Member Info for Mike1959

Amplats results for last year out today. Headline earnings down 71% YOY. The group cash operating costs in 2023 were R17,859 or about $943/ PGM oz. Have announced possible job cuts to cut the cash operating costs to R 16,500-17,500 or $871 to $923/PGM oz. and all-in sustaining costs to $1050/oz. Production guidance is unchanged at 2.1 to 2.3 million ozs for 2024-2026.

Implats results out around 29th Feb.

We will see what comes out of the AGM next Wednesday but I believe the Tharisa mine is still performing extremely well, it is just the Karo concerns that is pulling this down. The JSE Tharisa price today is down 10% to ZAR 12.60 which currently converts to 53p.

Moneyman64 I agree that we are now far away from the original justification for Karo based on a PGM basket of $2140/oz and a cash cost of $1096/oz (excluding royalties). The other main assumptions were a base metal basket $15,099/tonne (contributing about 20% of revenue), initial PGM recovery of 78-82% and PGM production of 190,000 oz/year .The base metal basket has also dropped, I calculate about 13%, so that is holding up much better than PGM's.

To reduce that cash cost per PGM/oz, Karo is now looking to produce nearer 200,000+ oz/ year by improving the recovery to nearer 82% (some S African PGM mines are actually at 85% or better) and greater plant optimisation particularly the concentrator with the same 980 people(we know that at Tharisa, the Voyager and Genesis concentrators have been running consistently above nameplate capacity for many years). They could look at re-planning the open pit mine to avoid some of the deeper more expensive ore to reduce costs but this would also reduce the open pit LOM, similarly with the phase 2, underground. Additional PGM/base metal benefication could also help .All of this might reduce the cash costs by say 10% but then we have inflationary delays admittedly offset by some gain from the stronger USD. So overall with these potential savings I still believe the cash cost is around $1050-1100/oz and grows with every year the project is delayed. We know that the capex cost has increased from $391m to nearer $430m so the excluded non-cash costs such as depreciation will be higher and current interest rates are now higher. There are possible savings to be made by giving Karo internal investment (such as cash payments from Tharisa for new shares) and this saves Karo paying around 10% financing/year at current rates (the VFEX bond is costing 9.5% interest/year plus costs) but there is an opportunity cost in this for Tharisa.. So as I have mentioned before, in my opinion the break-even cost is nearer $1700 oz PGM other things being equal.

Anyhow if the project is 100% reliant on ECIC external funding of $160m then we await the decision.

Freedom4Uall,probably better if I do not comment on the bulk of your last post but regarding verifying the 2023 $65m cash subscription by Tharisa in new KMH shares, I confirm this has gone into the net assets of KMH. At the end of Sept 2022 KMH had net assets of $4.898m increasing to $83.427m at the end of Sept 2023, an increase of $78.529m which is probably the $65m cash subscription plus a net profit of $13.528m (not quite sure where this has come from unless it is net gain in non-current assets/currency adjustments during the year less some operating costs such as labour?).

See note 16 on page 62 of the Sept 2023 Accounts.

Hxul, glad that you have come to this conclusion so that we all agree agree on the logic as explained by Stemis. I do agree with you that the value is getting greater with each incremental purchase of newly issued shares.

As you say currently 75% of KMH is currently owned by Tharisa and the remaining 25% by The Leto Settlement Trust or Medway Development under another name although this will change to 80%:20% some time this year (although there is still something strange about the number of KMH shares).

Despite this cash injection in June/July the net assets in KMH were still only valued at $83.427 m at the end of Sept 2023,

Freedom4Uall, to try and answer your second question, the Tharisa Report " Unlocking the Stock" in June 2022 showed the biggest shareholder in Tharisa as Medway Developments with 41.2% or 123.3 million shares. The Leto Settlement Trust Ltd was registered in Guernsey in 1989 and run by Artemis Trustees Ltd also registered in Guernsey. The Leto Settlement appears to control most of the Pouroulis family investments and is the beneficial shareholder of Medway Development Ltd registered in Cyprus in 1989.If you check on line now for Tharisa's biggest shareholders it is now Adonis Pouroulis (elder brother of Phoevos). with 123.5m shares or 40.75% with Phoevos owning 8.1 m or 2.67%.

The Pouroulis controlled Karo Holdings, registered in Cyprus ,did submit an interest to the Zim government in 2014 to develop what is now Karo if the lease was taken off Zimplats as they were not developing it. With the overthrow of Mugabe in November 2017 the new president , Emmerson Mnangwa was keen to attract foreign investment and the lease was taken off Zimplats in return for extending the lease on their operating mine. The Pouroulis family acted very quickly and by March 2018 , KH (fully owned by The Leto Settlement), though its 85% subsidiary Karo Platinum was awarded a Special Grant and later the mining lease to what is now Karo. Just 3 months later in June 2018 The Leto Settlement sold 26.8% of the issued shares in KH to Tharisa, a related party, for $4.5m.

The VFEX Bond application lists PP as chairman of KMH benefitting/owning/controlling 1.86% of KMH shares and his brother AP listed an non-executive director benefitting/owning/controlling 58.53% of the KMH shares.

Hi sam, hope you are right.

On the LSE TMI site for yesterday 9th Februsry there are 9 share trades shown. It is the second trade of the day, time 09.15.33, trade price 0.82c,volume 4,750,000, sell, bid 0.81,ask 0.84, value 4m.

Yes, LGEN heading south again but it is still up for me with an 8% + dividend.

Enjoy the next 17 days.

Sam, we have had one massive 4.75 million TMI share sale today which is 1.4% of the total issued shares which shows how nervous this is. I agree the management want to remain committed to the dividend but it remains on a knife-edge so we do need a good recovery in the BHSI before the end of this quarter otherwise...

If you want a low maintenance international fund go for Fidelity World Index it has very low charges and invests in shares 65% in US/6% Japan//4% UK/25% others. in the last 12 months the return is 12.76%, 6 months 11.16% and 3 months 10.51%.DYOR.

...wow, you are still in Koh Samui!

Yes, the BHSI index as of yesterday was 570, down,35.15% YTD so we really need that expected post -Chinese New Year bounce. I agree on the listings as potential cost savings but that appears to but lower down on the managements priorities.

For these exotic locations I always do funds rather than individual companies to spread and cut the risk. For India I would recommend Jupiter India X accum (up 55% over 12 months/36% over 6 months /21% over 3 months ) for Japan where the central Bank Rate is still zero I have Vanguard Japan Stock Index accum (up 12% over 12months/9% over 6 months/10% over 3 months) both available on your HL platform. There are a few investment trusts investing in Vietnam that you might consider.

I agree good points from Krusty.

I am worried at the moment but let us see what happens in 2 weeks when the Chinese New Year is over ower, should head north then.

Likewise most of my UK shares have underperformed aside or RR and LGEN in the last 12 months but funds doing better particularly technology driven by AI and US but also check out India and Japan funds. I still fancy bonds doing well in a reducing interest rate environment.

If you have any views or bright ideas

please share!

.......if you are losing money on every oz.

If we delay say another 12 months then we continue to incur costs for hundreds of men, and financing currently around 10% without any guarantees the PGM prices will significantly improve while having the Zim authorities on our backs for not having started production. Remember what happened to Zimplats and Salene Chrome.

Stemis, likewise a valid point on the valuation of Karo Mining Holdings but don't forget the next 5% cash subscription in new shares later this year will probably cost around 20% more than the previous 5% so the price is continuing to go up.

You mention the revised production timeline which is first ore in mill June 2025 subject to having the ring fenced funding in place. But so far the ring fenced funding of $160m is not in place. The biggest chunk in the total $430m capex spend is the main concentrator costing over $130m (a pilot concentrator is probably in place for early mining tests and metallurgical optimisation). So without the $160m funding in place it is probable that the main meaning that the concentrator has been set on hold meaning that the FOIM for June 2025 is probably going to be delayed again (we could run a few hundred tonnes through the pilot concentrator by June 2025 but not the commercial volumes needed. Anyway, why produce PGM'

Stemis, I do pretty much agree with your numbers but as Freedom4all and and others (including me) have said it is very confusing. But we know the latest capex costs for Karo will be around $430m, Tharisa have already put in $98.6m to date, VMEX bond $36.8m , we are told the ECIC external funding will be $160m , this leaves a gap of $134.6m. So that $134.6m gap will be filled by Tharisa putting in another say $31.4m (we have been told we will not put in more than $130m which leaves around $103m that looks like coming our of Karo Mining which effectively means most of this $65m when Tharisa t increased our share from 70 to75% and presumably a chunk of the $75m or so when Tharisa increases from 75 to 80% later this year. So Tharisa in putting in $130m directly and about $103m indirectly as our equity investment in Karo.

One question is are we paying the correct price for this increasing stake in Karo and it looks like a bigger Tharisa investment by stealth.

But as you have said before we do not know if PGM prices will increase or not. If the Karo PGM basket price recovers to $1700/oz+ then great. But at the moment I would be concerned that purely on commercial reasons the ECIC $160m funds are not approved, if not what does Tharisa do then , do we spend even more ourselves or moth-ball Karo and take a substantial write off on the investment to date ($130m directly plus $103m) which is substantially greater than our current market capitalisation or enterprise value.

Under the new ZEV legislation starting in January UK car sellers selling over 2,500 cars/year have to sell a minimum 22% ZEV cars otherwise they are fined £15,000 per car. the 22% gradually increases to 80% by 2030. Car producers are allowed to trade surplus ZEV credits so the likes of Tesla/Polestar can sell 78% of their credits to other producers at a price to be negotiated. So that 16% ZEV's in 2023 should be nearer 22% this year and steadily going up.

Ilja is the IR department and I am sure that Tharisa want to carefully consider and professionally write their response before replying to us.

Regarding your question Moneyman64, the reef of mine in the last quarterly figures was still pretty low so they continue to buy in substantial ore for processing ,but with the new waste contractors in place and the new realignment of the mining pattern particularly the dramatic improvement in stripping ration for the remainder of the above ground ROM I am expecting the ROM will start to improve and by the end of the year be back to the levels we saw 18-24 months ago.

After studying the numbers again I NOW agree with hxulcolrdol that his is just looking at the Tharisa percentage shareholding in Karo Mining so his numbers are correct and that they this ALREADY allow for the dilution effect described by stemis.

But now the issued share numbers look strange. On 2nd June 2022 we are told Karo Mining issued an additional 44 new ordinary share for a cash subscription of $9.9m [$225,000 each] ,the additional shares issued represented 1.29% of the issued share capital of Karo Mining {inferring 3411 shares in total}

on 10th Aug 2022 another 45 new share are issued for a cash subscription of $10.2m [$226,667 each] representing 1.22% of the issued share capital {now inferring 3689 share in total].

But then on30th June 2023 Karo issues an additional 3,800 new ordinary shares for $27.3m ( now only $7184 each] which represents 2.33% of the issued shares [now inferring 163,090 shares} why the big change?

Just shows how complicated the numbers are if we cannot agree on them!

SteMis, I agree with your logic, and admit it is important that Tharisa is buying newly issued shares rather than 5% of shares directly from the Minority shareholder (Leto Settlement/Medway).

But even valuing their 75% holdings in Karo at $320m is still a massive number and the purchase of the next 5% new shares this year will on past performance be at a higher price than $65m, valuing their 80% holding in Karo by more than $320m.

In relation to the Tharisa NAV or market cap or EV this is still a massive number particularly when the economic case is that the Karo PGM basket price needs to substantially increase for the project to start, probably from around $1200/oz at the moment to nearer $1700/oz +.

Sotolo, YES.

Mr Market current values the market cap of Tharisa (which includes 75% of Karo Mining) at around $234m, the enterprise value is round $113m and the Net Asset Value in the September accounts attributable to shareholders was $616m.

Tharisa has already told us our share in Karo will this year increase by a further 5% to 80% and presumably this will cost over $65m based on the previous transactions.

Hxulcolroh, thanks for your detective work, particularly the time time and prices.. To answer your question 1 I can only assume it is not a RNS reportable event but as you suggest it still seems to have been in a jungle of other information in the Annual Report. On your question 2, my understanding is that as 25% owners of Karo Mining, Medway would pay 25% of costs, although in the 30th Sept 2023 Consolidated Financial Statement under note 16, page 62, the total net assets of Karo Mining Holdings plc are $53.899m of which $53.899m are net assets attributable to non-controlling interest (Medway) after adjustments. It is understandable that over time as Karo is de-risked and some investments made and reserves proven that the asset value will increase.

I hope there is some discussion before we increase the shareholding to 80% and beyond and have some justification for this. Usually there is a Sale and Purchase Agreement in place and it would be good to know the terms and who decides on each side to buy and sell.

If you want to see a classic case of valuation and selling at the right time have a look at Eland Platinum. The Pourpoulis family make a big chunk of their fortune when they sold Eland Platinum for $1070 m to Xstrata, now part of Glencore, only for it to be sold to Northam Platinum for ZAR 175M ($13.4m) in 2017.

Feynzz, it is not just the capex investment but also buying the additional share in Karo.

In March 2022 Tharisa took a controlling stake in Karo paying the equivalent of $27m in Tharisa shares for an additional 39.5% stake (to the Leto Settlement Trust being the beneficial shareholder of Medway Developments Ltd which appears to be a Pourpoulis family investment vehicle. Medway Developments is also the biggest shareholder in Tharisa). In the interests of Tharisa shareholders, this deal had to be approved by an independent expert

Then in June/July 2023 Tharisa subscribes for more new shares in Karo for a cash figure of $65m increasing our shareholding from 70 to 75%.. I cannot get my head around this valuation and to my knowledge has not been explained.. The $65m paid for 5% implies that Karo Mining is worth $1300m or $1529m for Karo Platinum (allowing for the 15% free carry).Even the March 2022 Phase 1 Karo project had a post-tax Net Present Value of $770m based on a Karo basket price of $2500/oz (currently less than half that number). This $1300m valuation is more than double the Equity of Tharisa attributable to shareholders at the end of Sept 2023 of $616m.

We are told this 75% shareholding will increase to 80% this year, presumably for $65m+?This increase to 80% will still leave 20% with the Leto Settlement/Medway, would Tharisa look to buy this 20% in the future?

With the ongoing debate on this board regarding the commercial rationale for going ahead with Karo we should ask is this additional spend on Karo shares the correct thing to do and at what price.

So I still argue if we go ahead with Karo taking the capex and share spend into account is going to be considerably more that $100m. Great if the PGM basket goes up but if it does not.....

Ilja, thanks for your response and clearing that up and I put my hands up and apologise for any confusion caused. Can I please ask a few questions.

So you are saying that Tharisa has already capexed on Karo $98.6m up to early December 2023 and will commit to a maximum $130m (a further ~ $31m), then there is the $36.8m VFEX bond ($10m invested by Tharisa owned Arxo Finance) which is guaranteed by Tharisa . So the remaining required capex of about $160m will come from funding supported by the Export Credit Insurance Corporation of South Africa and will be ring fenced for Karo, alone, to totally fund without any parent company guarantees or liabilities from Tharisa? If Tharisa is guarantor to the Karo debt then it is not really ringfenced to Karo alone.

The same report states " Karo Platinum FY2024 capital spend budgeted at US$244m, subject to ring fenced funding" so 4 months into the 12 month financial year, as the ring fenced funding has not been announced can we conclude that it is highly unlikely that the US$244m will be spent by the end of September and that the revised FOIM targeted as June 2025 is no longer achievable.

When do you expect news on this ring fenced funding? If the ECIC does not like the commercial case for the investment and declines the funding then where does that leave the project (having already invested up to $130m and backed the bond of $36.8m)?

.