Member Info for hxulcolrdoh

A 'non- refundable $2 m loan' would be a $2m gift.

Though whatever KMH ends up being worth, Medway Developments who have stood about with two arms the one length currently own 25% of it.

If it was right for Tharisa to build a mine in Zimbabwe then Tharisa should have built a mine Zimbabwe. From a Tharisa point of view I don't see why there was a need for the intermediate company. Things probably look different from a Medway Developments point of view.

When I deduce from the fact $37.7 was paid for 2.68% that the company is valued at $1,400m - this is WRONG!

If $37.7 was needed then at the time Tharisa were a 72.32% shareholder of KMH and Medway 27.68%

So they should have contributed $27.26m (Tharisa) and $10.43m ( Medway ). So in the absence of a contribution Medway sacrificed 2.68% for their $10.43m. This puts a valuation of $393.37m on KMH, $458m on the mine.

I apologize.

Hi Freedom4UAll,

I'm not interested in THS at this point. I used to own THS and had noticed it cratered. I wondered why. Was it an opportunity or did the wheels come off the cart.

Anytime I have posted comments I have provided links / references to my sources of information so I shouldn't have to do this again - but I'll do it one last time.

When Tharisa first took an interest in Karo Mine Holdings (KMH) they paid $4.5m for a 26.8% interest ( KMH valued at $16.8m) : https://www.lse.co.uk/rns/THS/acquisition-of-a-268-interest-in-karo-holdings-8ucwqjaiifpnij9.html

They then spent $27m for an additional 39.5% taking them to 66.3% ( KMH valued at $16.8m) : https://www.lse.co.uk/rns/THS/exercise-of-farm-in-option-karo-pgm-project-pv8xtiaqa5v4fgk.html

More recently they have been burying sums paid in annual report footnotes ..

They then spent $28.2m for an additional 3.7% taking them to 70% ( KMH valued at $762m) : https://www.tharisa.com/pdf/investors/annual-reports/2022/annual-report-2022.pdf - PAGE 166 note 20

They then spent $65m for an additional 5% taking them to 75% ( KMH valued at $1300m) : https://tharisa.com/pdf/investors/annual-reports/2023/tharisa-ir-2023.pdf - PAGE 165 note 15

IN THE ABOVE LINE ABOVE there were 3 sub transactions the last of which was where $37.7m (of the $65m) acquired 2.68%. This puts a valuation of $1400m on KMH. As KMH owns 85% of mine this puts a valuation if $1,647m on the ACTUAL mine - Karo Platinum) : https://www.karomining.com/group-structure.php

Sorry but your suggestion that monies contributed in a capital raise towards a recipient don't count for valuation purposes if the donator has an interest in the recipient is nonsense. See my post of 7 Feb 2024 13:25. You are missing several points. If joint partner A puts money in when capital is required and joint partner B does not - then joint partner B should be diluted APPROPRIATELY not using some fantasy valuation. Also I'm sure the money is GONE / was ear marked for something.

It will be interesting to see how things play out over the next few years but I think I will watch from the sidelines. I fear that THS is going to rattle about at the bottom of the barrel for a while.

It is absolutely the case that having been blessed by favourable commodity tailwinds in recent years shareholders should be luxuriating in the rewards of their 'patient capital'. Unfortunately they are not. Further their 'patient capital' has been decimated.

Things seem to have started falling apart when with the quote "Capital will need to be more patient, or willing to explore new regions" Phoevos announced the plans for Karo on 31/03/2022. On that day THS opened at 145.5p.

NO HINDSIGHT WAS REQUIRED to see that the scale of the investment into Karo ($391m to first ore in mine) for a company the size of Tharisa was ALWAYS going to be a gamble. Phoevos seems to have confused cycle tailwinds and bubble commodity prices with the notion that he was gifted.

Unfortunately at present it looks like Karo project is struggling. Eventually in the fullness of time PGM prices will recover. However this is unlikely to happen in a timescale that will save THS from being put under considerable pressure in the interim. The immediate options are a) take a bad idea and develop it further whilst keeping ones fingers crossed or b) damage limitation both of which probably mean that a lot of 'patient capital' is written off. The trick would have been not to get into the current situation in the first place and frankly that would have been a very simple trick.

P.S. I have not seen an explanation as why when capital needs to be raised for Karo ($93.7m in the last 20 months that we know about) it falls to one joint partner (Tharisa) to provide the funds while the other joint partner (Medway Developments) is not appropriately diluted (as explained in my post of 7 Feb 2024 13:25). This appears to be due to an ABSURD present day valuation placed on Karo ( most recently $1.406 bn when on 19-05-2023 $37.7m acquired 2.68% of Karo - see https://tharisa.com/pdf/investors/annual-reports/2023/tharisa-ir-2023.pdf - PAGE 165 note 15 ).

P.P.S I'm past caring but I wonder what is the thinking behind this additional footnote re Karo Platinum in the 2023 annual report (page 28) "the Zimbabwean Government holds an option to increase its shareholding by a funded 11.0% from the current 15.0% to 26.0% after 24 months but before 36 months from 30 March 2022. As at 30 September 2023, the option was valued at US$11.0 thousand." If exercised this would take the Tharisa's share of the mine down to 55.5% (Karo Holdings would then own 74% and Tharisa currently own 75% of that).

Bye for now. Hope things work out for those involved.

Hi SteMis,

I'll explain the problem of the $93.7m for 8.7%.

If a company valued at $100m is jointly owned by A(75%) and B(25%) has to raise $100m then both A and B should put their hands in their pocket to the tune of $75m and $25m respectively. Post transaction their share of the larger enterprise remains the same.

However if the burden of the raise fell entirely on A then post transaction A should own 87.5% of the larger enterprise while B should be diluted down to 12.5%

Suppose instead it was a $10000m company that needed to raise $100m and again the burden fell entirely to A. Then post transaction A would own 75.25% and B would own 24.75%.

If in the case of 'Karo Mine Holdings' an ABSURD initial valuation can be put on the original enterprise then B ('Medway Developments') can leave A (Tharissa) to one sidedly supply all the funds whilst suffering minimal dilution.

THIS IS PLAINLY WRONG!

Re recent third party investments and their disclosure

To save anyone else doing the math's - Tharissa have paid $93.6m to increase their holding in 'Karo mining Holdings' from 66.3% to 75%.

I believe there is a requirement to disclose transactions valued above 5%. The initial larger transactions were RNS'ed. [1,2]. Smaller transactions I believe can simply be footnoted in the accounts. This appears to be what has happened i.e.

19-05-2022 : $8.1m for 1.21 % [3]

02-06-2022 : $9.9m for 1.29 % [3]

19-05-2022 : $10.2m for 1.22 % [3]

30-06-2023 : $27.3m for 2.33 % [4]

19-05-2023 : $37.7m for 2.68 % [4]

Rightly or wrongly the fact that the 8.7% increase has been done piecemeal and footnoted immediately raises a red flag in my mind.

So at the minute I have several problems with Tharissa

1) At this point in time the massive and existential gamble on Karo seems to be facing cycle downturn headwinds.

2) Behind the scenes I suspect some of the principles have agendas that are not in alignment with those of other shareholders. Tharissa shareholder funds seem to thrown with reckless abandon at 'Karo mining Holdings'.

'Medway Developments' appear on both sides of the equation. On the Tharissa side of the equation their investment into 'Karo mining Holdings' is significantly boosted by those of other shareholders. On the 'Karo mining Holdings' side of the equation they are not putting in any money but suffering minimal dilution. Happy days. I'd like to seem them try an make that fly on 'Dragons Den'!

NOTES

[1] : https://www.lse.co.uk/rns/THS/acquisition-of-a-268-interest-in-karo-holdings-8ucwqjaiifpnij9.html

[2] : https://www.lse.co.uk/rns/THS/exercise-of-farm-in-option-karo-pgm-project-pv8xtiaqa5v4fgk.html

[3] : https://www.tharisa.com/pdf/investors/annual-reports/2022/annual-report-2022.pdf - PAGE 166 note 20

[4] : https://tharisa.com/pdf/investors/annual-reports/2023/tharisa-ir-2023.pdf - PAGE 165 note 15

Hi Mike1959.

There would be an error in the last thing that I wrote. At the point at which Tharissa's share of 'Karo Mining Holdings' went from 70% to 75% for $65m rather than buy the 5% from 'Medway Developments' they would have diluted them by 5%.

It seems that at the point at which 'Karo Mining Holdings' needs funds Tharissa shareholders have the privilege of providing these while joint partners 'Medway Developments' keep their hands in their pockets and accept some dilution.

For the purposes of calculating the dilution the transaction of 31 July 2023 (below) put a valuation of ($37.7m/0.0268) / (0.85) = $1,655m on 'Karo Platinum'. This is absurd. How can the valuation of an unbuilt mine requiring considerable development funds dwarf that of the existing, larger, cash rich parent ?

I'd still ask why these transactions were not RNS'ed but buried in footnotes of the Annual Report ?

If as you say the plan is to increase Tharissa's share of 'Karo Mining Holdings' to 80% is this same travesty repeated ? Do Tharissa's shareholders only find out the details in footnotes in the next Annual Report ?

I'd still be of the opinion that something unsavory is going on here.

Hi Mike1959.

Tharissa's Karo valuations do look bizarre! Indeed if 'Medway Developments' managed to persuade Tharissa that 'Karo Mining Holdings' was worth >= $1,300m ie the overall project 'Karo Zimbabwe Holdings' was worth $1,529m (given that they own 85% of it) then they must be laughing all the way to the bank having shifted 5% for $65m. It does look like a wealth transfer from Tharissa shareholders to the principals of 'Medway Developments'.

Timeline

[1] : 13 June 2018 : a 26.8% interest is acquired in Karo Mining Holdings for $4.5m ( Karo Mining holdings valued at $16.8m)

[2] : 31 March 2022 : a further 39.5% interest is acquired in Karo Mining Holdings for 13.69m Tharissa shares/$27m ( Karo Mining holdings valued at $146.3m)

[3] : 31 March 2022 -> 30 September 2022 : a further 3.7% interest is acquired. ( Karo Mining holdings valued at ???? )

[3] : 30 June 2023 : Karo Mining issued an additional 3 800 new ordinary shares for a cash subscription of US$27.3 million to the Company. The additional shares issued represented 2.33% of the issued share capital of Karo Mining which increased the Company’s shareholding to 72.33%. ( Karo Mining holdings valued at $1171.8m )

[3] : 31 July 2023, Karo Mining issued an additional 5 248 new ordinary shares for a cash subscription of US$37.7 million to the Company. The additional shares issued represented 2.68% of the issued share capital of Karo Mining which increased the Company’s shareholding to 75.00%. ( Karo Mining holdings valued at $1,406.7m )

Questions

1) Why were the 30/06/2023 and 31/07/2023 transactions not RNS'ed ?

2) As currently 25% owners of 'Karo Mining Holdings' do 'Medway Developments' pony up 25% of all costs ? ( though if I was them I'd sell their 25% to Tharissa for the $325m that seem to be willing to pay (based on $65m for 5%)!

NOTES

[1] : https://www.lse.co.uk/rns/THS/acquisition-of-a-268-interest-in-karo-holdings-8ucwqjaiifpnij9.html

[2] : https://www.lse.co.uk/rns/THS/exercise-of-farm-in-option-karo-pgm-project-pv8xtiaqa5v4fgk.html

[3] : https://tharisa.com/pdf/investors/annual-reports/2023/tharisa-ir-2023.pdf - PAGE 165 note 15

Traditionally the company releases a Q4 and Full Year Operational Update at the end of January.

Will the company be able to release such a statement or would that be a 'rearranging deck chairs on the titanic' type of exercise ?

And another

https://awavesemi.com/press-release/alphawave-semi-and-teledyne-lecroy-unveil-pcie-7-0-signal-generation-and-measurement/

Presumably if they throw enough mud at the wall some of it is going to stick.

On the afternoon of March 27th

"the Group is looking forward to hosting a strategy seminar that will cover its plans for delivering attractive and sustainable profit growth and returns, including its refreshed customer proposition, plans for delivery of operational efficiency and an update on the Group's capital management framework."

Looking forward to the above.

Good synopsis Mike1959.

Having successfully invested in THS in the past I recently revisited it quite shocked by it's current valuation.

I've walked on by as IMO Karo poses an existential risk and the die appears to have been cast.

Regardless of whether it eventually all comes good the 'bet it all on red' strategy from management represents a gross mis allocation of capital and Phoevos's 'patient capital' rational doesn't cut it. Anybody who knows anything about commodities knows that the cycle can move against you and such risks need to mitigated. No hindsight was required to anticipate the current situation.

For now I'm an interested bystander.

Another collaboration that popped up recently from SC23 (Super computing 2023 - Denver mid November)

https://www.youtube.com/watch?v=qfX6uCgsZ1k

So to achieve a 'brand awareness uplift' AWE should replace their marketing team with GPT-4 ?

That was a commitment given by the since discredited/incompetent ex CEO Malcolm Le May. I'm not sure it still stands.

Though I suppose the word 'intention' affords quite a lot of wriggle room.

A domain specific joke to pass the time ...

Did you hear about the firmware engineer who kept getting halloween and Chrismas mixed up ?

He couldn't see the difference between OCT 31 and DEC 25.

As dead as the proverbial ?

As summarised in the opening bullet points it is a "heads up" that in the view of management things are going very well.

"Our growing pipeline reflects positive secular growth trends in data infrastructure markets and the continued investment in next-generation AI- centric connectivity solutions. This, combined with our talented team and strong balance sheet, give us confidence in our future."

With regards the numbers they seem impressive but a single quarter does not make a summer / needs to be integrated into the whole year and the bigger outlook beyond that - so I'd be more interested in the presentation of the finals in April.

Personally my current view on AWE is

- on the one hand it potentially has very significant upside.

- on the other (famous last words/China could invade Taiwan/whatever) I doubt if it is over rated / has significant downside in the immediate future

So for me it seems like there is an attractive risk/reward proposition at this point in time.

DYOR

SLE were suspended on July 3rd 2023 for not producing accounts for 2022.

https://www.lse.co.uk/rns/SLE/suspension-san-leon-energy-plc-5ec7aw1bonjviqj.html

Can this go on indefinitely or does some regulatory body intervene ?