Member Info for Mike1959

Today is the first day this year that both platinum and palladium have both traded above $1000/oz at the same time. Hopefully the psychological level is well and truely crossed and that they continue to rise.

The RNS out this morning suggests the EPS for H1 will be down about 80% from H1 last year which is actually better than I had expected.

Hi shareminator, thanks for your reply. We agree on much and disagree on much. Referring to your final paragraph being "more interested to know actual profitability figures" . Slide 11 that you kindly attach from February with an EBITDA $175 million for this current year is totally dead in the water, it will be less than half that number, I hope when the H1 result is out on Thursday that you will agree. My expected PBT for 2025 is $68 m. If the presentation can be so far out just 3 months later then how much faith should we have with the EBITDA figure of $320m for FY 2027? Without a absolutely massive increase in the pgm or chrome prices we are not going to see a "near term 90% jump in EBITDA over the next 2-3 years". I think this is clearly a case of do not believe everything you read. I suppose time will tell.

Shareminator, i totally agree that THS is very cheap, current market cap to NAV is about 0.3,, enterprise value to NAV around 0.2, my expected PE for the current year around 5. You say the company are forecasting a substantial near term increase in revenue and cash-flow retention but I would not agree with that, depends on your definition of near-term and if you think it is going to happen. We should n't compare THS to Sylvania, that is like comparing apples to oranges, we are a miner and they are a processor of tailings with considerably lower capex and risks. Again you say "between now and 2027 my bet is the PGM basket continues to build on gains already made this year" while feels more like a big gamble rather than a serious investment.

Then you mention the Karo independent report giving a break-even 6E price of USD 1213/oz on page 246 which I agree but this conveniently does not include the USD 137 million capex before September 2024 (only the USD 338 million remaining capex )which would add around another USD 100/ oz to that breakeven price you mention and more if the project is delayed. That same independent report gives an average preferred valuation on Karo of USD 53.69 million, see page 257, so that works out at USD 4.88 million year over the expected 11 year open pit LOM, but the Zim government gets a free carry of 15%, our partners Medway get 17% and we get the remaining 68% or just USD 3.32 million year , remembering this does not allow for the USD 137 million already invested before September 2024, so in other words it is loss making.

I do agree with you that we will see higher pgm prices over the next few years, but how much is uncertain, but we need considerably more than the number you mention particularly with the investment and risks involved. The report does say on page 252 that every 5% change in revenue changes the Net Present Value by USD 105 million (remembering we only get 68% of this and it is spread over 11 years). So realistically for me that USD 1213/oz breakeven you mention, allowing for the USD 137 million 2024 already invested and a reasonable profit balanced to the risks and future capex requirements needs to be nearer USD 1500/oz, the current Karo basket price is around USD 1361/oz.

Hi guys, I certainly agree that this is a comprehensive and sincere response from the management. As Krusty comments we will have to see how this strategy plays out in reality in the current and next quarter. The crux for me is getting that fleet breakeven per vessel down which is not easy when the number of vessels are reduced and the central admin costs have to be split across a smaller number of vessels. Certainly with the new company structure cost savings will be possible and just by having a younger fleet the costs per vessel will come down and lower debt will reduce the financing. With skin in the game the management are certainly committed to maintaining the dividend but still appear to have the dividend policy of an investment trust even though we are now a commercial public company. We cannot pay dividends unless we produce a profit, we are near to using up all of our get out of jail cards by selling off vessels. Most commercial public shipping companies have a stated dividend policy, most seem to commit to paying out 30 to 50% of annual net income, but zero if there is no net income. Grindrod's dividend and capital return policy was to pay out approximately 30% of adjusted net income to shareholders through a combination of share repurchase and dividends.

Hi Sotolo, you are right that the chrome price is back to where it was in $ and that the weaker $ gives us a lower price in GBP.

Hi shareminator, I agree with your first paragraph but less so the second. I believe the pgm basket needs to increase over 20% to make Karo profitable for us.

Group H1 revenue next week is likely to be around $276 m and around $655 million for the full year and Karo would add around $330m in a full year (but not the first year). You say that Karo doesn't need to be hugely profitable for Tharisa to benefit but firstly we have to get there which might or might not happen while we are financing the business until it does and secondly we do require a reasonable profitability to make the remaining investment of around $240m+ worthwhile ,to attract the required external investors and because of the 15% free carry to the Zim government. Turnover is for vanity, profit is for sanity.

I do totally agree that THS is on an absolutely crazy discount to NAV and that is why I hang in here. We will probably have a loss next week and an impairment on Karo is still possible over the next 18 months, and we will eventually know more about Tharisa transitioning to underground mining which will require further investment so it would be nice to have some positivity such as the Tharisa solar farm ,progress at Redox and external investors for Karo.

Hi shareminator, that big increase in chrome since February is just getting us back to were we where late last year.

I agree with much of the foreward fundamentals for pgm's. But the problem for Karo is that this 2027 platinum forecast price of $1,100/oz , about 10% up from the current price , is not enough to make Karo profitable without absolutely stellar increases in the other pgm's.

A massive percentage of buys today and a good 4.35% increase! Let us see what next week brings.

....and an estimated PEG of 0.1 for this year and 0.05 for 2026!

Today the calculated sales have outweighed the buys. We have attracted lots of day traders on the way up that might quickly sell out if they think the gold price has peaked and could collapse as a few articles have recently suggested. But keep the faith, we would never have dreamed of $3000/oz+ just 6 months ago. The market is jittery, we just need a few weeks under our belt to show the gold price is not collapsing and then the share price will recover again.

Not sure who Arrow Street Capital are but at 0.51% short they a tiny distraction.

Bustard, I think that is an excellent and severely under considered point you make about the stockholding At a time that PAF is dramatically increasing production we should expect that sales (and hence revenue) will inevitably lag behind production. This is particularly the case in our new Aussie operation with production starting towards the end of the financial year. In H1 production was 84,705 ozs but sales were 79,926 ozs. The Company has stated production guidance of 205,000 to 215,000 oz for the full year , to be safe I am working on sales of 196,000 to 203,000.

Further as you point out the proportion of the production that is not sold will be valued at cost and not at the dramatically higher current gold price which will reduce the Cost of Production number and eventually released as sales and revenue in the next 6 months.

The H1 interim accounts are out on 22nd May. But a SENS is required before that if there is a reasonable possibility that the numbers could be 20% different from the H1 numbers the year before. So we should get that SENS a week today, I reckon the basic EPS will be down 120% and no interim dividend.

Sam, hopefully debt free by August, at the moment I make it that 5 of the 11 vessels agreed for sale last quarter have now completed this quarter.

Hopefully the tentative US/Chinese trade agreement will add some positivity to charter rates.

Freedom4Uall, I agree with Moneyman64. . the biggest part of Property ,Plant and Equipment is Mining assets and infrastructure which is depreciated over the remaining open pit life of mine (not including underground) which was 17 years as a Sept 2024. Buildings are depreciated over 10 years, motor vehicles over 5 years, computer equipment over 3 years etc. The second biggest part is mineral rights and there has been no depreciation over the 4 years you mention as this is based on estimated economically recoverable proven plus probable mineral reserves.

As a snapshot just looking at the Sept 2024 the total PPE cost was $1042.894m and the accumulated depreciation and impairment was $258.256m or 25% which very roughly sounds right to me? My only other comment is if that 17 years open pit LOM was reduced then the depreciation would have to be increased.

Freedom4Uall/Hxul, I agree with Hxul's numbers, current investment is around $168m (I would guess 80-90% already spent) and projected to be around $233m in the next 12-18 months to achieve the stated goal of 80% ownership in KMH. From the recent Karo independent persons report we know the preproduction capex , including some contingency , has now increased to $475 m. So the project still has to find around $242 million to go ahead.

Freedom4Uall, yes the capex spend is significant but don't forget that no depreciation is taken on freehold land and mine development at Karo while under construction, the depreciation only starts when the assets start to be used. The standard depreciation numbers are listed in the accounts, for example buildings at 10%/year. It is worth mentioning that the 2024 mining assets and infrastructure of $205m included an unusual $65.6m for deferred stripping asset at Tharisa but this is an approved accountancy practice and we should see the benefit of this in a reduced stripping ratio in future years. I am no expert, but to me the capex/depreciation numbers are complex but correct, also we have had two auditors in the last few years.

Krusty, the initial share investment in Grindrod was an absolutely fantastic deal but in hindsight the full takeover happened just as the market was peaking and we literally paid top Dollar and then the increased debt could not be financed on dramatically lower TC's and we have been forced to sell out the majority of the vessels to reduce debt during a heavily loss making period. If the drop had not happened then the Grindrod takeover might have been a wonderful purchase. Cest l'vie! Having got into that situation I think the management handled the downsizing with skill. Yout are right that the fleet is only one -third of what is was but the third now averages bigger and more modern vessels.

Looking at the current quarter my very rough calculations are average TCE $13000/day less operating costs $10200/day x 90 days x average number of vessels say 27= operating profit +$6.8 million less interest -$2.9 million less depreciation under the new company structure -$5.2 million less dividends (2c/share) -$6.6 million =NAV less of -$7.9 million or about -2c /share. So to make a profit mathematically we need higher TCE's/lower operating costs/lower interest/lower depreciation/lower dividend or any combination of these.

I agree that we cannot just keep selling off vessels, for me we will reduce to the 19 by September and then might have to sell off just another one or two until the business stabilises and starts to make money again on a regular quarterly basis. This cyclical business will eventually improve and hopefully we can start to buy more second hand vessels just as this upturn starts. But as you say we have to gets our current costs down further in line with some of our competitors. Answers on a postcard how we achieve this.

Hxul, yes we are told that the Tharisa solar farm has been delayed while we wait for planning position but this has been promised for years while otherS African mining companies already have theirs. Still no update.. If the real reason is because Chariot cannot currently afford their chunk of the finance then they should let Total Eren continue without them. This has a financial and carbon opportunity cost for Tharisa and again asks the question who is really pulling the strings at Tharisa.

Nostra, thanks very much for your numbers,, very useful, out of interest what is your source?.

My calculated 2025 revenue is $548 m and PAT $152 m so pretty similar..

For 2026 I have turnover $834 m and PAT $287 m, so Mulder ,I agree that the EPS should be nearer 14 rather than 11. I suppose some of the forecasts are still using the gold price from one or two months ago. Hopefully the dividend will be progressive as the EPS increases.

The Edison FY25e forecast revenue on p.6 of $483.2 million is just too low even though they are using a gold price for the remainder of the financial year of $3157.

Moneyman, I agree with your view. The independent report conveniently ignores the $137.1 million capex because it is sunk and was already spent before Sept 2024. but even that Net Present Value of $83.3m is spread over 11 years, so only $7.6 million/year and then Tharisa only gets 68% of this (Zim government 15%, free carry Leto the balance) which works out at $5.2 million/year. which is a meagre return given the required further investment require of $338.1 million and the risks. Also that NPV of $83.3 million is based on a discount rate of 8% but Tharisa is already paying more than 8% for the bond and most of its bank borrowings. At a 10% real discount rate the NPV drops to $67.8 million. The Zim government has yet to confirm in writing it will honour the SEZ concessions agreed earlier for the first 5 year tax free and royalty free period. Also the independent report only considers open pit mining even though earlier reports suggest underground mining will commence in less than 11 years.

Likewise at the moment there is just too much risk for a potential meagre gain and we need a substantial increase in PGM prices for the project to proceed .

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Hi Riverboy/Sam, I agree with most of your comments. A good reaction to the numbers yesterday with a 5%+ rise. The current share price discount to NAV has reduced to 28% so the market certainly seems to like the coming debt reduction. The announced new 11 vessel sales are probably mainly the older Handysizes so the reduced fleet of 19 once completed will be under 10 years old and probably 55-60% Handys/balance Supra/Ultras. TMI continue to be committed to the 2c/quarter dividend which gives a 10% yield at the current share price but I still do not think it can be sustained at current time charter rates without selling further vessels. For the current quarter I think the TCE needs to be around $14,400/day to breakeven so based on current TCE's I expect the NAV at the end of June to be 1 or 2 cents down from the $1.11 at the end of March. This breakeven number will reduce further in the next Quarter once all of the agreed vessel sales are completed. Continuing cost cutting is required. Ed accepting a 25% salary cut if a fantastic gesture and probably saves the business about £132,000/year.

Sorry Sam but I expect a loss for the financial year up to March 2025 of at least $80 million and probably more (so a profit of $13.9 million in H1 but in H2 a loss of over $94 million).

Hi Sam/all,

At $1.11 a slightly better NAV than I was expecting.

I was expecting vessel sales to keep the debt ratio on target but the agreement for 11 new vessel sales which reduces the total fleet to just 19 is a massive change. The average sales price for the 11 vessels averaged 4% discount to fair market value but some of these would have been sold earlier in the Quarter so the actual selling price would have been higher that the Quarter end valuation had we kept the vessels which has reduced my expected $40m fair value loss to about $32 million loss.

On balance i think it is a great idea to significantly reduce debt even at the expense of a significant reduction in the size of the business ("turnover is for vanity, profit is for sanity").

I am expecting the loss for the full year to be announced in July will be over $50 m after a loss of $53.48 m the year before so big changes had to be made.April is a new financial year with a leaner almost debt free business and a new company structure and hopefully wipes the slate clean for a fresh start and better things to come.