Member Info for Mike1959

Thanks Ilja, I see that the non-exec directors own a combined 104,500 shares.

And thanks for the latest chrome/The improvement in the Tharisa PGM basket price will give us a positive Fair Value adjustment in the H1 results of several millions.

Stemis, I accept your comment about consolidated accounts so that you would expect Tharisa to pay either way. But PP has suggested patient capital and advised that the $160m investment in Karo Mining Holdings (KMH) would be external ECIC supported funding ring fenced against KMH. Yes, Tharisa could have afforded to do this but the point is that we were told the risk of this $160m would be taken by external investors and ring fenced solely against KMH and not Tharisa. And what would it say about prudent investment at Tharisa if external investment is not found for the $160m presumably because of the poor commercial case and high risks but then Tharisa jumps in and invests the $160m

The other factor is if Tharisa shareholders are getting value for money. As at the end of Sept 2023, Tharisa has invested a total of $135.3m in KMH but the net assets of KMH were only $83.427m ( $29.528m attributable to Tharisa and $53.899m attributable to Medway/Leto). So Tharisa has invested $135.3m in KMH but owns only $29.528m in assets. While Tharisa owns 75% of the shares in KMH it only owns 35.4% of the assets.

In my opinion we need to see more transparency in the dealings between Tharisa and its related parties (Leto/Medway/Chariot). Much has been said recently about the Pouroulis family owning 42% of the shares in Tharisa but it would be good to know roughly how much skin in the game the non-executive directors have.

Feynzz, I totally agree with you about the operating cash flow, the Tharisa mine continues to be a money machine.

Back on 22nd Feb, Ilja confirmed that Tharisa's total investment after completing the 75% ownership in Karo Mining Holdings was $135.3m but we know this 75% will increase to 80% sometime this year but we do not know the exact cost or exactly when, which by past experience I am expecting to cost us roughly $75m, although it would be good to have the formula for this.

As you say, we have been told that $160m of ECIC supported external investment will be ring fenced against Karo and so will not cost Tharisa anymore. Presumably if this $160m external investment is not found then Karo simply stays on hold (which still incurs costs). But as you suggest, having already got this far could Tharisa reconsider and decide to invest the $160m directly? If not then I agree we could afford a share buy back or more progressive dividend policy, even though PP has called for patient capital. So our total investment that we have already committed to, could be around $210m ($135.3+~75) by the end of this year or around $370m if we were to decide to invest the $160m if it is not found from external investors. The recent improvement in the Karo PGM basket is a step in the right direction but we possibly need a further 25%+ increase to make Karo commercially viable.

In their weekly summary 2 days ago Hellenic Shipping News reported that 10 year old Supramax had increased a massive 3.0% in value and Handysize 0.5%. If that is replicated throughout our solely owned fleet of 30 Handysize and 7 Supramax (ignoring the 3 chartered in vessels) this means the vessel values have increased around $6m in 7 days, equivalent to 1.8 cents/share.

BHSI now up for the last 21 days in a row.

Chrome concentrate 40-42% price CIF Chinese ports this week is up $5/t to $295-300/tonne so we will see the Tharisa price nudge up on Monday.

Smkr, palladium price averaged $1016/oz in 2018 and was in 3 figures for 2010 to 2017.

i agree the USD has been weaker in the last week or so but probably too early to read too much into that.

Sam, totally agree and good to see 2 directors buying recently.

By my rough calculations ,10 year old Handysize vessels have increased in value by 2.4% since the end of the last quarter and Supramax by 4.3% and if they remain at these levels then even allowing that the vessels are 3 months older , this should add around $13m to total vessel values at the end of March which bodes well for our NAV with the end of March also being the end of our financial year.

Sotolo, good question! First of all I am no expert but this iron-chrome redox technology has absolutely massive potential for the carbon free economy. It allows green energy to be stored until needed and has a long -life span and can be scaled up as required. Also it is safe and commercially cheaper than other redox alternatives based on vanadium or zinc-bromide. I suppose it is worth pointing out that it is not just a case of putting chrome concentrates direct from the Tharisa concentrate plants into a chamber. Presumably the chrome has to be refined and then dissolved into an electrolyte and is highly technical hence Redox One, in Germany. This technology has been around for about 50 years and already operating in a handful of plants around the world so there are already a dozen or so players in this market place. I am sure it will be a success at the Tharisa mine storing solar power produced during daylight hours which can be released and used during the night but time will tell how successful Redox One is at developing and selling the technology externally around the world at a profit in competition to the existing players.

Ian B, I suppose this is not new news but merely the official launch of previous news. Nonetheless, good and hopefully exciting news.

Hi Krusty, "the trend is my friend" .

Both The Baltic Handysize Index and the Baltic Supramax Index are up 14 days in a row, by 33% and 24% respectively.

This should be sufficient to maintain the dividend.

Some great comments yesterday.

Sotolo, yes the EV share of total vehicle sales continues to grow but don't forget the overall market size continues to grow so that absolute world ICE sales are still growing and are predicted to peak next year. But I agree that the rate the EV market share increases and the rate that PGM production falls in the next decade particularly the next few years will govern the PGM basket price. I still believe we will see platinum remain in deficit over the next few years although there may possibly be enough above ground stocks for the market to draw from.

Moneyman64, I agree with your comments on the chrome and PGM prices. With less than 4 weeks of FY H1 to go I am expecting the HI PAT attributable to shareholders to be around $50m ($52.025m in H1 last year) and an EPS of 16.5c and PE below 2.

Fenzz, likewise, the Tharisa mine continues to be a money machine held back by spending on Karo with an uncertain future. In terms of the family seeing some think I suspect they have invested heavily in personal time, effort and money and still believe the PGM price will recover sufficiently in the next few years to turn back now. I hope the H1 accounts include the investment cost and price explanation when the current 75% share of Karo is increased to 80%, presumably in the second half of the year and also where we are with the sought after EICCS supported external investment and exactly how this is ring fenced to Karo. The PGM basket price will eventually recover but this will take even further considerable financial hardship to close a big chunk of the more expensive mines which could take several years.

Good observations all.

TMIP down 0.30% today but TMI up 1.78% today so they are slightly out of cinc so that TMIP is the equivalent of 2.7p lower (an arbitrage possibility if you have millions to trade).

BHSI is up 12.7% since the start of the week, if this continues then in 2 weeks we will be back to December levels.

Hi Ilja, thanks for that latest number that the chrome stocks at Chinese ports have dipped back below 3m tonnes to 2.885 million tonnes.

Freedom4uall, thanks for the info.

The S African 40-42% chrome concentrate price CIF Chines port is still $285 to 290/ tonne although with little consumption during the Chinese New Year and vessels still arriving the latest stock at Chine ports has increased from 2.77 m tonnes to just over 3 m tonnes so we need this to decrease in the next fee weeks.

Stemis, the other big change to these 2022 Karo numbers is the LOM and mining cut. The 2022 numbers show the Phase 1 or open pit Life Of Mine as 17 years+. But the 2023 Mineral Resource and Mineral Statement reduced the ROM by 12.5 m tonnes from 35.5m tonnes to 23.0 m tonnes compared to just the year before, a massive reduction of 35% (see page 93 in the Tharisa PLC 2023 Integrated annual report).

The main reason seems to be that the previous Mineral Reserves were based on a targeted mining cut of around 5m containing around 2.42g/tonne PGM 6E and in 2023 this has changed to a narrower cut of about 2.5-3m targeting 2.98g/tonne PGM 6E. So while the physical reserve is still there , to hit the original target of 3.0 g/tonne and lower PGM prices the business is having to forgo some PGM's to try and remain viable.

At the anticipated full production of 2.46 m tonners/year this reduces the LOM from 17 years to 10-11 years (allowing for some lower production in the first and final year). While Tharisa has highlighted the reduced LOM at Tharisa we have not overtly mentioned the reduced Phase 1/open pit LOM reduction at Karo (possibly as the mine has not yet even started and the number might change yet again and possibly some embarrassment as the scale of the current big reduction).If the 10-11 years LOM continues, then the Phase 2 underground capex would probably have to start say 4 years before that, so the capex on Phase 2 could be required sooner than expected.

The near-by Zimplats Ngezi mine started as an open pit mine in 2001 , opened the first of 3 underground shafts in 20023 and the open pit was closed in 2008.

Thanks Stemis, the latest Karo PGM basket price on the Tharisa website is $1193/oz (or around $1210/oz since the start of this year) and the latest production forecast is around 200k oz. At of June last year Karo employed 540 people (90 direct, the balance contractors). Being in a Special Enterprise Zone I have assumed their are no royalties but for the first 5 year the Zim government gets the 15% free carry and then after that the 15% free carry plus 15% corporation tax.

Sam, yes-the BHSI is now up 6 days in a row and surprisingly good economic numbers out of China now that their New Year festivities are over.

We still need this to continue rising to secure the next dividend intact and paid for fully out of profits rather than partly out of vessel sales.

Thanks Stemis, much appreciated. On paper buying the right to mine an inferred 96m ozs at $4.8/oz looks incredibly cheap but based on the current PGM basket this is still loss making. As the Company says below they are looking at the "higher long term analyst price forecasts that were used in valuing the project". which I agree is the right thing to do and I do agree that prices will trend higher (although prices trending up due to inflationary increases is rather neutral in real terms as costs increase too). But the big question is how fast do prices increases and to what level? If it happens within 6 or 12 months then great although even this has a cost and will probably delay the FOIM next year ,but if it takes say 3 years for the current Karo PGM basket price to recover from around $1200/oz at the moment to say $1500/oz which might be considered the break even all in cash/capex cost then we still have to finance Karo for 3 years and then at $1500/oz by my admittedly basic numbers it is still only breaking even so no gains for us shareholders. By my numbers, even a basket price of say $1700/oz after taking out the payments to Medway/Zim government would generate a net profit attributable to Tharisa shareholders of roughly only $30m/year which is a relatively low gain for the current risks involved. These are just my numbers and I am open to numbers from others or Tharisa.

As we have said before this is a massive play on where the PGM price will be in future years . I see the AGM statement says this $4.8/oz " compares favourably to comparable transactions" but what transactions, perhaps 12-24 months ago, the Big 4 PGM producers are now cutting back even though they have lower cash costs and operating mines. At some point the reality of current PGM prices and longer term PGM forecasts have to merge into some form of reality. Great if the Company gets this call right but if not....

I can understand that Tharisa management has commitments to many Karo stakeholders and needs to be seen as being decisive and so is sticking with the same mantra but this needs to be pragmatic .

The Tharisa mine is a fantastic business but with Karo I fear for the future.

Ilja, thanks for your reply as promised.

For good order can you please explain the maths for 96 million PGM 6 E ozs equating to USD 4.8/oz.

Hi Stemis, the valuation of KMH to date is just is just part of the equation.

We know that Tharisa will increase our shareholding from 75 to 80% this year, but we do not know the cost, the increase from 70 to 75% cost $65m last year but I expect the increase from 70 to 75% this year to cost $70 to 80m, possibly more, we will have to wait and see.

Up to Sept 2023 Tharisa had spent the equivalent of over $130m on KMH (in 2018 $4.5m to Medway for 26.8% of the business plus injecting $8m for initial exploration then in 2022 at further $27m worth of THS shares to Medway increasing our shareholding to 66.3% then later in 2022 rights issues for $8.1m + $9.9m and in 2023 rights issues for $27.3m + 37.7m) But the Sept 2023 accounts show the KMH net assets as only $83.427m and of that $53.899m was attributable to Medway taking acquisition adjustments into account (so only $29.528m of net assets attributable to THS having spent over$130M).

It has been inferred that our shareholding will stay at 80% and ECIC external $160m ring fenced funding will be raised but we do not know if THS will have to act as guarantor to this ring fenced funding (if so then it is not really ring fenced to Karo) or IF the ECIC funds are not approved will THS change their mind and commit to the $160m additional investment.

At Sept 2023 THS has a Net Asset Value of $615.874 m attributable to shareholders this will certainly increase over the next year or so but by then we possibly might have invested $200-300m on KMH and if PGM prices do not recover then THS could end up righting off a big chunk of that investment. Have a look at the massive recent impairments taken by Sibanye Stillwater/Amplats and shortly Implats on their PGM assets. We already have some experience of this on a tiny scale having bought 90% of Salene Chrome in Zimbabwe from the Leto Settlement Trust in 2018 and eventually increasing to 100% in 2021 only for it to be mothballed after the Zim government imposed taxes on chrome concentrate exports.

Finally it is critical that related parties, such as Tharisa, KMH, Chariot trade at arms length and that the deals between them are fully transparent and understood by all stakeholders.

Likewise, thank you Ilja.

Can someone start with another subject.

ElProf ,THS now own 75% not 70% of KMH.

Ilja, I agree it is totally up to Medway if they want to participate or not in additional new KMH shares for cash they do not have to explain . As Stemis has explained earlier, based on the share increase from 70 to 75% values KMH at $325 m , if you take the very last additional new share tranche of $37.7m on 31.07.23 increasing THS shareholding from 72.33% to 75% this values KMH at $351.7m. The crux of the discussion is how is the new share price set and by whom? It would help if this was transparent. Do we know what the cash injection will be when the 75% is increases to 80% later this year? As you can see the $325m or $351.7m is a big premium to the $210m value for KMH you mention below based on all capex flows, those capex flows only have a value when Karo is operational and at the moment are possible impairments . As ElProf mentions ,Mr Market values Tharisa which includes the 75% of KMH at around $215 m market cap, if the directors believe this is grossly undervalued then why are they not jumping in to buy, aside of transfers the last director share transaction was a sale in Jan 2023 and the last director purchase was in August 2022.Also as KMH only own 85% of Karo Mining this inflates these prices even more.