numbers are but critical to all of it is a good production report on Tuesday
Mike,
My opinion is that since Tharisa don't post quarterly results I don't think we will see a massive FV adjustment like we did for SLP. The basket price was actually higher in Q3 (vs Q2) than Q2 and then dropped significantly in Q4. I don't think thr FV adjustment would have a massive impact on the debtors stated in the H1 report as bulk of them should have materialised in Q3. Then again this is just an estimate and I may well be wrong. Regardless I do expect the H2 NPAT to be at least the same as H1 ($60m) as H2 prodcution expected to be significantly higher and so was the average H2 basket price. I guess we will only find out on 2nd December although we may be able to get close using actual Q4 production figures.
Hi Ian,
I expect FY NPAT attributable to Tharisa shareholders to be no less than c$140m. FY EBITDA to be c$275m. Obviously the numbers could change depending on actual production figures for Q4. My numbers are based on c40kz PGM production and c365kt chrome production in Q4.
Warno01, you have got the wrong link there. ST's article is here and he rated it a Strong Buy
https://www.investorschronicle.co.uk/ideas/2021/09/21/bargain-shares-priced-for-a-highly-profitable-outcome/
Strange that another IC writer had a different view posted on the same day.
The only changes that I know of from this list are :
Fujian increased their holding to 10%
FIL down to 2.7%
Maaden Invest own 3.8%.
These numbers are from Tharisa's Avior Summit presentation dated 10th June available on their website.
The basket price despite Rhodium falling to $17koz is $2800oz which is the same as our H1 average when our NPAT was $60m on a 75koz production. Q3 avg basket price was $3,800 and H2 average so far should be >$3,150oz and production should be c80koz. Chrome is at c$180/t much stronger than the H1 average. We continue to be extremely profitable with Rhodium at $14koz even. And tbh we all know that the drop in Rhodium is due to lower car production due to the chip shortage issue which will be resolved in a few months max. The price should pick up again but even if doesn't, we are producing 175koz PGM and 1.9mt chrome in FY22 which starts in October. We are operating on a FY21 EV/EBITDA of <1.5 and in a strong net cash position which will continue to get better.
You can't hold a mining stock if you get worried by daily price movement of the metals. Focus on the average and the outlook. Tharisa is in the strongest position in its history. We need some patience. There is a lot of news due soon as well before the Q4 update in October.
The chrome tax hasn't been announced or imposed yet, so too soon to worry about it. The fact is that the EV now is £260m. Tharisa's H1 EBITDA was $124m on a basket price of $2800 for PGM and 150/t for Chrome. Our production increases from next month and unit costs should decrease. This is crazy cheap and the market will sort itself out in due course. Until then sit back and enjoy the divis.
Sotolo,
Its important to note that both BBC and Sky news articles mention that Toyota plans to make up for the lost production in Sept during Q4. The chip shortage issue is having an impact on PGMs in the short term but eventually this should pick up. Some patience is required. But on a positive note, chrome prices are up at $180/t. With Vulcan commissioning next month, this is excellent for Tharisa and will make up for some of the lower PGM margin in the meantime.
Centamin reported its H1 results today. NPAT attributable to shareholders of c$60m which is very similar to what Tharisa made in H1. Interim dividend per share of 4c is the same as Tharisa. Centamin has a market cap of c£1.2bn and EV of £1bn vs £315m and £285m for Tharisa. Tharisa's H2 results will beat their H1 results. I like Centamin but I would never invest in it knowing I can buy a miner generating the same amount of net profits at less than 1/3rd of the price. Tharisa is a bargain and it is only going to get better next year. I won't be surprised if Tharisa H2 profits beat Centamin.
I think there are a number of factors. SLP is covered by Simon Thompson of the Investors chronicle who has a huge following. He has highlighted the buying case a number of times and has brought that stock to a lot of private investors radar. SLP is also in John Rosier's portfolio who is quite popular and writes for the IC. In addition it got extensive coverage from the likes of Stockopedia at the end of last year. Tharisa on the other hand is covered by a handful of analysts who imo have done an extremely poor job in highlighting the investment case. SLP is also debt free, has a stronger net cash balance and has much higher margins than Tharisa as it does not have a 26% minority ownership.
Having said all of that and having held SLP myself, imo Tharisa remains a much superior stock but its just not as popular yet. SLP also had a similar period in 2019/20 when it was stuck at the 30p-40p range for a very long time. Management share buy backs at SLP also helped boost its sp.
Sotolo, that is not very hard to calculate. Admin expenses at $40m should make up c 6% of revenue so deducting that will get you to 35%. Deducting tax and minority interest will leave NPAT attributable to THS shareholders at around 19%. Current year revenue should exceed $700m so 19% of that is >c$135m (>£100m). For a company with an EV of c£300m, that is a PE of less than 3. Production will increase next year and unit costs will decrease.
Rhodium will recover in a few months when the chip shortage issue is resolved. There will probably be a big spike in demand. Sibanye Still-water predicting the Rh deficit to be c180,000oz/year by 2025. Buy now, enjoy the divis, sit back and relax.
couldn't agree more with you bangrak. For those interested I did a rough sensitivity analysis on Tharisa's earnings for FY22 on a range of different basket prices starting from an average of $2,360/oz (c30% lower than today) (Pt $900, Pd $2100, Rh $14k, Ir $3.5k, Ru $270) and I got to a NPAT (attributable to THS shareholders) of c£84m. How does that look for a £330m market cap (£310m EV).
Link to the tweet here:
https://twitter.com/feynzz/status/1406169648228360198?s=20
I find it extremely frustrating that SLP's market cap today exceeds Tharisa's. As bangrak rightly pointed, not just Tharisa has a far superior mine life (almost >5x SLPs), it also doesn't rely on ore from Samancor unlike SLP. When you buy shares, you are also buying a share in the company's assets. Would you want to own a mine that would produce 1.6x for 50 years or a mine that would produce 1x for the same price?
I am bullish on Tharisa and it can sustain a significant fall in Rh price.
Rhodium is now down to $21,400 (JMAT) and has been falling almost every day this month starting from $25,500. Has anyone got a view on what's happening with it. Is the chip shortage affecting car production also catching up with demand for rhodium? Does that mean rhodium will not the end the year in deficit after all?
you are right actually. Phoevos confirmed in this interview that the interim is 14% of NPAT
https://www.youtube.com/watch?v=0Mq_W0K01qg&feature=youtu.be
well in that case they may catch up with the full year dividend which they mentioned is likely going to be more than the interim. Its odd that their policy is for dividends to be calculated on NPAT rather than NPAT attributable to Tharisa's shareholders as that's what they use to calculate their EPS