Member Info for Mike1959

Feynzz, we have discussed before and I totally agree with you that Tharisa is crazily undervalued on all metrics and with 4 months of the HI financial year now completed I think the market is underestimating the H1 result.

But on Karo the capex with the latest 12 month delay is going to be around $430m and I reckon nearer $150m has already been spent rather than the $100m you mention and that investment could be nearer $300m by the end of this calendar year. Furthermore, by now Tharisa must be legally committed to 80%+ of this capex even if they have not yet parted with the money. Extensive purchase agreements will already be in place for the long lead items and it would now be difficult or press the stop buttons. Tharisa could delay for another 6- 12 months but this will increase the capex costs further and would still incur some running costs particularly the hundreds of people already employed. So even abandoning Karo now could cost $300m + in write-offs.

Hi Sam, great, I have been to Koh Samui,a long time ago in the 1980's , can't remember exactlywhere we stayed but it must be near to you and within sight of the Big Buddha.

Anyway back to subject. With some afterthought I agree with you.

We are up to 10 centigrade today!

Hi Sam, I suppose your post at 00.53 is 7.53 am in Thailand, by the way which resort are you in?

The break-even TC is going up with the reducing number of vessels and the average vessel size is getting bigger , the 4 vessel sales in this quarter were all Handysizes plus inflationary increases and high interest rates. So based on the latest numbers the breakeven TC is roughly $12,870/day and allows for dividend of 2c/share to continue every quarter (this costs $6.6m every 3 months). The 4 completed vessel sales had total gross proceeds of $40m (plus TMI received $26.7m from Grindrod's capital reduction and pay-out to shareholders) so it is a little surprising that only $11.4m was paid off debt, it might just be that some of the funds came in late in December and were transferred to paying off debt in early January.

I agree with your comments on the mm's. On Friday TMIP share sales were 9,000 and purchases 208,152 while TMI sales were zero and purchases 882,402, that is a total net buy of 1,081,564 (0.3% of the total shares changed hands) but the share price did not budge. TMI had 2 big buys of 204,814 shares and 488,627 shares timed at 4.01pm.With the original Taylor Maritime group buying 1.3% of the shares in this quarter taking their total to around 8% , I wonder if they will continue to do so or even consider a private buy-out? With the current share price at a 35% discount to NAV they could offer to buy out the existing shareholders including us at say a 20% premium to the current price and still get the assets at a 15% discount to book value. 15% of total NAV is currently worth around $67m and TMI has shown over the last 12 months that the main assets, vessels, can if need be, be readily sold at around their book value. Possibly I am totally wrong!

Sam/Krusty, the actual average time charter equivalent of $11,997/day although up about 15% was a little lower than I had hoped for and the reduction to 40 vessels in total was quicker than I had estimated. The NAV bridge shown in the Q3 factsheet today is interesting. The total NAV/share increase was 5 cents, but vessel fair value gains (vessel appreciation ) accounted for 6 cents of this, profit just 1 cent and dividends a loss of 2 cents, so dividend is still not fully covered by profit and is partly coming out of vessel appreciation. So this remains on a knife-edge, TMI needs even higher TC' s/lower costs per vessel/lower financing to get this down and cannot keep paying it out of assets particularly if vessel values were to fall or even just depreciate naturally as they get older. Fortunately 42% of fleet days for 2024 have already been covered at the slightly higher TCE of $12,387/day ,although the BDHI dropped in the first half of Jan while vessel values have increased in the first 3 weeks of Jan, for vessel values I have started to use the weekly percentage changes shown in the Hellenic Shipping News which appear more accurate.

The combined vessels were 40 at the end of Dec with Grindrod announcing a Handysize vessel sale since then. Below you mention Grindrod are taking up an option to purchase an existing charter vessel but this was already included in the starting 40 to the total vessel count will still be going down to 39 in June this year. We cannot carry on cutting but the high interest rate is crippling at the moment (the reduced debt of $156.2m debt at the end of December will be costing around $2.7m every 3 months in interest).

The Grindrod accounts for their full year, Jan-Dec 2023 should be out around 8th Feb (that was the date last year) but after that, to save money, will only report every 6 months rather than quarterly as before .

Not sure if the Barbarossa Ltd , Marshall Islands you mentioned at the start of the year is related to the low-key comment in the RNS that the private Taylor Maritime group (is this still our CEO's father???) has increased its stake in TMI????

Still a bit disappointing to not see the result today push the share price to 70p, The current NAV of 136 cents/share is equivalent to 107p so we are still trading on a 35% discount to NAV.

Hi Sam, good to see the NAV up 3.9% although my expectation a few days ago was too optimistic as the Market Value of the combined fleet did not increase as much as I had hoped.

I will crunch the numbers in more detaii. Enjoy Thailand!

Sotolo, the first one is the important one, the other two are just a guide to check against the South African chrome concentrate price (40-42% chrome content CIF Chinese port. Incidentally this was very slightly higher this week.

Sotolo, we have been here before!

The first one, which is what Tharisa produces (plus the higher quality).

The other 2 are just guides (South African High Carbon ferro chrome is produced from concentrate and the 3rd is lumpy chrome produced in Turkey).

Sam/Krusty, likewise looking forward to the Oct-Dec numbers on Friday.

the dominating factor is going to be the vessel appreciation since the end of September. After a big drop in vessel values at the end of September TMI told us in their RHS of 25th October that "Clarksons' benchmark values for 2nd hand Handysize and Supra/Ultramax vessels has returned to their end of June levels since{September} quarter-end". NAV at end of September was $433m, with increased TC's for the 42 to 44 vessels I have total TC's $54.2m less operational expenses $47m= gross operational profit $$7.2m less financing $2.9m, plus vessel appreciation $50m , group expenses-$4m=NAV increase of $50.3m or about 11.6% to about $483m.

NAV of $483m is about $1.46/share or £1.15/share which represents a 43% discount to NAV which I think would propel the price back to a 35% discount of 75p.Bank borrowings should also be good news with a plateauing off of new vessel sales.

However if that vessel appreciation is considerably lower then the NAV rise will be considerably lower. Unfortunately I do not know of an accurate vessel valuator available to us.

Here in the UK I suppose wewill have to see how the Zero Emissions Vehicle mandate which started this month goes. This requires all car manufacturers to sell minmum 22% ZEV's this year , increasing to minimum 28% nezt year and eventually 80% by 2030.othwise they are fined.

HI Sam, Baltic handysize index actually up today, the first increase so far this month.

Sotolo, we have to be careful of the terminology, some reports include mild and plug in hybrid vehicles as EV vehicles even though they have an internal combustion engine which requires a bigger amount of PGM's in the catalytic convertor due to the stop/start of the ICE. As a starting point ,14% of global car sales in 2022 were EV, and 2023 the estimate is around 18%.

Reports are infamous for being wrong and highly speculative. In July 2020 Deloittes Insight "Electric vehicles setting a course for 2030" said globally"EV's would secure approximately 32%of the total market share for new car sales". In Feb last year Goldman Sach Intelligence published an article with the headline Electric vehicles are forecast to be half of global car sales by 2035". In 2022 the International Energy Agency suggested demand for oil based fuels would peak in 2025 but that "existing policies would drive EV's share to just 21% in 2030.In particular they were concerned for the increasing popularity of sports utility vehicles which are more energy intensive/more PGM intensive and are nearly cancelling out the emissions reductions from record vehicle sales. Even with increasing EV sales it could be that over the next 6 years that PGM loadings in remaining ICE sales are increased to take account of bigger vehicles, greater hybridisation and possibly tougher vehicle emission standards . In Europe E10 petrol already contains 10% renewable ethanol and the German car industry is already suggesting this could be increased dramatically to preserve the German ICE dominance. In the Anglo American Integrated report 2022 published in April last year on page 59 the company suggests the the shortage of battery metals like lithium and graphite will limit global BEV share to 30-35% by 2030but no higher. The high BEV take-up in China that you mention is helped by their dominance of battery production which introduces a geopolitical angle. Furthermore despite this BEV take-up in China, remember that around 60% of Chinese electricity is produced from coal so the CO2 issue is just moved upstream.

Damn lies and statistics! We will see in 6 years.

While we discuss the exact numbers you are correct that BEV's will eventually reduce the demand for PGM's. But to balance the debate we should also debate the possible future hydrogen economy. Currently around 20,000 ozs/year of PGM's (platinum, iridium and ruthenium) are used into proton exchange membrane electrolysers and one suggestion is that this could increase 85 times by 2030 increasing the usage to 1.7 millon ozs/year, even with some fuel-cell advances reducing the required PGM content this could represent 1 million ozs/year. In this scenario prices of platinum, iridium and ruthenium could increase relative to the other PGM metals particularly palladium.

At the moment in this low PGM price environment, the Company appears to be planning to reduce costs at Karo by upping reef of mine production to 215,000/month or 2.58 million tonnes/year which would generate around 211,000 ozs 6E PGM and around 4,800 tonnes of contained cu/ni/co. But for me this still needs Karo PGM basket price above $1400/oz to breakeven and well above $1600/oz to make a "satisfactory" return. So at the current basket price of around $1200/oz they are not going to push the button to start full time production and will delay further. The problem with this is that we continue to spend cash on capex and workforce and the Zim authorities will not allow the project to be delayed indefinitely (remember the Karo lease was previously held by Zimplats and taken off them around 2017/18 because they failed to start meaningful production on the site). So this is a big play on where the Karo PGM basket price will be in the next 12-24 months.

Meanwhile the good news is that if the excellent Q1 production numbers were to continue for the remaining 9 months of the year then using the actual Q1 prices and the current prices for the remaining 9 months I calculate turnover will be $710m and NPAT exactly $100m which is actually slightly up on last year.

Sotolo, while I agree with you that electric cars are dramatically increasing in China, the number of non-BEV vehicles in the world actually increased in 2023 compared to 2022 but longer term we can expect the non-BEV market to steadily shrink although how much and how quickly is a massive debate.

Excellent PGM and production numbers which reinstates my belief that the production guidance numbers for the full year are realistic (providing we do not see the stripping ratio back above 14 later in the year) . Excellent chrome yield and recovery.

Net cash down $31.7m over the 3 months reflecting the ongoing investment in Karo.

Q1 number on Thursday.

Hi Sotolo, nothing sinister, Ilja was busy the second half of Dec with the annual numbers presentations and then factories tend to shut for a week or so and I assume Ilja has gone back to visit family in eastern Europe, well deserved, we all deserve a good festive period to recharge our batteries for the New Year.. Everything will be wakening up this week and I am sure he will post the numbers latest next week.

Regarding the PGM prices, like you I was disappointed to see the step backwards after the good rise in December but I think it will have a second and possibly 3rd attempt for the increases to find traction..Demand indicators are still uncertain but weakly positive. Chrome price is incredibly steady although the chrome stocks at Chineae ports at about 2.7m tonnes are the highest for about one year but I am still posative for chrome.

Production worldwide of non- BEV's are up this year on last year and PGM stocks outside of China have fallen so I expect the market to finally adjust to the new reality.

We should see the Q1 production numbers out Thursday/ Friday/ Monday and I just hope they are up on Q1 last year which were impacted by terrible rain.

Thanks Visitor, I decided to check this out and found it in the Q+A section at the end. Generally underground mines are said to have 2 to 3 times the capex costs of open pit mines. As PP explained it ,the move to underground will start in the western pit area and will be 5 slightly inclining shafts for the initial development which are significantly cheaper than vertical mines. But he went on to explain that the western pits currently produce only about 20% of the total ROM so assuming the total ROM production is say 5m tonnes/year and the underground mines continue to produce 20% or 1m tonnes then $54m Capex over 2 years is equivalent to $27/tonne. In contrast the Eastern pit producing 80% or say 4m tonnes/year and the total yellow fleet capex will drop from from $40m/year now to $32m /year or $8/tonne.

We are going to have the same problem at Karo, 2 years ago the original open pit LOM was 20 years and later reduced to 17 years, based on the latest mineral resource and mineral reserve statement the proven/probable open pit ROM has reduced to 23.0m tonnes and 2.46 m tonnes/year production this reduces the LOM to less than 10 years (more reserves might be found but similarly Tharisa are hinting at significantly increasing production above 2.46m tonnes/year to reduce unit costs).So Karo might have to start transitioning to underground less than 6 years after starting open pit production.

Visitor, thanks for the information, I did not see the last InvestorMeet and you are right that it is less expensive than I had imagined

...to fall below the official projection. The Q1 production figures will give us more idea on this when they are out later this month. Over the last two years the Tharisa costs have been reduced by the serious weakening of the ZAR against USD, while I expect this to continue this year I expect it will be at a much slower relative rate. Looking slightly longer, in the recent financial accounts, Tharisa has reduced the expected life of open mine at Tharisa by 3 years and could start transitioning to shallow below ground mining as early as 2025/2026 which will need further serious CAPEX and could affect overall production.

On top of this there are the question of where the PGM/chrome prices are heading.

So you are right that Karo is a big gamble, PP and his father have a successful history of building up mining businesses.

Like everything in life this relies on hard work and a little big of luck. On balance, I am still invested here.

Hi hxul, for years, Tharisa has had low valuation metrics and I agree that Karo accounts for a big chunk of this but it is not the only reason.The Karo project had a CAPEX of about $391m although Tharisa has said this could go up by up to 10% ,due to the probable 12 month delay in FOIM to June 2025, so I am now working on around $430m. But don't forget that about one third of this has already been spent in previous years ($46m in 2023) which leaves about $250-270m still to be spent and most of this will be spent in this new calendar year. This explains why Tharisa is sitting on a big cash balance rather than paying off debt as they know the vast majority of this will be spent later this year (although Karo could be delayed for a second 12 months).

Tharisa is fully committed to Karo having increased the share in 2023 from 70 to 75% at a cost of $65m and increasing that to 80% this year. With the recent increase in Pt/Pd/Au the Karo PGM basket price is now around $1300-1340/oz, at this level my rough calculation is that the project is breakeven without taking account of the financing costs and debt repayments. If you take account of the financing/debt then for me the breakeven Karo basket price is nearer $1450-1500/oz and if we expect a return on investment of say 10% then for me the Karo basket price needs to be nearer $1800/oz. We have to remember that the tax free profit period for Karo will only last 5 years and that the first 15% of net profits will to to the Zim government as they own 15% of the business based on a free carry so they have no costs at all. In saying that, Tharisa has recently suggested possible efficiency savings in recovery above 80% and the the plant working above namneplate capacity to that the PGM production could be increased to nearer 200,000 oz/year rather than the 190,000-194,000 second project level.

One of the big factors at the moment is that Tharisa is currently having to pay 8.5-10.5% interest on debt which is the "patient capital" that you mention and is forcing them to try and finance the outstanding Karo CAPEX out of their own funds rather than borrow more, alternatively delay the project longer hoping that interest rates reduce or PGM prices increase. In contrast the bigger international PGM miners can borrow at significantly lower interest rates, in late November , Sibanye Stillwater announced they would raise $500m in the form of a convertible bond and expected the coupon to be 4.5-5% (in contrast we are paying 9.5% on our Zim bond in USD).

Regarding your question of other explanations, much has been said over the years on this and includes the relative small size of Tharisa compared with some of the big mining companies , and also geopolitical risk (see what happened to Salene Chrome). Even in the short term there are production questions about the Tharisa mine which is the goose laying the golden egg. I expect chrome production this year to be at the bottom end of the official projection and the PGM t

Ilja, good to see the Mineral Reserve Statement now published rather than having to wait until February or longer, and that the Karo 5PGE+Au is advised as 2.98 grams/tonne which is in line with the 3.0 used in the original projection. Also interesting that there is a significant increase in the proven/probable tonnes although the open pit volume and life is reduced and presumably the underground amount increased which will add to costs.

Similarly a minute reduction PGE/Cr content for the Tharisa mine but the open pit life has been reduced with an earlier transitioning to underground.